Countries seek NAFTA deal in D.C.

The NAFTA countries began a days-long negotiating round Monday in what could be their final chance for an agreement this year, before the talks enter electoral hibernation.

Any possibility of a deal hinges on the ability of Mexico and the United States to resolve a central issue of these negotiations, one that has significantly divided those two countries: auto parts.

Mexico delivered a counter-proposal on autos Monday in its first meeting of the round with the U.S., which ran slightly overtime and delayed the first Canada-U.S. session until this morning.

If an agreement doesn’t happen soon, some feel it won’t happen this year at all; Mexico and the U.S. will soon both be immersed in national election campaigns through most of 2018.

“We’ll be here for as long as is necessary,” Mexico’s Ildefonso Guajardo said as he left the office of the U.S. trade representative, where the talks are being held.

U.S. trade czar Robert Lighthizer has said the window for a deal may only be open for the next one or two weeks.

The U.S. is demanding that 40 per cent of every car be produced in a high-wage country, otherwise the car is subject to a tariff. Automakers could meet that threshold with up to 15 percentage points’ worth of credits for spending on research and development.

Mexico has rejected the U.S. plan as damaging to its own industry.

But some analysts say the latest U.S. plan wouldn’t be good for any country, let alone their workers or consumers. Few companies would be likely to redesign their production patterns to comply with the new NAFTA, preferring to pay the 2.5 per cent tariff on small vehicles and pass the cost onto customers, they argue.

Guajardo said he shared with Lighthizer a socalled “conceptual” suggestion for a different way to calculate the auto rules, indicating that they discussed broad ideas more than specific percentages.