By David Lawder and Jeff Mason, WASHINGTON,(Reuters): U.S. President Donald Trump said on Tuesday that a new North American Free Trade Agreement could be agreed quickly, as Canada hailed progress on forging new rules for the auto industry, the pivotal issue in talks to revamp the 24-year-old accord.
Ministers from the United States, Canada and Mexico responsible for NAFTA met in Washington to narrow outstanding differences in the hope of tying up a deal in the coming days.
“NAFTA, as you know, is moving along. They (Mexico) have an election coming up very soon,” Trump said at a cabinet meeting briefly attended by reporters.
“But we’re doing very nicely with NAFTA. I could make a deal really quickly, but I’m not sure that’s in the best interests of the United States. But we’ll see what happens,” he said.
While details are not yet clear, a new NAFTA is likely to push the region’s auto makers to source more parts from North America in order to create more jobs. Such an outcome could also raise costs for Detroit’s main car manufacturers.
Canadian Foreign Minister Chrystia Freeland, U.S. Trade Representative (USTR) Robert Lighthizer and Mexican Economy Minister Ildefonso Guajardo are pressing for a quick deal to avoid clashing with Mexico’s July 1 presidential election.
To do so, they must reach a compromise on several contentious U.S. demands, including raising the regional automotive content requirements to qualify for tariff-free trade.
Trump’s negotiators had initially demanded North American-built vehicles contain 85 percent content made in NAFTA countries by value, up from 62.5 percent now, and said that half the value must be U.S.-made.
Industry officials say the regional demand has been cut to about 75 percent and the U.S. content pitch dropped.
Entering the USTR’s office near the White House, Freeland said the latest talks would focus on the auto sector rules of origin, calling it “the heart” of the new NAFTA.
“We have been making good progress. This is an issue which is fiendishly complex,” she told reporters.
Trump on Monday again fanned uncertainty by threatening to tie a NAFTA deal to Mexico’s immigration controls, a suggestion the Mexican government quickly dismissed.
Mexico, which at the outset of the Trump presidency said it would treat the NAFTA revamp as part of a general review of its relations with the United States, has pushed back in the talks by threatening to become less cooperative with Washington.
Two weeks ago Mexico vowed to analyze all cooperation with the United States and the government on Tuesday circulated an official’s letter to the Mexican Senate saying President Enrique Pena Nieto would soon consider the findings of the review.
Arriving for talks with Lighthizer, Mexico’s Guajardo said flexibility will be needed to reach a deal. Guajardo said that Mexico would not accept any U.S. tariffs on aluminum or steel – another measure Trump has threatened to tie to NAFTA. A U.S. exemption to tariffs ends on by May 1.
Negotiators say a new NAFTA could be possible by early May.
“In the coming 10 days we can really have a new agreement in principle,” said Moises Kalach, head of the international negotiating arm of the CCE business lobby, which represents the Mexican private sector at the talks.
“As soon as there is political will from the American government to go for a final deal, I think we can close this,” Kalach told Mexican radio. “We’ve had all our (negotiating) teams in Washington for two weeks and we will continue working all this week, the weekend and into next week.”
(Reporting by David Lawder and Jeff Mason; additional reporting by Anthony Esposito, Dave Graham and Veronica Gomez in Mexico City; Editing by James Dalgleish and Grant McCool)