Canadians see signs U.S. ready for NAFTA agreement

Autos may be key to a speedy resolution

OTTAWA — American trade officials are showing new-found interest in a Canadian proposal for revamping NAFTA’s automotive provisions as the U.S. seeks to swiftly conclude negotiations on the free trade pact.

And that’s being taken in some quarters as a sign the U.S. may realize it will have to settle for making only modest progress on a handful of American demands if there’s to be any hope of concluding a deal within the next few weeks.

At the conclusion of the last round of negotiations in Mexico this month, U.S. trade representative Robert Lighthizer said “time is running very short” to get a deal before “political headwinds” complicate matters.

Those headwinds? Mexico’s presidential election in July, American mid-terms in November and provincial elections in Ontario and Quebec.

For the first time, Lighthizer made public his hope of completing a NAFTA deal before a new Congress gets sworn in next January.

That would mean reaching a deal with Canada and Mexico during or very soon after the next round of talks, which have not yet been officially scheduled but are expected to start on April 8 in Washington and last at least 10 days.

Canadian government officials are privately skeptical a deal can be concluded at such a breakneck pace.

Mexico’s presidential campaign officially kicks off at the end of this month and no candidate can afford to be perceived as conceding anything to U.S. President Donald Trump, who is political kryptonite in that country.

The Canadians believe the only way it can happen is if the U.S. drops many of its controversial demands and accepts modest changes in just a few key areas — in particular on automobiles, which they have believed from the outset would be the key to a successful renegotiation.

Lighthizer himself listed autos earlier this month as one of three priorities for the U.S.

Flavio Volpe, president of the Automotive Parts Manufacturers Association, concurs with the Canadian assessment.

“I would agree with all of that,” he said in an interview.

And the fact that Lighthizer officials finally agreed to meet with him two weeks ago leads Volpe to suspect they may have come to the same conclusion.

“That was a good meeting. It gave me hope,” he said.

After all, he noted, U.S. trade officials had not accepted an invitation to meet with him during the first six months of the negotiations.

In the meeting, Volpe said the Americans reiterated their opening demand — that vehicles must have 85 per cent North American content and 50 per cent American content to be eligible for dutyfree movement across the three countries, up from the current NAFTA requirement of 62.5 per cent North American content — which has been rejected as a non-starter by Canada, Mexico and the industry.

But he said they were also “intellectually curious” about Canada’s counterproposal.

Canada has proposed that NAFTA’s list of traceable components that go into cars and trucks be updated to include not just things like steel, aluminum and plastics but also intellectual property — like the software behind the computerized parts now integral to most vehicles.