UNDER pressure from U.S. President Donald Trump, Mexico is preparing to discuss changes to trade rules about a product’s country of origin to try to avoid a disruptive fight with the United States over commerce.

    As the two countries begin a difficult new relationship, Mexico sees possible common ground with Trump on the “rules of origin” of the North American Free Trade Agreement (NAFTA) that binds the two countries and Canada, several sources said.

    Rules of origin are regulations setting out where trade products are sourced from. Although formal negotiations about the NAFTA have not begun, the rules could eventually be altered to favor U.S. industry over competitors from outside North America, particularly in Asia.

    Changes to those rules could help align Mexico with Trump’s industrial strategy of boosting U.S. manufacturing jobs and dovetail with the Mexican Government’s calls to strengthen North American competitiveness.

    It could also help pave the way for a broader deal with Trump over border security and immigration, Mexican officials believe.

    Talks about the NAFTA rules of origin will be a “very important” point of discussion between the two countries now that Trump is in office, a Mexican official said.

    A White House official said: “As a general rule, it is in the best interests of the United States to insist on strong rules of origin provisions in pursuing bilateral negotiations. Lax rules of origin in proposed treaties like the now defunct Trans-Pacific Partnership shrink and weaken our supply chain and contribute to the offshoring of American jobs.”

    Mexican Foreign Minister Luis Videgaray and Economy Minister Ildefonso Guajardo will hold talks with top Trump officials in Washington today and Friday, where security, migration and trade will be discussed.

    Fears of economic disaster have haunted Mexico since Trump won the presidency in November threatening to tear up the NAFTA, impose protectionist tariffs and build a wall on the United States’ southern border to halt illegal immigration.

    While Mexico is reluctant to alter the 1994 trade accord, officials concede that some changes may be necessary to help keep trade open with the United States, which absorbs 80 percent of its exports.

    “What we want is to maintain free access for Mexican products, without restrictions, without tariffs and quotas,” said Videgaray, the spearhead of the government’s outreach to Trump.

    Speaking on condition of anonymity, two Mexican government officials and four other people familiar with ongoing discussions said Mexico saw rules of origin as an important avenue to brokering a deal with Trump, provided a fair compromise can be reached.

    In trade agreements, content rules or rules of origin are often used to determine import duties.

    Under the NAFTA, 62.5 percent of the material in a car or light truck made in Mexico must be from North America to be able to enter the United States tariff free.

    If the countries agree in negotiations, that percentage could be increased, potentially giving an advantage to U.S. industry at the expense of Asian competitors.

    For Mexico, changing the rules of origin could be a lesser evil than Trump’s threat to impose a 35 percent tax on certain goods made by foreign companies in Mexico for sale in the United States.

    Trump’s pressure on U.S. automakers such as Ford to build more cars at home worries Mexico, where the industry has been one of the main drivers of growth and accounted for 18.5 percent of manufacturing GDP in 2015.

    Trump on Tuesday told the chief executives of the three big U.S. automakers — General Motors, Ford and Fiat Chrysler — that he wants to see more auto plants in the United States.

    Mexico warned it could pull out of the NAFTA if a renegotiation of the pact does not benefit it.

    Trump’s team is behind the push for changes in the origin rules, seeing it as a means of reducing imports from China, two of the Mexican sources familiar with the matter said.

    (SD-Agencies)