US Lighthizer sees NAFTA ‘breakthrough’, Mexico cooler

Mae Love
August 19, 2018

Lighthizer was speaking in Washington amidst the latest round of high-level talks between USA and Mexican officials to rejig the North American Free Trade Agreement, known as NAFTA, with a deal still elusive a year after the renegotiation began.

U.S. Trade Representative Robert Lighthizer, left, shakes hands with Canadian Foreign Affairs Minister Chrystia Freeland, accompanied by Mexico's Secretary of Economy Ildefonso Guajardo Villarreal, after they spoke at a news conference, Wednesday, Aug. 16, 2017, at the start of NAFTA renegotiations in Washington.

The U.S resumed negotiations with Mexico n July after talks that included Canada stalled.

Regardless of whether one agrees with Trump's negotiating tactics, Orava said, if the administration can land a good agreement on a new NAFTA, "it will validate their approach to USA trade policy is effective and generating results and worthwhile". "If you can't make the right deal, don't make it".

However, . Mexico's economy minister has suggested there's still work to be done before an agreement could be reached.

Multilateral trade negotiations typically include bilateral talks between nations, but the administration's strategy to close a deal first with Mexico - without parallel discussions with Canadian officials - is unusual and could backfire.

In regard to their sideline position, Canada states that there have been several unilateral discussions over the past few months in the negotiations, and that they are simply waiting for the USA and Mexico to resolve their issues before they rejoin the talks.

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Not a single US governor or senator has asked to pull their country out of NAFTA, Bachand said, which is Canada's true trump card in the negotiations, he added. But talks bogged down over several US proposals, such as a provision that would allow any one of the three countries to walk away from NAFTA after five years, and a provision to make optional the investor-state dispute settlement process that allows corporations to use private, three-person arbitration panels to seek monetary damages for a country's policies or laws they say affect their bottom line. There is of course the obvious, and that is that Canada is not going to simply accept what the US and Mexico agree to, as they have their own agenda.

Negotiators have been working for four straight weeks to hammer out differences with Mexico, largely over provisions affecting the auto industry as they try to update the 24-year-old North American Free Trade Agreement, and sign a revised deal before the end of the year.

The end of the tariff exclusions strained relationships with Canada, Mexico and the European Union, which responded with retaliatory tariffs on selected US goods.

At the Senate hearing, it was unclear how far-reaching a preliminary agreement with Mexico could be. "NAFTA will continue because the power in the U.S. Senate is very strong in commercial decisions, and governors also have a big influence".

Trade negotiators have sounded optimistic in recent weeks. "So we're not even talking to them right now". Mexico's new president, Andrés Manuel Lopez Obrador, was elected in July and takes the oath of office December 1.

NAFTA's current rules specify that at least 62.5 percent of the content of cars come from North America to qualify for zero tariffs; anything lower than that threshold subjects a vehicle to a 2.5 percent duty for cars and 25 percent for trucks and sport utility vehicles. Cars account for the biggest trade among the three countries, and Trump and other critics blame NAFTA for the USA trade deficit with Mexico and the loss of domestic manufacturing jobs.

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