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Mexico seems to have tentatively agreed to the U.S. demands that 75 per cent of auto content be made in North America, and that 40-45 per cent, depending on the type of vehicle, be made by workers earning at least $16 an hour, said one source.

Nothing is agreed until everything is agreed

Some of the discussion now is on determining the tariff that would be applied to products — mostly made by European car manufacturers — that don’t meet those thresholds, said the person.

But there is a big caveat to that agreement, the source said. In exchange, Mexico wants the U.S. to at least water down its demand for a sunset clause, as well as take off the table both its proposal to scrap state-to-state dispute resolution, and to impose tariffs on some Mexican produce.

And none of it means anything in terms of a new NAFTA agreement unless the northern partner signs on as well, says another source familiar with the auto-related negotiations.

“Clearly, the Canadians need to be heard from tout suite, though I do not expect them to balk at this proposal,” said the person. “They should like this … (But) if they don’t agree to the full final deal, these auto (rules of origin) would be for naught — the premise is North American content and Canada would be left out.”

Canadian officials have suggested there is nothing unusual about the long stretch of bilateral negotiations excluding them, and are happy the other two countries have made progress.

But Lighthizer told U.S. senators recently that he hoped to strike a deal with Mexico soon, then use that as leverage to win “compromises” from Canada that have not been forthcoming to date.