Countries seek broad outline of preliminary deal

Foreign Affairs Minister Chrystia Freeland hinted Friday that the three NAFTA countries could be close to some sort of deal.

Freeland dropped the hint mid-way through a day-long meeting in Washington with her U.S. and Mexican counterparts aimed at determining whether it’s possible to reach an interim agreement within days, before political deadlines render a deal impossible this year. “We have entered, over the past couple of weeks, very much including today, a new, more intensive stage of engagement,’’ Freeland said.

“It is quite normal in trade agreements that the pace of progress increases as you get closer to the end,’’ she added.

Freeland said talks over the past two days have been “constructive and intensive’’ and the more intensive pace will continue “in the coming days.’’

Sources said Friday’s meetings are key if there is to be a renegotiated NAFTA this spring, before Mexico elects a new president, the U.S. elects a new Congress and procedural rules make a ratification vote in Congress impossible this year. What remains unclear is what form an imminent deal might take.

Freeland refused to clarify or to discuss what issues remain unresolved.

But one trade insider said two realistic possibilities for a quick agreement have been under discussion: one is to seriously scale back the scope of the talks and the other is to present something highly preliminary this spring and keep negotiating the details after July’s Mexican election. That’s because the idea of a full overhaul of a new NAFTA that is thorough, and ambitious, and quickly completed, is a fantasy, said trade consultant Eric Miller of the Rideau Potomac Strategy Group.

“An agreement-in-principle is anything you want it to be,’’ he said.

“(But) a deal on a fully renegotiated NAFTA by the end of May, as the Trump administration would like, simply will not happen. There just isn’t enough time.’’

It’s unclear the countries have even discussed, in any detailed way, major sticking points like dairy — which is a perennial top irritant in Canada-U.S. trade talks and would need to be resolved to have a thorough deal.

Autos have been the central issue so far, given the Trump administration’s overarching goal of pulling manufacturing jobs back from Asia and Mexico. The U.S. has agreed to modify its most controversial auto proposal to date.

Its new proposal would grant credits to parts-makers that pay wages beyond $15 an hour and help those companies more easily meet the proposed U.S. floor of 85 per cent North American parts for a car to avoid a tariff.

It’s an extension of a Canadian proposal from January. Canada first suggested overhauling the old formula for calculating regional content and installing a system of credits for certain behaviour.