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NAFTA Nations to Meet Again, Mexico Says Deal ‘Possible’ in Days

April 27, 2018
Negotiators are plowing ahead to try to secure a deal by May 1, which is also when temporary exemptions for U.S. steel and aluminum tariffs on imports from Canada and Mexico are due to expire, sources say.

The U.S. and its NAFTA partners are stepping up efforts to reach a tentative deal in the coming days -- with one Mexican minister saying a pact is “reasonably close” while the U.S. prepares for talks with China.

U.S. Trade Representative Robert Lighthizer met for a third straight day Thursday with Canadian Foreign Affairs Minister Chrystia Freeland and Mexican Economy Minister Ildefonso Guajardo, with talks resuming Friday. Freeland on Thursday noted “significant progress’’ on the key issue of rules for cars, while Guajardo cautioned they are juggling many “highly complex” issues.

Negotiators are plowing ahead to try to secure a deal by May 1, which is also when temporary exemptions for U.S. steel and aluminum tariffs on imports from Canada and Mexico are due to expire, according to three people familiar with the talks who asked not to be identified. Lighthizer will join Treasury Secretary Steven Mnuchin on a trip to China that’s expected next week for discussions on how to resolve a simmering trade dispute.

Mexican Foreign Minister Luis Videgaray said an agreement within a few days is “definitely possible,” but two other ministers in talks warned that key issues remain, meaning a quick windup is still far from certain.

Trump Optimism

Even if an accord is struck on car rules, division remains over a sunset clause, dispute panels and other issues. When asked by reporters outside his office Thursday if a deal is possible in coming days, Lighthizer declined to comment.

“We are more concerned with having a good agreement than a quick agreement, but I think we are reasonably close,” Videgaray said Thursday evening, leaving the meeting. “Certainly this has been a great week.”

The mood is optimistic within the White House. Talks are “moving along,” President Donald Trump said Tuesday. “I could make a deal very quickly, but I’m not sure that’s in the best interest of the United States. We’ll see what happens, but we’re doing very well,” he said.

Still, all three countries have reason to hope for an agreement soon. Canada and Mexico were both temporarily excluded from recent U.S. tariffs on steel and aluminum, with the Trump administration linking permanent relief to the successful renegotiation of NAFTA.

‘Essential Step’

Talks Thursday included White House aide Jared Kushner and Katie Telford, chief of staff to Canadian Prime Minister Justin Trudeau, reflecting the push to get a deal. Freeland, meanwhile, hailed progress on rules that govern what share of a car must be made within NAFTA countries to be traded tariff-free under the pact, and skipped a North Atlantic Treaty Organization meeting to attend more talks.

“Something really significant has happened this week, which is that we have moved from a conceptual level on rules of origin on cars to really talking about the details. That is an essential step,’’ Freeland said before the meeting. Afterward, she added: “We have been making good progress this week. We are not done yet, but this is really, really important.”

Guajardo said a deal is not quite done. “We are still in the process. And we’ll keep on moving in the right direction,” he said. “There are too many items, all of them are highly complex, we are basically engaging in those discussions and we will keep on doing that.”

Flavio Volpe, head of the Toronto-based Automotive Parts Manufacturers’ Association industry group, cautioned that the U.S. hasn’t put many of its recent proposals in writing. He said a deal on autos is possible by Tuesday but warned other key disputes remain unsolved.

“I think we can have a deal if the Americans want to have a deal,’’ he said. “The space we’re in is positive, but I don’t have text’’ that details specific proposals or agreed changes.

Divisions Remain

Not everyone is applauding, however. Canada and the Mexico, typically united in the face of Trump’s demands, appear to be diverging on a U.S. proposal to require a share of a car –- 30%, according to Jerry Dias, head of Canadian labor group Unifor -- be made with a minimum wage of about $15.

The provision would, if adopted, effectively mean that share is made in the U.S. or Canada. Mexico opposes it, according to two people familiar with talks, speaking on condition of anonymity. Volpe said there’s indeed “anxiety’’ on the issue but no firm proposal; Dias said Mexico has been “balking’’ at certain issues.

By Josh Wingrove, Andrew Mayeda and Eric Martin

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Licensed content from Bloomberg, copyright 2016.

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