US trade official hopes for breakthrough in NAFTA talks | Business| Economy and finance news from a German perspective | DW | 17.08.2018
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US trade official hopes for breakthrough in NAFTA talks

During ongoing discussions about reworking the NAFTA free trade pact, Robert Lighthizer has said that he expects a breakthrough in the coming days, though his Mexican counterpart has urged more flexibility for a deal.

On the eve of the resumption of high-level talks between US and Mexican officials on Friday, US Trade Representative Robert Lighthizer said he was hopeful that "in the next several days we'll have a breakthrough" in negotiations.

Speaking during a White House cabinet meeting with US President Donald Trump on Thursday, Lighthizer however also noted that there was still "some difficult issues to work on."

At the same time, he indicated that Canada could rejoin the talks soon. "I'm hopeful with Mexico. And then I hope once we get one with Mexico, that Canada will come along," he said.

Read more: Donald Trump's trade spats with Europe, China and NAFTA ― What you need to know

Lighthizer's optimism comes about a year after renegotiations began following Trump's threat to exit the free trade pact with Mexico and Canada because it was a "disaster" and an unfair deal to American workers.

'No rush'

NAFTA talks ground to a halt in late May in the run-up to the presidential election in Mexico on July 1. After the election, negotiations resumed without Canada and are seeking to tackle thorny bilateral issues such as revamped automotive sector rules and a sunset clause that could kill NAFTA after five years if it is not renegotiated.

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US-Mexico trade in focus

During the cabinet meeting, Donald Trump said he was in "no rush" to conclude the talks, stressing that he wanted to make "the right deal."

"We're either going to do a good NAFTA, a fair NAFTA for us, or we're not doing NAFTA at all," he said.

In a jibe to Canada, Trump repeated his claim that the country's tariffs and trade barriers were "too high," which was why the US wasn't even talking to them right now.

Crucial auto industry rules

In their efforts to update the 24-year-old NAFTA pact, US and Mexican officials have been working over the past four weeks to iron out differences over provisions affecting the auto industry. Trump has repeatedly argued existing NAFTA rules have facilitated an exodus of manufacturing jobs from the US to Mexico, especially in the automobile sector.

Read more: Auto giants launch new coalition to save NAFTA

According to US auto industry sources, the two sides are close to a deal to increase North American automotive content thresholds, with substantial requirements for content produced in high wage areas, namely the United States and Canada.

Reportedly, differences remain however over whether Washington should have the ability to levy national security tariffs on Mexican-produced autos that do not comply with the new rules.

Industry officials said on Thursday that the administration still had not agreed to remove the threat of tariffs on vehicles built at new plants nor specified whether passenger vehicles that do not comply with the rules would face a higher tariff than the current 2.5 percent.

Who blinks first?

Meanwhile, Mexican Economy Minister Ildefonso Guajardo, who is leading his country's delegation, has urged negotiators to show "flexibility." 

"We have everything on the table, there are no preconditions and we'll see at the end how the whole thing falls into place," Guajardo said as Thursday's meetings concluded.

He stressed that the most difficult issues had been left to the end, including the US demand that NAFTA be approved every five years — a provision known as a sunset clause.

US officials have indicated that if the deal can be agreed by the end of August it would be possible to win congressional approval for the new NAFTA before the new US Congress is seated in January following mid-term elections in November. This would protect the deal from the possibility of opposition if Democrats win control of the legislature.

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Mexico's endangered car industry

uhe/aos (Reuters, dpa, AFP)

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