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A tougher stance by US at NAFTA talks

New proposals unlikely to find support with either Mexico or Canada

The United States has adopted a tougher stance in NAFTA renegotiation talks, a move that could be designed to prevent a new deal being reached, according to a report by Bloomberg.

Based on information provided by officials familiar with the discussions on the North American Free Trade Agreement, the report says that proposals being pushed by the U.S. on government procurement, textiles and fresh produce are unlikely to be agreed upon by either the Mexican or Canadian governments.

The third round of talks held in Ottawa, Canada, this week took on a more negative tone than previous rounds held in Washington and Mexico City, the officials said.

The U.S. seeks to limit government contracts that Mexican and Canadian companies can access in its domestic market, proposes ending preferential tariffs on textiles and is pushing to open seasonal products such as fruit to dispute mechanisms that would likely raise tariffs and hinder Mexican exports.

Two of the sources Bloomberg spoke to said the move could be a deliberate ploy to make settlement on a new agreement impossible.

That stance fits with the hardline rhetoric of President Donald Trump who has made repeated threats to pull out of the deal if it wasn’t renegotiated in a way that is more favorable to the U.S.

Reducing its U.S. $64-billion trade deficit with Mexico has been a priority in the renegotiation process with automotive manufacturing seen as the biggest cause of the imbalance.

Consequently, at the next round scheduled for October 11 to 15 in Washington, the U.S. is expected to once again push its contentious proposal to change rules of origin in the sector.

The United States wants cars to have higher NAFTA country and U.S.-specific content in order to get tariff-free status in the North American market. That proposal is almost certain to be rejected by Mexico and Canada, further raising the possibility that the talks will end in stalemate.

U.S. Trade Representative Robert Lighthizer told reporters Wednesday that “significant progress continues to be made” in some areas including digital trade and telecommunications but “there is an enormous amount of work to be done, including on some very difficult and contentious issues.”

All three countries previously agreed it was important to accelerate the pace of talks with a view to concluding them before domestic political matters, including next year’s Mexican presidential elections, took over.  However, a lack of consensus on several issues could make that goal increasingly difficult to achieve.

If any of the three countries decided to withdraw from the talks and agreement, six months’ notice is required although legal battles would likely follow, especially if it was the U.S. pulling out.

But at the end of this week’s talks, Mexican Economy Secretary Ildefonso Guajardo said he remained confident that progress can still be made.

“As the negotiations move forward it is important we have the will to table positions that encourage constructive discussions.”

Source: Bloomberg (en)

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