US, Mexican negotiators set for more NAFTA talks

Randal Sanchez
August 28, 2018

"Our relationship with Mexico is getting closer by the hour", the tweet read.

The United States and Mexico have been holding bilateral talks aimed at resolving differences in the renegotiation of the North American Free Trade Agreement. That would represent a major jump from the 2.5% tariff the USA charges now under World Trade Organization rules.

That would leave open the possibility that cars that don't meet the rules and are built at new plants could face tariffs of 20 percent to 25 percent, pending the results of a Section 232 national security investigation that Trump ordered in May, the people said.

Mexicans and USA officials have been eager to revise NAFTA by the end of August to give allow the outgoing Mexican administration of Enrique Peña Nieto to sign the deal before leaving office. Both also agreed to raise the percentage of a vehicle that comes from auto plants that pay higher wages, which the United States and Canada hope will help prevent more of their jobs being outsourced to lower-wage workers in Mexico.

A spokeswoman for the US Trade Representative's office denied that Lighthizer had softened his position on the sunset clause, without further elaboration.

"The story of these types of things is always defined in the final minute, and I would say that we're practically into the final hours of this negotiation", Mexican Economy Minister Ildefonso Guajardo said. Mexico would not be satisfied living with the threat of 232 tariffs over its head, the person said.

"There's been no indication of flexibility from the United States on this issue", a senior Canadian official told AFP on Thursday.

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Canada has been waiting for the Mexican and USA teams to reach common ground on autos before rejoining the negotiations.

But Guajardo told reporters that Canada's Foreign Minister Chrystia Freeland was ready at any point to proceed with the NAFTA negotiations. Despite this, many USA companies have pressured the administration not to force any change on that agreement, as their worldwide investments are now protected because of it. We will just have to wait and see.

Trump has softened his tone recently both about the trade accord and about Mexico, a nation that he argues has stolen and done little to stop illegal immigration and drug trafficking to the United States. AMLO wants it excluded, and he has a pretty good reason.

"We've not really been making any recommendations to the USA government on that topic", he told reporters on a conference call.

"It's not about not touching the energy reform, but it's touching it in the right way", Seade told reporters in Mexico City late Thursday. Fruit and dairy imports are another big issue, given farmers remain a powerful political constituency in all three NAFTA members. Yet efforts to ratify that new agreement in South Korea have been complicated by the auto tariffs threat.

The two sides have been gradually nearing agreement on autos, and one source close to the negotiations said at the weekend there was now "little" separating the two.

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