No NAFTA deal in principle to be announced at Lima summit: sources

MEXICO CITY (Reuters) - Talks to rework the North American Free Trade Agreement (NAFTA) are not advanced enough for the United States, Mexico and Canada to announce a deal “in principle” at this month’s Summit of the Americas in Lima, according to two people familiar with matter.

Flags of Canada, Mexico and the U.S. are seen before a joint news conference on the closing of the seventh round of NAFTA talks in Mexico City, Mexico March 5, 2018. REUTERS/Edgard Garrido

The ministers responsible for NAFTA met on Friday in Washington, and said progress had been made on reworking the accord.

But there was still too much to do unveil an agreement at the April 13-14 summit, the sources said, speaking on condition of anonymity due to the sensitivity of the matter.

U.S. President Donald Trump, his Mexican counterpart Enrique Pena Nieto and Canadian Prime Minister Justin Trudeau are due to attend the Lima gathering, and officials have held out hope for substantive progress on the renegotiation before the meeting.

Spokespeople for the Mexican economy ministry and Canada’s foreign ministry declined to comment. A spokeswoman for the office of U.S. Trade Representative (USTR) Robert Lighthizer did not respond to a request for comment on Sunday.

Lighthizer has been pushing for the three sides to reach a deal in principle soon, and said in late March he believed it could be possible in the “next little bit.” However, Mexican and Canadian negotiators have been more cautious.

An agreement in principle could not be a partial deal, and would need to contain “everything defined in black and white” before it was reached, one of the sources said. It could not leave key issues open for discussion afterward, the source added.

If negotiations continue advancing, a deal might be possible by the end of April or early May, the source said.

Trump said on Thursday that the three countries were working “very hard” on NAFTA and that he expected to have “something ... fairly soon.”

Speaking in West Virginia, he noted that there had been discussion of reaching agreement on NAFTA ahead of the Lima summit, but added: “I said ‘Don’t rush it, take it nice and easy, there’s no rush, we get it done right or we’ll terminate it.’”

Negotiations to rework NAFTA began last year after Trump took office promising to take the United States out of the 1994 agreement if it could not be reworked to better serve American interests. Talks continue this week in Washington.

Lighthizer, Mexican Economy Minister Ildefonso Guajardo and Canada’s Foreign Minister Chrystia Freeland plan to meet again at the end of the week, one of the sources said.

Trump argues that NAFTA was a “disaster” that has shifted manufacturing jobs to lower-cost Mexico at the expense of the United States.

However, with the Trump administration embarking on a tariff conflict with China, officials say Washington is now in a hurry to reach a deal over NAFTA before the current Congress ends. The United States holds mid-term congressional elections in November.

Much of the debate centers on drawing up new rules for the automotive sector, with the United States eager to broker a revised NAFTA that secures it a bigger chunk of that business.

Having first demanded new rules stipulating that 50 percent of automotive content under NAFTA must be from the United States, Trump’s negotiators have changed tack and are now pushing a plan to try to ensure that a certain percentage of work in the industry is sourced from “high salary” areas.

Such a deal could squeeze Mexico and send more work to the United States and Canada, where wages are much higher.

Drawing up new automotive sector rules continues to present a major challenge at the talks, one of the sources said.

Reporting by Dave Graham; Additional reporting by David Lawder in Washington, Anthony Esposito in Mexico City and David Ljunggren in Ottawa; Editing by Frances Kerry