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Incoming Mexican president Andres Manuel Lopez Obrador says he expects a deal will be reached in the renegotiation of the North American free-trade agreement in the coming days, a prediction that comes after Mexico and the United States agreed to step up one-on-one talks.

Mr. Lopez Obrador’s comments on Tuesday come as Mexico and the United States have been conducting bilateral negotiations, without Canada, on the rules that should govern automobiles sold duty-free in the NAFTA zone. His trade adviser, Jesus Seade, has taken part in these talks.

Further high-level talks between U.S. trade representative Robert Lighthizer and Mexico’s Economy Secretary Ildefonso Guajardo are planned for Thursday in Mexico City. Foreign Affairs Minister Chrystia Freeland, who had offered to attend, but was told it wasn’t necessary, will instead be in Singapore talking with Asian allies.

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Canada’s ambassador to the United States, David MacNaughton, said in an interview that he expects three-way negotiations between Canada, the U.S. and Mexico will resume in August. This would include civil-servant-level talks between all three countries as well as higher-level discussions including Ms. Freeland and her NAFTA counterparts.

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Opinion: Protecting Canadian dairy isn’t worth souring the chances of a NAFTA deal

Officials from Canada, Mexico and European and Asian auto-producing countries met Tuesday in Geneva to discuss how to react to U.S. threats to impose, on national-security grounds, tariffs of up to 25 per cent on vehicles and auto parts exported to the United States.

The focus of U.S.-Mexico talks has been American demands for higher minimum wages and stronger North American content rules for any cars assembled in NAFTA countries. Disagreement between Mexico and the United States over these rules was a major logjam in talks this spring.

As The Globe and Mail reported earlier this week, U.S. industry sources have said Mexico and the United States are making good progress on narrowing their differences over autos.

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A deal between Mexico and the United States, on autos at least, would be welcomed by Canada, Mr. MacNaughton said. That’s because Canada has no objections with the direction in which these auto negotiations have been going. “The issues that are being negotiated are largely bilateral issues between Mexico and the United States,” he said. “I have talked to the Mexicans three or four times in the last week. The number of issues … they are talking about have been narrowed,” the ambassador added. “As far as I know … there is nothing new that has been added that would cause us [Canada] to have real problems.”

Mr. MacNaughton also addressed critics who have suggested Canada is being frozen out of talks, saying that it’s “completely normal" for Mexico and the United States to be negotiating one-on-one to resolve their differences over autos. He suggested any characterization of events that frames Canada as being shut out or sidelined is a pressure tactic designed to unsettle Canadians. “I think a lot of this is just U.S. negotiators trying to divide Canadians and unfortunately some Canadians are taking the bait,” Mr. MacNaughton said.

He said there’s no point in shifting negotiations to other areas until the Mexican-U.S. auto disagreements are worked out. A significant portion of the imbalance of trade between the United States and Mexico stems from the fact the U.S. imports more than it exports to Mexico in automotive goods. “What we have been told by the Americans and by the Mexicans is 80 per cent of the issues that the Americans have had with NAFTA have to do with autos,” the envoy said. “Eighty per cent of what the President identified as the problem with NAFTA is a trade deficit with Mexico.”

Major differences remain unresolved even if Mexico and the United States reach agreement on wages and North American content.

Mr. MacNaughton points out that both Canada and Mexico remain adamantly opposed to U.S. President Donald Trump’s demand for a five-year expiry clause in a renegotiated NAFTA. “We have said we don’t like, and will not accept, a sunset clause that kicks in automatically,” he said.

“The Mexicans have said exactly the same thing. Canada also will not accept the gutting or removal of the Chapter 19 dispute settlement mechanism," the ambassador said. "We want to have a robust dispute resolution mechanism. The Mexicans have said the same thing.”

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Christopher Sands, director of the Center for Canadian Studies at the School of Advanced International Studies at Johns Hopkins University, said he’s concerned Canada appears to be outside the “inner circle" of NAFTA talks at the moment. He said he hears from U.S. trade negotiators that they are irritated by what they see as Ms. Freeland and Mr. Trudeau “lecturing the Americans on the virtues of free trade” while remaining adamant Canada’s heavily protected dairy industry be largely off-limits. “I think the hypocrisy and the lack of creativity upset everybody,” Mr. Sands said, adding this has left Canada looking to the Americans as though they were being “dragged to the altar” on NAFTA talks.

Ontario’s Progressive Conservative government, meanwhile, also expressed alarm over the way the federal Liberal government is handling NAFTA negotiations as the United States and Mexico enter into high-level bilateral talks.

On Tuesday, Premier Doug Ford’s office urged the Trudeau government to take seriously Canada’s exclusion from the current round of U.S.-Mexico NAFTA talks.

“Premier Ford’s top priority is protecting Ontario jobs. Whatever our disagreements on other issues, our government has indicated our willingness to work with the federal government of this file,” Mr. Ford’s executive director of communications, Laryssa Waler-Hetmanczuk said in response to The Globe. “We certainly hope the federal government takes protecting our economy as seriously as we do.”

Mr. Lighthizer’s office, however, tried to allay concerns about Canada’s place in the NAFTA talks. "Ambassador Lighthizer has great respect for Minister Freeland and considers her a good friend. She does an amazing job for Canada,” Emily Davis, USTR spokeswoman, said.

The Americans also defended the one-on-one Mexican-U.S. talks, saying these are a normal part of NAFTA negotiations.

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“In addition to the trilateral meetings, throughout the renegotiation of NAFTA there have been numerous bilateral meetings among the three partners, including meetings between Canada and Mexico, Canada and the United States, and Mexico and the United States," Ms. Davis said.

With a report from Reuters

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