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Legal Alert - Update: Second Round of NAFTA Negotiations Concludes - Progress Made?

09/19/2017

by Brett W. Johnson, Sarah E. Delaney and Sarah S. Anand

The second round of the North American Free Trade Agreement (NAFTA) negotiations among the United States, Canada, and Mexico concluded earlier this month. While official statements from the countries indicated that all three feel they are making progress, a number of “controversial” and important issues remain unresolved. For example, it remains uncertain whether the negotiations will modify NAFTA’s “rules of origin,” which determine when an item has “originated” in one of the NAFTA countries for preferential tariff treatment, a change driven by the United States’ goal of ensuring automakers incorporate more U.S.-made parts. The parties also did not overhaul NAFTA’s dispute settlement mechanism. Another remaining point of contention is whether to include provisions that would require an increase in Mexican wages, something the Trump administration wants, although it is not necessarily favored by American businesses (as low wages have been a draw for corporations to set up plants in Mexico).

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