World Economy

Nafta Negotiators Dig In for Long Haul

Thorny issues such as content rules for  cars remain unsolved.Thorny issues such as content rules for  cars remain unsolved.

It’s looking increasingly likely Nafta talks will extend beyond a March target, meaning negotiators will have to deal with the added political uncertainty of a Mexican election campaign.

Thorny issues such as content rules for cars remain unsolved as negotiators prepare to meet Sunday through March 5 in Mexico City for the seventh round of talks. When negotiations began six months ago, politicians expressed optimism they could reach a deal by the end of 2017.

They later pushed the goal to March—a deadline that now looks almost impossible. With the US complaining that progress on its demands is too slow, President Donald Trump’s threat to exit the pact is still weighing heavily over the discussions, Bloomberg reported.

Negotiators have finished work on three issues and could wrap up five to seven more this round out of a total of about 30, according to Juan Pablo Castanon, the head of the Mexican chamber of commerce. Despite progress in modernizing the 24-year-old North American Free Trade Agreement, there has been little or no movement on controversial and politically-charged US proposals that Canada and Mexico say would hurt their economies.

Political will has been building to extend the talks. Mexican Economy Minister Ildefonso Guajardo has signaled that his government is willing to negotiate through July’s presidential election, even though teams are working on an accelerated timeline to avoid that scenario.

Nafta negotiators have wanted to avoid clashing with the Mexican election, given that trade can be a lightning rod for voter anger over their economic situation.

Adding to the uncertainty, leftist frontrunner Andres Manuel Lopez Obrador has indicated lukewarm enthusiasm for the accord, and there’ll be a five-month transition period before outgoing Mexican President Enrique Pena Nieto hands over power to the new government.

Trump said last month that he could be “flexible” on the timetable for Nafta talks given Mexico’s vote, a position Canadian Foreign Minister Chrystia Freeland has voiced support for.

The nations began renegotiating the North American Free Trade Agreement in August at the initiative of Trump. He says Nafta is responsible for hundreds of thousands of Americans losing manufacturing jobs as plants moved to Mexico to take advantage of cheaper labor.

To revive US factories, Trump wants to raise the minimum content that a typical car must have to benefit from Nafta’s tariff exemptions to 85% from 62.5%. He also wants to add a US-specific requirement of 50%.

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