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NAFTA Negotiations Intensify

Negotiations in Washington on the NAFTA continued at a rapid pace between the United States and Mexico over the last fortnight, including technical-level discussions that carried over into the weekend. Some of the most sensitive NAFTA issues remain outstanding at this time, however, including finalising the automotive rules of origin, certain agricultural issues between the United States and Canada, and the U.S. insistence on a “sunset clause” that would potentially require renegotiation or expiration every five years.

Negotiations in Washington on the North American Free Trade Agreement continued at a rapid pace between the United States and Mexico over the last fortnight, including technical-level discussions that carried over into the weekend. There have been repeated high-level meetings between U.S. Trade Representative Robert Lighthizer and top Mexican officials – both the current chief negotiator Mexican Economy Minister Ildefonso Guajardo as well as Jesús Seade, who represents President-Elect Andrés Manuel López Obrador and is involved in all areas of the discussion. Guajardo said that 20 of the 30 chapters of NAFTA have been agreed to between Mexico and the United States, compared to only half that many prior to this renewed push. As the talks have become more focused, there has been less discussion of issues such as the level of the bi-lateral goods deficit between the United States and Mexico. 

Some of the most sensitive NAFTA issues remain outstanding at this time, however, including finalising the automotive rules of origin, certain agricultural issues between the United States and Canada, and the U.S. insistence on a “sunset clause” that would potentially require renegotiation or expiration every five years.  Guajardo is expected to return to Washington for more meetings later this week. Canadian negotiators have not been participating in this round, although both Mexico and Canada have insisted that NAFTA must remain a tri-lateral agreement. Canadian Chief Negotiator Chrystia Freeland recently told Canadian television that “Canada is ready to be at the table at any time and I think we’re very hopeful and optimistic about getting a deal soon.”

There is uncertainty as to whether the United States, Mexico and Canada will be able to reach a deal in time for the current Mexican administration to sign the agreement. USTR would have to notify an agreement to the U.S. Congress by the end of August in order to be authorised to sign a deal before López Obrador takes office in December. The NAFTA negotiations could potentially continue after López Obrador becomes president, although he expressed various concerns about NAFTA during his presidential campaign.

According to a report issued on 23 July by the non-partisan U.S. Congressional Research Service, López Obrador’s position on NAFTA, an agreement he has criticised in the past, “appears to have evolved and he seems to favor keeping the agreement in place.” In a 23 July letter to President Trump, López Obrador called on the United States to resume NAFTA negotiations with Mexico and Canada, stating that “prolonging the uncertainty could slow down investments in the medium and long-term” and could hinder economic growth in Mexico.

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