A new NAFTA deal could be reached in two weeks, according to a Mexican trade group, although officials involved in the negotiations have downplayed the notion that an agreement is imminent.
The president of the Mexican Business Council for Foreign Trade, Investment and Technology (Comce) said yesterday that he is optimistic that Mexico, the United States and Canada are close to renewing the 24-year-old North American Free Trade Agreement.
“We expect the signing [of an updated agreement] soon, the three countries have the political will, they’re accelerating the technical work to reach a consensus on all the pending articles. We expect that there will be progress in the next two weeks and a conclusion will be reached,” Fernando Ruiz Huarte said.
Renegotiation talks are continuing this weekend in Washington after Economy Secretary Ildefonso Guajardo and Foreign Secretary Luis Videgaray met with other high-ranking officials yesterday, including U.S. Trade Representative Robert Lighthizer and Canadian Foreign Minister Chrystia Freeland.
The chief negotiators are scheduled to meet again Tuesday.
Ruiz said the three countries have agreed that the so-called sunset clause — proposed and pushed by the United States — will not automatically lead to the termination of NAFTA if it is not renegotiated every five years.
Instead, it will act as a review mechanism that allows a country to leave the agreement if it is not happy with the results, he said.
With respect to rules of origin as they apply to the automotive industry, probably the most important — and contentious — issue in the negotiations, analysts expect that the three countries will agree to set regional content levels between 70 and 75%.
That range is higher than the current 62.5% content level in order for a vehicle to qualify for tariff-free status but lower than the 85% the United States wanted.
“It’s not that Mexico has given in; what it has done in the face of the United States’ interests is to look for a formula that brings us closer to them,” Ruiz said.
The three countries have previously pledged to speed up the negotiations as much as possible to avoid clashing with domestic political processes.
However, the official campaign period for Mexico’s presidential election has already started and voters will go to the polls in 10 weeks.
On his way into a meeting yesterday, Guajardo told reporters “we are basically working very hard, but I think there’s still a lot of work to do.”
After the meeting, he said that the three countries will need to be flexible to get a new deal quickly, adding that it was unlikely an agreement that only focused on the auto industry would be announced because the aim of the talks is a wide-ranging agreement.
“There’s no sense to modernize NAFTA, to upgrade NAFTA, if it’s not based on what you have built in the original one,” he said, adding that negotiations on telecommunications, energy and digital trade are “well-advanced.”
“This is a comprehensive NAFTA,” he said.
Freeland also said yesterday that the negotiators are “making good progress” but added that Canada “will take the time it takes to get a good deal.”
The countries have said that they are hopeful an agreement could be reached by early May although the United States indicated it might only be an in-principle deal.
U.S. President Donald Trump has frequently railed against NAFTA, describing it as the “worst trade deal” ever signed by the United States and making repeated threats to terminate it.
Despite the fact that fewer than one-third of the 30 chapters have been completed, the coordinator of the negotiating team for the powerful Business Coordinating Council (CCE) shares Comce’s optimism, saying in a television interview yesterday that he too is confident that a deal will soon be reached.
“I believe that we are a couple of weeks [away from reaching a conclusion], although these things can happen at any moment,” Moisés Kalach said, adding that a large business delegation will be present in the U.S. capital this weekend to support Mexico’s negotiating team.
“The whole team is flying . . . to be in Washington, we expect at least 150 to 200 business chamber representatives [to be there],” he said.
The business leader added that it was possible that the presidents of Mexico and the United States and the prime minister of Canada would directly intervene during the final stages of the negotiations with the goal of reaching a deal before elections are held.