Mexico says must finish NAFTA talks with U.S. before Canada rejoins

Workers in a car factory

Mexico seems to have tentatively agreed to the US demands that 75 per cent of auto content be made in North America, and that 40-45 per cent, depending on the type of vehicle, be made by workers earning at least $16 an hour, said one source.

The negotiations with Mexico to update the free trade agreement, which resumed Thursday morning in Washington, are "going as well as we can possibly expect right now", he was quoted as saying by the Hagstrom Report.

"I think we are going to get there with Mexico in a relatively short order". He said long-standing agriculture issues with the Canadians have still not been resolved, an apparent reference to American objections to Canadian supply-management systems for dairy and poultry.

USA negotiators "haven't had market access conversations with Canada of any substance", the Hagstrom Report quoted Doud as saying. Talks have been "really, really hard ... The peso advanced as much as 0.2% to 18.4130 per USA dollar, trading near a three-month high in afternoon trading. As the Mexican delegation left the offices of the U.S. Trade Representative, virtually next door to the White House, they were uncharacteristically closed-mouth about the start of two days of talks.

Canadian embassy spokespeople could not be reached for comment.

One possible deal would be for Mexico to accept the US autos proposal in exchange for the USA dropping some of its most controversial other ideas, such as the sunset clause and restrictions on Mexican agricultural exports depending on the season, said Dan Ujczo, an Ohio-based trade lawyer at Dickinson Wright.

When asked whether negotiations over automobile issues within Nafta could be finished this week, Guajardo said "nothing is agreed until everything is agreed".

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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.

The two countries were to meet again on Thursday, again without Canada, while Canadian officials met in Ottawa Wednesday to plot out their strategy for when they are invited back to the table.

Canada has not participated in the talks in Washington which have been focused on resolving bilateral issues between Mexico and the United States. Lighthizer rejected a similar Mexican offer in May, but the incentives now could be different given the US midterm congressional elections in November and the upcoming Mexican presidential transition, Ujczo said.

Getting an agreement on automobiles would let the United States turn its attention to demands that only affect Canada, such as increasing American access to the dairy market north of the border.

A USA -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. That's a red line for both Canada and Mexico - and some US senators and congressmen - who believe it would create uncertainty and deter new investment.

"We are organizing the items by degree of complexity, and sunset will be one of the very last", Guajardo said Thursday.

Those requests by the USA 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.

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