‘No fireworks’ at NAFTA talks in Mexico City, but little sign of headway

MEXICO CITY – Negotiators at high stakes talks to update NAFTA have so far kept their tempers but are not making much progress on tough U.S. demands that could sink the 1994 trade pact, a well-placed source said on Saturday.

Officials from the United States, Canada and Mexico are meeting in Mexico City for the fifth of seven planned rounds to update the North American Free Trade Agreement, which U.S. President Donald Trump has threatened to withdraw from.

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Time is running short to seal a deal by the deadline of end-March 2018. Officials say next year’s Mexican presidential election means talks after that date will not be possible.

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The U.S. administration has made a series of demands that the other members say are unacceptable, such as a five-year sunset clause and tightening so-called rules of origin to boost the North American content of autos to 85 percent from the current 62.5 percent.

“It is very slow moving but there are no fireworks,” said a Canadian source with knowledge of the talks, adding there had “not been much conversation at all” on the more contentious U.S. proposals.

Officials have so far discussed other issues such as labor, gender, intellectual property, energy and telecommunications but it is too soon to say whether there will be any breakthroughs during this round, added the source. The talks are due to end next Tuesday.

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Though the mood in the fifth round has been calmer than the tense scenes seen last month during the fourth round in Arlington, Virginia, the negotiations are now beyond the halfway point of an initial schedule with few clear signs of process.

Mexican officials say they hope chapters on telecommunications and e-commerce will be concluded in the fifth round, but there has been no indication of this yet.

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Although negotiators are scheduled to discuss rules of origin every day starting Saturday, the source said detailed talks on boosting North American content would not be held before the end of the round.

Canada and Mexico say the new rules of origin are unworkable and would damage the highly-integrated auto industry.

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“I hope the United States understands there are things … that Mexico won’t accept, and (I hope) the negotiating process becomes more rational,” Moises Kalach, head of the international negotiating arm of Mexico’s CCE business lobby, told Reuters late on Friday.

The U.S. Trade Representative’s office on Friday revised its official objectives to conform to demands that it currently has on the negotiating table.

The move prompted U.S. Senator Ron Wyden, the top Democrat on the Senate Finance Committee, to remove a “hold” he had put in place to block the confirmation of two Trump administration nominees for deputy USTR positions, a Wyden aide said.

Wyden complained the trade office had been keeping members of Congress “in the dark” about its tactics and was not in compliance with U.S. trade negotiating laws.