Published: Sun, August 12, 2018
Money | By Ralph Mccoy

Mexico says it must finish NAFTA talks with US before Canada rejoins

Mexico says it must finish NAFTA talks with US before Canada rejoins

USA and Mexican negotiators are working to reach a NAFTA cars deal this week that would allow Canada to rejoin talks and move toward resolving the toughest issues that affect all three nations, according to three people familiar with the discussions. They say they have not been part of the U.S. -Mexico talks over the past three weeks because those countries have complex bilateral issues to resolve.

A US -proposed so-called sunset clause that would kill a NAFTA deal unless it is renegotiated every five years has been another major stumbling block in the talks.

Canada has not participated in the talks in Washington which have been focused on resolving bilateral issues between Mexico and the United States. "We have to go to get to a situation where we can bring Canada on board and wrap this thing up".

Mexico's Economy Minister Ildefonso Guajardo speaks to the media during a news conference at Los Pinos presidential residence in Mexico City May 1, 2018.

Guajardo said on Monday that Mexico had put forward a proposal to update NAFTA's rules of origin, and was studying the US position.

Talks are due to continue Friday and include Jesus Seade, economics adviser to Mexico's President-Elect Andres Manuel Lopez Obrador. But sources say they are near to agreement on the key US demands that more of the content of automobiles imported duty-free under NAFTA be made in North America, and by workers earning at least $16 an hour.

Those requests by the US are meant to counter the administration's view that too much of what's made under NAFTA is out-sourced to low-wage destinations, robbing Americans of good jobs. That's up from 62.5 percent now, though below the 85 percent originally sought by the October.

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After a second day of meetings with U.S. Trade Representative Robert Lighthizer in Washington, Mexican Economy Minister Ildefonso Guajardo said talks were "advancing" but that it was not clear how long it would take to settle U.S. -Mexico issues before Canada would come back to talks. Mexico views the clause as redundant because any of the partners already can withdraw from NAFTA after giving six months' notice.

"A free-trade agreement is supposed to provide certainty, and this would hurt investment in Mexico and the competitiveness of North America", Moises Kalach, the trade head for the Mexican business chamber known as CCE, said in an interview last week. "It's not something we can work with".

Canadian officials have said talk of their alleged inflexibility is simply a negotiating or public-relations tactic by the Americans, and that President Donald Trump's chief concern about NAFTA is the large American trade deficit with Mexico.

The Mexican delegation has said little about the details of their talks with Lighthizer.

The other issue is the sunset clause that allows the USA to back out and reset after a certain time period.

"Once you get one of the 800-pound gorillas off the table, then you create a narrative and a story of traction and success", he said. This article is strictly for informational purposes only.

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