Mexico is preparing a proposal concerning the North American Free Trade Agreement (NAFTA) rules of origin for the automotive sector, ahead of the seventh round of negotiations set to begin next week.

Mexican Economy Minister Ildefonso Guajardo told reporters the proposal will be added to the two existing initiatives being discussed with the US and Canada.

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"We are working with the Mexican Association of the Automotive Industry (AMIA) to determine a Mexican proposal for the next round," said the minister.

Negotiators from Canada, the U.S. and Mexico will meet in Mexico City from Feb. 25 to March 5 for the seventh round of NAFTA renegotiation talks.

Rules of origin for the automotive sector, determining the percentage of each vehicle which must be manufactured in North America (and constituent countries) is considered one of the main sticking points in the stalled talks.

The US wants the rules of origin to be increased to 85% within the NAFTA region, and at least 50% from the US.

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The proposal is opposed by Canada and Mexico, but Guajardo did admit that the rule could be modernised.

"After six months of negotiation, I think it is time to recognise a strengthened rule of origin, taking us away from the vehicle we used as a model, which was in 1992, and which is different in 2018," he said.

US President Donald Trump has threatened to withdraw the US from the NAFTA if it cannot be renegotiated on terms more favourable for investment in the US.