<html><head><meta http-equiv="Content-Type" content="text/html charset=utf-8"></head><body style="word-wrap: break-word; -webkit-nbsp-mode: space; -webkit-line-break: after-white-space;" class=""><br class=""><div class=""><br class=""></div><div class=""><br class=""></div><div class=""><div style="margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif;" class=""><a href="http://www.reuters.com/article/us-trade-nafta-steel-exclusive/u-s-demands-regional-steel-aluminum-in-nafta-auto-rules-sources-idUSKBN1CI1X3" style="color: rgb(149, 79, 114);" class="">http://www.reuters.com/article/us-trade-nafta-steel-exclusive/u-s-demands-regional-steel-aluminum-in-nafta-auto-rules-sources-idUSKBN1CI1X3</a><o:p class=""></o:p></div><div style="margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif;" class=""><o:p class=""> </o:p></div><h1 style="margin-right: 0in; margin-left: 0in; font-size: 24pt; font-family: 'Times New Roman', serif; margin-bottom: 0.0001pt; background-color: white; vertical-align: baseline;" class=""><span style="font-size: 26pt; font-family: Arial, sans-serif; color: rgb(63, 63, 64);" class="">U.S. demands regional steel, aluminum in NAFTA auto rules: sources<o:p class=""></o:p></span></h1><div style="margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif; background-color: white; vertical-align: baseline;" class=""><span style="font-size: 9pt; font-family: inherit; color: rgb(113, 115, 117); border: 1pt none windowtext; padding: 0in;" class=""><a href="http://www.reuters.com/journalists/david-lawder" style="color: rgb(149, 79, 114);" class=""><span style="color: rgb(49, 49, 50); text-decoration: none;" class="">David Lawder</span></a></span><span style="font-size: 10pt; font-family: 'Times New Roman', serif; color: rgb(113, 115, 117);" class=""><o:p class=""></o:p></span></div><p class="bylinebarreading-time39cog" style="margin-right: 22.5pt; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif; font-style: inherit; font-variant: inherit; line-height: inherit; margin-bottom: 0.0001pt; background-color: white; vertical-align: baseline; box-sizing: border-box; font-stretch: inherit; -webkit-font-smoothing: antialiased;"><span style="font-size: 7pt; font-family: Arial, sans-serif; color: rgb(243, 112, 33); text-transform: uppercase; letter-spacing: 1.8pt;" class="">4 MIN READ<o:p class=""></o:p></span></p><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif; margin-bottom: 22.5pt; background-color: white; vertical-align: baseline;" class=""><span style="font-size: 14pt; color: rgb(49, 49, 50);" class="">ARLINGTON, Va. (Reuters) - The Trump administration is demanding the use of North American-made steel, aluminum, copper and plastic resins in cars and trucks sold under North American Free Trade Agreement rules, as it seeks to give U.S. industry a boost.<o:p class=""></o:p></span></p><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif; margin-bottom: 22.5pt; background-color: white; vertical-align: baseline;" class=""><span style="font-size: 14pt; color: rgb(49, 49, 50);" class="">People briefed on the matter said U.S. negotiators issued the proposal, which could force automakers to shift sourcing of some components to North America from Asia, during talks on Friday to overhaul NAFTA.<o:p class=""></o:p></span></p><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif; font-style: inherit; font-variant: inherit; margin-bottom: 22.5pt; background-color: white; vertical-align: baseline; box-sizing: border-box; font-stretch: inherit; -webkit-font-smoothing: antialiased;" class=""><span style="font-size: 14pt; color: rgb(49, 49, 50);" class="">It calls for the inclusion of steel, aluminum and other raw materials on a so-called NAFTA tracing list for auto parts, according to the sources, referring to the mechanism by which the regional content level of cars, trucks and large engines is monitored and verified under the trade agreement.