WASHINGTON (Reuters) - U.S. Commerce Secretary Wilbur Ross said on Thursday a new study by his department shows that U.S. value-added content is declining for manufactured goods imported from Mexico and Canada, arguing that this required tougher rules of origin in the North American Free Trade Agreement.
In a Washington Post opinion piece preview of the report to be released on Friday, Ross said the analysis of recently released OECD trade in value-added data shows a marked decline in U.S. content in automotive imports from Canada and Mexico from 1995 through 2011.
The report comes as chief U.S. negotiator John Melle prepares to present new text proposals at the third round of NAFTA talks in Ottawa, where he said “more challenging issues will start taking center stage.”.
Among these are rules of origin, a chapter in which the Trump administration wants more substantial U.S. content in autos, the main source of trade deficits with Canada and Mexico.
“If we don’t fix the rules of origin, negotiations on the rest of the agreement will fail to meaningfully shift the trade imbalance,” Ross said in the op-ed.
He said the U.S. content of manufactured goods from Canada dropped to 15 percent in 2011 from 21 percent in 1995, a year after NAFTA went into effect. The U.S. content in Mexican manufactured goods fell by more, to 16 percent from 21 percent.
At the same time, Ross said the study shows content from non- NAFTA countries was rising over the same period, suggesting the origin rules needed to more tightly restrict NAFTA access benefits.
Mexican officials have said that Mexican imports into the United States contain about 40 percent U.S. content.
“These data debunk the claim that U.S. content in the form of parts is so high that we shouldn’t worry about headline gross-deficit figures,” Ross said.
Reporting by David Lawder; Editing by Shri Navaratnam