Mexico, U.S. 'close' to resolving bilateral NAFTA issues

WASHINGTON (Reuters) - Mexico and the United States are close to resolving remaining bilateral issues in the revamp of the NAFTA trade deal, officials said, but hopes of squaring away differences on Wednesday were booted to at least later this week.

FILE PHOTO: Mexico's Economy Minister Ildefonso Guajardo at a news in Mexico City on May 1, 2018. REUTERS/Henry Romero/File Photo

“We are already looking at all the issues. We might close this, not in a matter of hours, but these days. We still have next week,” Jesus Seade, designated chief negotiator of Mexican President-elect Andres Manuel Lopez Obrador, told reporters.

“We shouldn’t rush, but we’re already close,” Seade added as he left the Washington offices of U.S. Trade Representative Robert Lighthizer following the latest talks on renegotiating the North American Free Trade Agreement.

Since restarting last month, the talks have focused on settling differences between Mexico and the United States that go to the heart of U.S. President Donald Trump’s complaint that NAFTA has hollowed out U.S. manufacturing to Mexico’s benefit.

Trump has threatened to dump the 24-year-old accord between the United States, Mexico and Canada if it is not reworked to the advantage of the United States. He hopes to reduce the U.S. trade deficit with lower-cost Mexico and claw back jobs, particularly in the automotive industry.

The prospect of a breakthrough helped the Mexican peso MXN=D2 rise 1 percent against the dollar.

Earlier in the day, both Seade and Mexican Economy Minister Ildefonso Guajardo, the country’s top trade official, said a breakthrough could be only a matter of “hours” away.

Guajardo said talks would resume on Thursday morning.

A representative for Lighthizer’s office said there was no deal yet and that “major issues” remained outstanding. U.S. Commerce Secretary Wilbur Ross later said the two countries could reach agreement in the “very near future.”

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Although progress has been made on the automotive question in recent weeks, other issues, including a U.S. “sunset” proposal that could kill NAFTA after five years and future dispute-resolution mechanisms, remain unresolved.

The sunset clause, which Mexico and Canada fear could hurt long-term investment, was not discussed Wednesday, Seade said.

Questions have also arisen about the NAFTA energy chapter, because Lopez Obrador’s camp has doubts about enshrining the opening of the oil and gas sector enacted by the outgoing Mexican government in the new pact, sources close to the talks say.

Lopez Obrador opposed the opening, but Seade said the incoming Mexican team was not “changing anything.” But he said they wanted to be sure that it was consistent with the Mexican constitution, which was changed to allow the reform.

Canada has been waiting for the Mexican and U.S. teams to reach common ground on autos before rejoining the negotiations.

U.S. and Mexican officials say they will push for a deal on reworking auto industry rules that could open the door for Canada to return.

Guajardo said the talks would seek to resolve the key issues so that Canada could rejoin the negotiation, while Seade suggested that Canada could even come back beforehand.


Canadian Foreign Minister Chrystia Freeland said she was in “very close contact” with her Mexican and U.S. counterparts.

“We are encouraged by the optimism that both countries have, and we are optimistic as well,” she told reporters outside a Cabinet meeting in British Columbia on Wednesday.

Though NAFTA is a trilateral deal, Freeland noted that many issues were chiefly bilateral, which is what she said the United States and Mexico were concentrating on.

Much of the negotiation has focused on revising rules of origin for autos to try to bring more production to the region.

The United States and Mexico are close to a deal to increase North American automotive content thresholds, with substantial requirements for content produced in high-wage areas, according to officials and industry sources close to the talks.

Freeland said auto rules of origin were also important to her government, and that “Canada will very much have a voice in the finalization of all of this.”

Still, a half dozen auto executives told Reuters it is unlikely a deal will be reached with Mexico by Thursday, pointing to the issues yet to be settled and Mexico’s hesitation about having an agreement announced without Canada.

Either way, the automakers said they believed talks would likely go into next week for remaining issues to be resolved between the three countries.

Talks to rework NAFTA, which underpins the bulk of foreign trade in North America, have ground on for more than a year.

Reporting by Sharay Angulo and Timothy Aeppel; Additional reporting by Dave Graham in Mexico City, David Shepardson in Washington, Andrea Hopkins in Ottawa; Writing by Daina Beth Solomon and Anthony Esposito; Editing by Jonathan Oatis and Leslie Adler