U.S. trade chief says NAFTA approval on 'thin ice' without deal soon

WASHINGTON/MEXICO CITY (Reuters) - U.S. Trade Representative Robert Lighthizer said on Tuesday that if a deal to revise the North American Free Trade Agreement cannot be reached with Canada and Mexico in about three weeks, its approval by the U.S. Congress could be in jeopardy.

U.S. Trade Representative Robert Lighthizer speaks during a meeting hosted by U.S. President Donald Trump with governors and members of Congress at the White House in Washington, U.S., April 12, 2018. REUTERS/Kevin Lamarque

Lighthizer said at a U.S. Chamber of Commerce event that a deal to update NAFTA was needed quickly because of the lengthy notification process for congressional approval of trade deals.

If a deal takes too long, he said approval by the current Republican-controlled Congress may be on “thin ice” without sufficient time for a vote before November elections put a new Congress in control in January 2019.

Lighthizer is traveling to Beijing for trade talks with Chinese officials on Thursday and Friday, but will resume intensive negotiations with Canadian Foreign Minister Chrystia Freeland and Mexican Economy Minister Ildefonso Guajardo on May 7.

“We’re going to meet again on Monday, and we’ll see,” Lighthizer said. “If we can get a good agreement, I’d like to get it done a week or two after that. If not, then you start having a problem.”

U.S. Democrats, who have traditionally been skeptical of free trade deals, are expected to gain ground in November elections, possibly taking control of the House of Representatives.

Lighthizer said he was aiming to get an agreement that is acceptable to U.S. President Donald Trump, Canada, Mexico and a strong bipartisan majority in Congress.

“My objective is to get an agreement that is going to have overwhelming support and I think we will do that,” he said, adding that such a vote could shift public sentiment in favor of trade deals.

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The U.S. trade chief’s latest offer to revamp NAFTA’s automotive regional content rules to encourage more U.S. production has industry players concerned that it would still prove too costly.

Guajardo said Mexico will respond to the U.S. autos proposal when ministers meet next week.

Mexico’s main auto sector lobby on Monday described the latest U.S. demands, which include raising overall North American content to 75 percent from the current 62.5 percent over a period of four years for passenger vehicles, as “not acceptable.”

When asked whether he agreed with the automotive lobby, Guajardo said Mexico was still consulting with the industry over the matter.

“We will bring a plan in response to the U.S. position,” he told reporters at a news conference in Mexico City.

The minister said it was too early to say whether the three countries could reach a deal in the coming days. But if the negotiators were sufficiently “creative” and “flexible,” a successful outcome was probable, Guajardo added.

Both Guajardo and Lighthizer spoke a day after Trump extended until June 1 the possible imposition of steel and aluminum tariffs on Canada and Mexico.

Lighthizer said the metals tariff negotiations “will go hand-in-hand” with talks over NAFTA.

Guajardo and Canada’s Freeland have rejected linking the two trade negotiations, both insisting on a permanent exemption from the 25 percent steel tariff and 10 percent aluminum tariff without quotas or other conditions.

“Last night’s decision is certainly a step forward,” said Freeland to reporters. “Canada will continue to work for a full and permanent exemption.

White House trade adviser Peter Navarro told American steel industry executives on Tuesday that the administration was insisting on “quotas and other restrictions to make sure that we defend our industries in the interest of national security.”

Reporting by Dave Graham; Editing by Phil Berlowitz and Tom Brown