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Aug 26, 2018

Mexico poised to reach NAFTA deal with U.S. as soon as Monday, sources say I The Globe and Mail

Eric Martin and Jennifer Jacobs

Mexico's incoming trade negotiator says the United States has softened its contentious demand for a NAFTA 'sunset clause' while President Donald Trump tweets that the United States could reach a 'big trrade agreement' with Mexico imminently. Reuters
The United States and Mexico are close to resolving bilateral differences on the North American free-trade agreement and may wrap up as soon as Monday, according to three people familiar with the talks’ progress, clearing the way for Canada to possibly return to talks to update the three-nation trade pact.
The U.S. and Mexico achieved significant breakthroughs in the past several days on the critical issues of automobiles and energy, according to the sources, who asked not to be named because they were discussing talks held in private.
U.S. President Donald Trump said Saturday on Twitter that the U.S. could have a “big Trade Agreement” with its southern neighbor soon. The terms of any deal struck by U.S. trade representative Robert Lighthizer would need Mr. Trump’s final approval.
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Talks continued Sunday at the U.S. trade representative’s offices in Washington. Arriving at the meeting, Mexican Economy Minister Ildefonso Guajardo was upbeat.
“The story of these types of things is always defined in the final minute, and I would say that we’re practically into the final hours of this negotiation,” Mr. Guajardo told reporters.
“We’ll see clearly how things advance today. It’s going to be a long day. We have twelve hours, and midnight also counts. We’ll do everything possible to try to land a deal,” he said.
Asked about a potential deal on Monday, he said: “That’s why we’re here; to make our best effort. We need at minimum a week to work with Canada as well. We’ll try to finish as soon as possible.”
It remains unclear how U.S. and Mexican negotiators would make public the completion of work on their bilateral issues, given that Mr. Guajardo has signalled that Mexico won’t make an announcement on NAFTA until Canada also signs on to a new deal.
White House press secretary Sarah Huckabee Sanders said Sunday morning that the administration has “no announcements or anything finalized at this time.”
The administrations of Mr. Trump and Mexico’s Enrique Pena Nieto have been working for five weeks to resolve their bilateral issues so Canada can rejoin the talks to update the decades-old trade pact. The United States and Mexico are pushing for an agreement this month that would give the countries time to sign the pact before Mexican president-elect Andres Manuel Lopez Obrador takes office in December.
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A Canadian official declined to comment and referred back to remarks last week from Prime Minister Justin Trudeau, who said he was encouraged by optimism coming from the United States and Mexico but won’t sign just any deal.
On Saturday,Mr. Lopez Obrador’s envoy Jesus Seade told reporters that Mexico and the United States have resolved concerns that the deal had too many restrictions on how the next government can treat foreign oil companies investing in Mexico.
Mr. Guajardo termed Saturday an “important day” for the negotiations heading into the meeting; neither Mr. Seade nor Mr. Guajardo commented when they emerged some hours later.
The U.S. and Mexico in recent weeks had largely focused on the thorny issue of car manufacturing, as the Trump administration pushes for a deal that would boost factory jobs in the United States. The U.S. negotiators have proposed tightening regional content requirements for car production and having a certain percentage of a car manufactured by higher-paid workers.
While a U.S. proposal to increase tariffs on cars imported from Mexico that don’t meet stricter new content rules was a sticking point as recently as last week, that issue appeared to be resolved by Thursday.
The U.S. agreed to keep the 2.5-per-cent tariff currently applied under World Trade Organization rules if the cars are made at factories that already exist, according to two people familiar with the plans, who asked not to be named discussing private negotiations.
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That would leave open the possibility that cars that don’t meet the rules and are built at new plants could face tariffs of 20 per cent to 25 per cent, pending the results of a Section 232 national security investigation that Mr. Trump ordered in May, the sources said.
While Mr. Trump has floated the idea of negotiating bilateral trade accords -- finalizing one with Mexico before moving on to Canada -- both Mexico and Canada have said they want to keep a three-nation deal.

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