NAFTA agreement or the north american free trade agreement concept as the flags of United States Mexico and Canada as a trade deal negotiation question for the American Mexican and Canadian governments as a 3D illustration. wildpixel/ThinkstockPhotos

Sixth round of NAFTA talks conclude

The next round of talks will take place in Mexico in late-February.

by Andrew Mayeda, Eric Martin and Josh Wingrove

The U.S. is pushing for a breakthrough on its touchiest NAFTA proposals within a month, underscoring the fragility of the new mood of optimism after Canada and Mexico came forward with fresh ideas.

“My hope is that we start seeing some breakthroughs between now and the next round,” U.S. Trade Representative Robert Lighthizer told reporters Monday in Montreal, after the sixth session of talks to rework the new North American Free Trade Agreement. The next round will take place in Mexico in late-February.

Trade experts had framed the Montreal round as pivotal, with the U.S. putting pressure on Canada and Mexico to respond to proposals designed to shrink the American trade deficit. While Lighthizer said there were signs of progress, he made it clear the U.S. wants to see more movement from its trading partners in the next few weeks.

“The reality is that some of the participants weren’t really willing to talk about anything,” Lighthizer said, adding that he wants the discussions to move “much faster.” He added, “This is the first time they’ve been willing to talk about it at all.”

‘President’s Views’ 

Hanging over talks is U.S. President Donald Trump’s threat to quit the 24-year-old trade pact. Trump has regularly called it a horrible deal and blamed it for U.S. manufacturing job losses, pledging as recently as last week to renegotiate or give a sixth-month notice of withdrawal.

“I don’t think the president’s views have changed at all. His view has been if we can get a good agreement, we should have one,” Lighthizer said. 

Canadian Foreign Minister Chrystia Freeland said she was pleased with progress so far and Mexican Economic Minister Ildefonso Guajardo said the three countries are on the “right track” to reach a deal.

Monday’s press conference was a familiar sight in any trade negotiation -- a celebration of progress along with warnings of problems, said Andrea van Vugt, vice president of policy for North America for The Business Council, a Canadian group representing the nation’s chief executive officers. “That builds into the overall expectations that negotiations are not going to collapse in the next week, and that they’re going to continue,” she said in an interview. “The fact that the negotiations are going to continue is a good thing.”

Contentious Demands

The most contentious U.S. demands are on the automotive industry, dairy and agriculture, dispute panels, government procurement and a five-year sunset clause that would kill NAFTA unless the three agree to extend it. This round saw Canadian “ideas” -- officials wouldn’t call them formal counter-proposals -- on changing how a car’s value is calculated and adding periodic review, rather than a termination clause. Canada and Mexico have also threatened to keep some form of their own investor dispute system that the U.S. wants to opt out of.

Lighthizer called the Canadian proposal on cars “vague,” and argued it would reduce the share of a vehicle made within the three nations. “This is the opposite of what we are trying to do,” he said.blo

While NAFTA looks to have avoided collapse for now, talks could run for months or into next year as the three hash out differences. Negotiators agreed in Montreal on a proposal related to fighting corruption. That followed agreements in previous rounds on small- and medium-sized businesses and competition.

Freeland, Guajardo

In his remarks, Lighthizer took aim at Canada in particular, saying its recent World Trade Organization challenge against the U.S. is “a massive attack on all of our trade laws.” Freeland responded by saying the U.S. could resolve the issue by returning to separate talks toward getting a softwood lumber deal. Lighthizer also criticized a deficit in goods traded between the countries.

Lighthizer’s counterparts said the progress made so far is important and that challenges remain. Freeland praised the work of negotiators.

“That work, I’m pleased to say, is beginning to bear fruit,” Freeland said.

Guajardo said the countries are making progress with flexibility from all three nations. “We still have substantial challenges to overcome. Yet the progress made so far put us on the right track to create landing zones to conclude this process,” he said. 

Lighthizer’s comments were more positive than the trio’s previous joint appearance in Washington in October, when he said he was “surprised and disappointed” by Canadian and Mexican positions so far. The Montreal meeting was the trio’s first since October, as they skipped subsequent talks in Mexico City and Washington. 

To contact the reporters on this story: Andrew Mayeda in Washington at [email protected]; Eric Martin in Mexico City at [email protected]; Josh Wingrove in Ottawa at [email protected]

To contact the editors responsible for this story: Sarah McGregor at [email protected]; Theophilos Argitis at [email protected]; Vivianne Rodrigues at [email protected]

Randall Woods

© 2018 Bloomberg L.P

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