WASHINGTON/MEXICO CITY, Feb 27 (Reuters) - U.S. trade officials are due to meet auto industry executives on Tuesday, three sources said, in a possible sign of increased discussion of automotive content requirements that have become a sticking point in efforts to rework the NAFTA trade deal.
Soon after a seventh round of talks to renegotiate the North American Free Trade Agreement began, officials said the U.S. negotiator handling so-called rules of origin had returned to the United States for industry consultations.
Three people familiar with the matter said representatives from the office of U.S. Trade Representative (USTR) Robert Lighthizer would hold separate meetings in undisclosed locations with executives from Ford and General Motors on Tuesday afternoon.
USTR declined to comment. Ford said it had an ongoing dialogue about the importance of NAFTA with the government, with an emphasis on enforceable rules prohibiting currency manipulation.
A GM spokesman said: "These regular meetings with USTR happen in the context of any major trade agreement to assure that GM's point of view is heard."
Chief negotiators on Tuesday took part in the latest round of NAFTA discussions, which run until March 5 in Mexico City, as U.S. President Donald Trump again seeks to cast the United States as the victim of unfair trade with Mexico and Canada.
Time is running out to agree a new NAFTA before a Mexican presidential vote and U.S. mid-term congressional elections later this year, and the Trump administration has put forward an aggressive set of proposals that are complicating progress.
Among those proposals is a demand that seeks to guarantee the United States more of the automotive business, and impose far tougher rules of origin requirements for the industry.
Officials have said they do not expect a major breakthrough on the auto demands this round, though some in attendance were encouraged by the signs of greater U.S. discussion of rules of origin, even if that part of the round is now on hold.
"There's a good atmosphere at the negotiations," Mexico's chief negotiator Kenneth Smith said late on Monday. He said he hoped the United States would return to talks on rules of origin later this week.
Under NAFTA, 62.5 percent of the net cost of a passenger car or light truck must originate in the NAFTA region to avoid tariffs. Trump wants the threshold raised to 85 percent and is also seeking to ensure half the total content is from the United States.
The demand reflects Trump's belief that trade with Mexico and Canada is hurting U.S. jobs and factories.
He has repeatedly threatened to pull out of NAFTA unless the deal can be reworked in a way that favors the United States.
Trump said in Washington on Monday that his country was probably losing "$130 billion a year" to Mexico.
"For years, I've been saying ... (it is) $71 billion, but it's really not," Trump said, adding that the United States also loses "a lot" with Canada. "People don't know it. Canada is very smooth. They have you believe that it's wonderful. And it is — for them. Not wonderful for us," he added.
U.S. data show the country's 2017 trade deficit in goods with Mexico was $71.1 billion and $17.6 billion with Canada.
Mexican negotiator Smith said talks were not being affected by political distractions, a few hours after Trump's comments.
Critics of Trump's preoccupation with the trade deficit say it reflects robust U.S. consumption, not unfair trade.
It was unclear how Tuesday's U.S. automotive discussions might affect the debate on rules of origin, but the people briefed on the matter did not expect a major change in position.
If USTR was going to announce a radical shift on the rules, the auto companies believe the meetings would be held at CEO level, according to two of the people familiar with the matter.
The auto industry has opposed Trump's demands on increased content, arguing it will disrupt supply chains and raise costs. Mexican officials say the issue must be resolved in large part between the White House and U.S.-based industry bosses.
The latest talks have also been hit by fresh tension between Mexico and Trump over his planned border wall. (Additional reporting by Noe Torres, Anthony Esposito and Stefanie Eschenbacher in Mexico City Editing by Dave Graham and Rosalba O'Brien)