<o:p class=""></o:p></span></p><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif; font-style: inherit; font-variant: inherit; line-height: inherit; margin-bottom: 22.5pt; background-color: white; vertical-align: baseline; box-sizing: border-box; font-stretch: inherit; -webkit-font-smoothing: antialiased; letter-spacing: 0.2rem;" class=""><span style="font-size: 14pt; color: rgb(49, 49, 50);" class="">The list would be greatly expanded under the U.S. proposal to cover a vast and complex web of automotive components, essentially eliminating the concept of “deemed originating,” under which parts not listed get a free pass to tariff-free NAFTA access, no matter their origin.<o:p class=""></o:p></span></p><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif; font-style: inherit; font-variant: inherit; margin-bottom: 22.5pt; background-color: white; vertical-align: baseline; box-sizing: border-box; font-stretch: inherit; -webkit-font-smoothing: antialiased;" class=""><span style="font-size: 14pt; color: rgb(49, 49, 50);" class="">In addition to the metals and plastics, the list would now include sophisticated automotive electronics, electric vehicle batteries and other parts not on the tracing list because they did not exist when NAFTA was negotiated by Canada, Mexico and the United States in the early 1990s.<o:p class=""></o:p></span></p><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif; font-style: inherit; font-variant: inherit; margin-bottom: 22.5pt; background-color: white; vertical-align: baseline; box-sizing: border-box; font-stretch: inherit; -webkit-font-smoothing: antialiased;" class=""><span style="font-size: 14pt; color: rgb(49, 49, 50);" class="">If Washington prevails, the components would now need to be sourced from North America to count toward proposed sharply higher content levels, or companies would need to pay U.S. tariffs of around 2.5 percent on them.<o:p class=""></o:p></span></p><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif; font-style: inherit; font-variant: inherit; margin-bottom: 22.5pt; background-color: white; vertical-align: baseline; box-sizing: border-box; font-stretch: inherit; -webkit-font-smoothing: antialiased;" class=""><span style="font-size: 14pt; color: rgb(49, 49, 50);" class="">People briefed on the U.S. proposal said it would lift the regional content threshold to 85 percent from the current 62.5 percent, with a 50 percent minimum U.S. content level.<o:p class=""></o:p></span></p><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif; font-style: inherit; font-variant: inherit; margin-bottom: 22.5pt; background-color: white; vertical-align: baseline; box-sizing: border-box; font-stretch: inherit; -webkit-font-smoothing: antialiased;" class=""><span style="font-size: 14pt; color: rgb(49, 49, 50);" class="">A spokeswoman for the U.S. Trade Representative’s office declined to comment on the auto industry proposal.<o:p class=""></o:p></span></p><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif; font-style: inherit; font-variant: inherit; margin-bottom: 22.5pt; background-color: white; vertical-align: baseline; box-sizing: border-box; font-stretch: inherit; -webkit-font-smoothing: antialiased;" class=""><span style="font-size: 14pt; color: rgb(49, 49, 50);" class="">U.S. Commerce Secretary Wilbur Ross has vowed to close “loopholes” in the parts list that he says allow too many cheap auto parts from Asia and other regions to enter the United States.<o:p class=""></o:p></span></p><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif; font-style: inherit; font-variant: inherit; margin-bottom: 22.5pt; background-color: white; vertical-align: baseline; box-sizing: border-box; font-stretch: inherit; -webkit-font-smoothing: antialiased;" class=""><span style="font-size: 14pt; color: rgb(49, 49, 50);" class="">Ross has already sought to protect the U.S. steel and aluminum industries from subsidized imports with national security reviews that could lead to import restrictions.<o:p class=""></o:p></span></p><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif; font-style: inherit; font-variant: inherit; margin-bottom: 22.5pt; background-color: white; vertical-align: baseline; box-sizing: border-box; font-stretch: inherit; -webkit-font-smoothing: antialiased;" class=""><span style="font-size: 14pt; color: rgb(49, 49, 50);" class="">Steel industry trade groups from all three NAFTA countries in June issued a joint statement calling for any renewal of the trade pact to require North American steel use in manufactured goods.