Canada's ambassador to Washington says the three NAFTA partners need to wind up negotiations over the next two months because the uncertainty is creating a chill on investment and hurting job creation.
Canadian Ambassador David MacNaughton and Washington's representative in Ottawa, Kelly Craft, spoke Monday at a conference on the importance of bilateral energy trade. Mr. McNaughton said he believes the NAFTA negotiations can be concluded within the next two months, meeting a March 31 deadline set by U.S. negotiators.
"I think [if] we roll up our sleeves and work hard at this, we can at least get to the point where we have an understanding, an agreement in principle. … I don't see any reason why we can't get there."
Mr. MacNaughton said the Mexican presidential election, plus looming midterm congressional elections in the United States, will make it increasingly difficult to reach a deal past March 31.
Meanwhile, businesses are wary about making investments in the three countries without a clear indication of what the trade rules will be.
"The uncertainty is causing people not to make investments that they might ordinarily make," he said. "I think if you look at Mexico's interest, the United States's interest and Canada's interest, it is creating jobs. And the more you have people sitting there not investing because they don't know what the rules are going to be, the fewer jobs get created."
Foreign Affairs Minister Chrystia Freeland and her U.S. and Mexican counterparts wound up a negotiating round in Montreal last week with little sign of progress on key issues. Mr. MacNaughton said there has been good progress on the "plumbing" issues but that four or five key roadblocks remain.
Talks were deadlocked for months over a series of tough protectionist demands by the Trump administration: A 50-per-cent U.S. content requirement on autos made in Canada and Mexico; a cap on the amount of U.S. government procurement Canadian and Mexican companies would be allowed to bid for; the abolition or gutting of the deal's dispute-resolution provisions; and a "sunset clause" that would automatically terminate NAFTA in five years unless all three countries agreed to keep it.
But at the most recent round of talks, in Montreal, Canadian negotiators presented a series of compromise proposals. Mr. Trump's trade czar, Robert Lighthizer, rejected Canada's key compromise on autos, but said he was encouraged that Ottawa was trying to work with his core demands. Mr. Lighthizer did not reject proposed Canadian compromises on the sunset clause and Chapter 11, the provision that allow corporations to sue governments in front of trade tribunals.
The three parties will reconvene in Mexico City in the last week of February for the seventh round of talks. Ms. Freeland has said there will be a further round in April in Washington.
The Trump administration has imposed deadlines on the NAFTA talks from the start: At first, they aimed to have them completed by the end of 2017. In the fall, Mr. Lighthizer changed that target to March, 2018. But Mr. Trump and his lieutenants have begun taking a softer line in recent weeks.
In January, when asked by the Wall Street Journal if he had a timetable for deciding whether to leave NAFTA or stay in, he replied "No." Mr. Trump told the newspaper he might extend the talks until after the Mexican presidential election, when it would be easier for Mexico to negotiate.
"I'm leaving it a little flexible because they have an election coming up," Mr. Trump said. "There's no rush."
In Davos later that month, U.S. Commerce Secretary Wilbur Ross said there was a "good chance" the renegotiation would be successful.
Canadian officials have been divided on whether a hard deadline is a good or bad thing. While some have said Ottawa wants to get the negotiation out of the way to give investors certainty, others have argued that an endless negotiation is not necessarily a bad thing if it means keeping the current NAFTA in place.