NAFTA talks in ‘perpetual negotiation’ as U.S. stresses deadline

The three NAFTA countries are in a “perpetual negotiation,” Foreign Affairs Minister Chrystia Freeland says, committed to bargaining daily as the United States presses for a deal within the next two weeks.

And while the all-important auto file remains the key to a revamped pact, negotiators are aiming for a deal that covers all areas of the North American free-trade agreement (NAFTA) – eschewing a previous plan to reach a limited agreement on autos and a few less contentious areas and punt other sticking points to future talks.

Ms. Freeland met with U.S. Trade Representative Robert Lighthizer and Mexican Economy Minister Ildefonso Guajardo in Washington on Friday for a second straight day. They were joined by U.S. President Donald Trump’s son-in-law, Jared Kushner, and Mexican Foreign Affairs Minister Luis Videgaray.

After the meeting, Ms. Freeland said negotiators would remain in the U.S. capital throughout the weekend and she would return next week for further talks.

“You could call this a sort of perpetual negotiating round. We’re working very hard,” she told reporters outside the Winder Building, Mr. Lighthizer’s headquarters near the White House, on Friday afternoon. “We are certainly in a more intense period of the negotiations and we are making good progress.”

She said the “rules of origin” for the automotive sector are “the heart” of NAFTA and the main issue on the table.

Mr. Guajardo said the target, however, is broader than simply an auto deal.

“No, no, no,” he said when asked if negotiators were still toying with a plan to defer other items. “This is a comprehensive NAFTA that includes, obviously, new views and venues to handle new challenges.”

The minister said he would return to Washington on Tuesday.

One source with knowledge of the talks said the United States is determined to get a deal it can present to Congress for ratification. Such an agreement would have to cover all areas of NAFTA in detail – meaning a limited agreement in principle, which Mr. Lighthizer has floated in the past, is less likely.

The U.S. government wants to put the deal before the current Congress before its term expires early next year. Because of numerous procedural steps under U.S. law, an agreement must be reached quickly to get there in time.

Mr. Lighthizer revised his target for the end of negotiations from December of 2017 to March of this year, to mid-April. Mr. Guajardo said this week that the goal was to determine within two or three weeks whether a deal is possible.

The United States is demanding several changes to the rules of origin in a bid to ensure more North American content in vehicles – particularly steel, aluminum and glass.

Its toughest proposal would ensure all cars made in the NAFTA zone contain at least 30 per cent parts from factories where workers make above a certain threshold – between US$15 and US$17 an hour. Such a move would favour parts made in the United States and Canada over Mexico.

Mexico is resisting. One source briefed on the talks said most of the negotiations have focused on sorting out which auto parts would be subject to the wage rules, in hopes of finding a balance the United States and Mexico can live with.

Other stumbling blocks include a U.S. demand for a limit on the number of U.S. government contracts Canadian and Mexican firms could bid on; Washington’s desire to pry open Canada’s supply management system for milk, eggs and poultry; and a U.S. proposal to kill provisions that allow countries to challenge each other’s punitive tariffs at special trade tribunals.