NAFTA Officials Look to Inject Renewed Momentum into Trade Talks as Autumn Approaches

2 August 2018

Negotiators looking to update the North American Free Trade Agreement (NAFTA) have resumed a busy agenda of meetings at ministerial and technical levels, including talks planned between the US and Mexican delegations later this week, with some officials hinting that a deal could be forthcoming by late August. 

Outgoing Mexican President Enrique Peña Nieto suggested this past week that a “promising horizon” may lie ahead for wrapping up the NAFTA talks, with Mexican and US ministers due to hold talks on Thursday and Friday to help inject further momentum into the process and make advances on some of the most contentious sticking points.

“We are determined to speed up [the negotiations] in order to make progress in a significant way throughout the month of August. It’s not a deadline but we are convinced that we can reach an agreement,” he said, according to comments reported by Mexico News Daily.

Mexican Economy Secretary Ildefonso Guajardo Villareal has been meeting with his US counterpart, US Trade Representative Robert Lighthizer, in the lead-up to the ministerial meetings this week in Washington. Similarly positive assessments have lately emerged from some US administration officials, with Commerce Secretary Wilbur Ross telling reporters this week that the talks, launched one year ago, may lead to a political agreement shortly.

“Our immediate, most close-to-completion negotiations are with NAFTA, particularly with Mexico,” Ross said this week, according to comments reported by Bloomberg. “There’s a pretty good chance that we could be on a pretty rapid track with the Mexican talks.”

The renewed pace in talks comes one month after Mexico held its federal elections, with voters naming Andrés Manuel López Obrador as Peña Nieto’s successor. López Obrador, nicknamed AMLO, will take office in December, though the current and incoming administrations are reportedly already working together on ensuring a stable transition in handling Mexico’s role in the continuing NAFTA talks.

Meanwhile, US congressional midterm elections are coming up, with campaigning due to intensify during and after the August recess. The midterms are scheduled for 6 November, and will see roughly one-third of the Senate’s 100 seats and all 435 House of Representatives seats up for a vote, along with various gubernatorial seats and other state and local positions.

Mexico’s chief NAFTA negotiator: various chapters near conclusion

A number of challenging topics remain outstanding in the NAFTA talks, including US demands for changes to rules of origin for automobiles; whether to include a five-year sunset clause or other review mechanism for an updated deal; and revisions to various aspects of the existing accord’s dispute settlement chapters.

A sunset clause would cause the agreement to expire after five years unless it was renewed. The prospect of such a provision has drawn pushback from many quarters, including businesses, who argue for the need for a certain trading climate in order to make long-term investments.

Nonetheless, Mexican negotiators have noted that many chapters are well advanced, even if politically sensitive issues remain challenging to address.

“We will continue working on all chapters of the negotiation and will look to close out the modernisation chapters that are 80-90 [percent] finished: Customs & Trade Facilitation; Environment, Financial Services; Textiles; Energy; Digital Trade; among others,” said Kenneth Smith Ramos, Mexico’s chief NAFTA negotiator, on Twitter in previewing the upcoming meetings.

AMLO pledges NAFTA support, warns against uncertainty

Mexican president-elect López Obrador has called on US President Donald Trump to maintain his commitment to the NAFTA process, sending a letter to the US leader in mid-July calling for both sides to collaborate on shared concerns in the fields of trade, migration, development, and security.

“In the matter of trade, I think it is worth making an effort to conclude the renegotiation of the North American Free Trade Agreement. I think that prolonging the uncertainty could slow down investments in the medium and long-term,” said the letter. 

“I propose to resume negotiations with the participation of representatives from Mexico, Canada, and the United States,” the letter continues.

Trump has also called for wrapping up the talks quickly, while cautioning his new Mexican counterpart that he is open to pursuing “a much different route” should negotiations not advance promptly. “It would not be my preference, but would be far more profitable for the United States and its taxpayers,” he said in a letter to López Obrador in late July.

The US leader and other administration officials have previously hinted that the US could pursue bilateral tracks with Canada and Mexico on NAFTA, given that talks between Washington and Mexico City have reportedly advanced more quickly. Switching to the pursuit of bilateral deals would, however, mark a significant shift from the current trilateral nature of the discussions.

However, Mexican and Canadian officials have indicated that they prefer a trilateral approach, rather than clinching bilateral deals. In recent weeks, Canadian officials have also been meeting with their Mexican counterparts, including with López Obrador. Canadian Foreign Affairs Minister Chrystia Freeland told CBC News that she is “hopeful” that NAFTA talks can go “back into high gear” in the post-election landscape.

Guajardo, meanwhile, indicated that the US-Mexico meetings planned this week are “just a method, not a direction,” given that negotiators and ministers from all three countries often meet bilaterally, as well as in a trilateral format. “We still want a trilateral NAFTA.”

ICTSD reporting; “U.S. Talks With Mexico on New Nafta Near Completion, Ross Says,” BLOOMBERG, 30 July 2018; “Cabinet ministers meet with Mexican president-elect in shadow of trade spat,” CTV NEWS, 25 July 2018; “NAFTA teams ready to ‘start solving’ stalled issues: Mexico,” REUTERS, 27 July 2018; “Officials agree to step up NAFTA talks; August conclusion possible: Peña Nieto,” MEXICO NEWS DAILY, 28 July 2018; “Mexico vows it won't cut a   separate trade deal with Trump,” CBC NEWS, 26 July 2018; “Trump Says U.S. May Have Separate Trade Deal With Mexico,” BLOOMBERG, 18 July 2018;  “Trump Congratulates Mexico's President-Elect, With Nafta Warning,” BLOOMBERG, 24 July 2018. 

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