<o:p class=""></o:p></span></p><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif; font-style: inherit; font-variant: inherit; margin-bottom: 22.5pt; background-color: white; vertical-align: baseline; box-sizing: border-box; font-stretch: inherit; -webkit-font-smoothing: antialiased;" class=""><span style="font-size: 14pt; color: rgb(49, 49, 50);" class="">However, two people briefed on the talks said the U.S. proposal stops short of labor unions’ call for “melted and poured” North American steel, which would have precluded the use of raw steel from elsewhere that has been rolled or otherwise processed on the continent.<o:p class=""></o:p></span></p><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif; font-style: inherit; font-variant: inherit; margin-bottom: 22.5pt; background-color: white; vertical-align: baseline; box-sizing: border-box; font-stretch: inherit; -webkit-font-smoothing: antialiased;" class=""><span style="font-size: 14pt; color: rgb(49, 49, 50);" class="">Automakers in North America largely already use North American steel but currently get no content value credit for it. Adding it to the tracing list would get a typical vehicle hundreds of dollars closer to meeting the goal.<o:p class=""></o:p></span></p><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif; font-style: inherit; font-variant: inherit; margin-bottom: 22.5pt; background-color: white; vertical-align: baseline; box-sizing: border-box; font-stretch: inherit; -webkit-font-smoothing: antialiased;" class=""><span style="font-size: 14pt; color: rgb(49, 49, 50);" class="">But any such gains would be offset largely by the higher overall content thresholds and the need to find other sources for electronics, said Kristin Dziczek, a trade and labor economist with the Center for Automotive Research in Ann Arbor, Michigan.<o:p class=""></o:p></span></p><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif; font-style: inherit; font-variant: inherit; margin-bottom: 22.5pt; background-color: white; vertical-align: baseline; box-sizing: border-box; font-stretch: inherit; -webkit-font-smoothing: antialiased;" class=""><span style="font-size: 14pt; color: rgb(49, 49, 50);" class="">Dziczek and auto industry groups say that the U.S. content proposal was likely to backfire, with automakers and suppliers simply choosing to pay the 2.5 percent U.S. tariffs for passenger cars and many parts, sourcing more of them from China or other Asian countries.<o:p class=""></o:p></span></p><p style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif; font-style: inherit; font-variant: inherit; margin-bottom: 22.5pt; background-color: white; vertical-align: baseline; box-sizing: border-box; font-stretch: inherit; -webkit-font-smoothing: antialiased;" class=""><span style="font-size: 14pt; color: rgb(49, 49, 50);" class="">“That could be the preferred trading route if NAFTA becomes too strict,” she added.<o:p class=""></o:p></span></p><div style="margin: 0in 0in 0.0001pt; font-size: 12pt; font-family: 'Times New Roman', serif; font-style: inherit; font-variant: inherit; line-height: 19.5pt; background-color: white; vertical-align: baseline; box-sizing: border-box; font-stretch: inherit;" class=""><span style="font-family: inherit; color: rgb(113, 115, 117);" class="">Additional reporting by David Ljunggren in Arlington and Sharay Angulo in Mexico City; Editing by Susan Thomas and Tom Brown<o:p class=""></o:p></span></div><div style="margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif; background-color: white; vertical-align: baseline;" class=""><span class="articlebodytrustbadgetitle3xfqc"><i class=""><span style="font-family: inherit; color: rgb(113, 115, 117); border: 1pt none windowtext; padding: 0in;" class="">Our Standards:</span></i></span><span class="trustbadgeurl"><i class=""><span style="font-family: inherit; color: rgb(113, 115, 117); border: 1pt none windowtext; padding: 0in;" class=""><a href="http://thomsonreuters.com/en/about-us/trust-principles.html" style="color: rgb(149, 79, 114);" class="">The Thomson Reuters Trust Principles.</a></span></i></span></div></div></body></html>