Published: Wed, November 22, 2017
Worldwide | By Gretchen Simon

Nafta Talks Bogged Down As US Partners Resist Hardline Demand

Nafta Talks Bogged Down As US Partners Resist Hardline Demand

Canada and Mexico will rebuff the United States over its demand for tougher NAFTA automotive content rules, top officials said on Monday as negotiations to renew the treaty bogged down with only a few months to go.

USA negotiating objectives that were updated on Friday appeared to accommodate the Mexican proposal, saying the revised NAFTA should "provide a mechanism for ensuring that the Parties assess the benefits of the Agreement on a periodic basis".

Negotiators from the United States, Mexico and Canada met on Tuesday for the last time in a fifth round of talks to rework the North American Free Trade Agreement (NAFTA).

"Where is the merit in making a counterproposal to a demand that would take us backwards?" said a Canadian source. "There has been no progress in the contentious chapters". On the issue of Buy American, the Mexicans said they could respond with equivalent Buy Mexico policies for public projects - and the biggest loser would be the U.S. That's because American companies do more construction business in Mexico than vice-versa, they argued.

More complicated subjects "are going to be left for the following meetings", he said.

Negotiators say they need to finish their work before campaigning for Mexico's presidential election formally begins at the end of March. Neither of them was present in Mexico City.

After Round 5 of NAFTA talks ended Tuesday - only two more are scheduled - no progress has been made on divisive issues.

Mexico and Canada fear Trump will follow through on a promise to pull out of NAFTA, causing disruption and economic damage.

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Flavio Volpe, president of Canada's Automotive Parts Manufacturers' Association, applauded the Canadians' decision to present facts about the destructive potential of the USA auto proposal rather than put forward a counterproposal.

They concluded by saying that the USA agricultural industry must forward, not backward.

A USA government official, speaking on condition of anonymity in Mexico City, said they didn't consider it a setback that no new chapters were closed this round and said it's still possible to reach a deal by March. They said they would simply allow the walk away, accelerate trade talks with Brazil and Argentina and expand trade with Canada in meat, wheat and energy, where Canadian suppliers would pick up some of the US slack.

"There are some areas where some extreme proposals have been put forward, and these are proposals that we simply can not agree to", Freeland said, adding that the USA has not budged on contentious issues since the talks began in August.

The Trump administration wants half of the content of all North American-built autos be produced in the United States and that the regional vehicle content requirement be increased to 85 percent from 62.5 percent. That's allowed the respective teams to work on the challenge of updating the more mundane facets of the almost 2,000-page North American Free Trade Agreement, which started in 1994 and is undergoing a major overhaul.

A heavy workload lies ahead to resolve differences over hard-line US proposals shot down by Mexico and Canada in talks scheduled through March.

"Chief negotiators reaffirmed their commitment to moving forward in all areas of the negotiations, in order to conclude negotiations as soon as possible", the countries said in a joint statement.

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