Grim reality of NAFTA talks sets in after tough U.S. demands

ARLINGTON, Va. (Reuters) - Negotiators from Canada and Mexico grappled with US demands to drastically alter the North American Free Trade Agreement on Saturday, as talks over renewal of the pact vilified by President Donald Trump ran through a fourth straight day.

Some downcast participants said the demands, unveiled this week in line with Trump’s “America First” agenda, have increased the odds of NAFTA’s demise. At the very least, they could make it impossible to reach a deal renewing the treaty before a year-end deadline.

“The atmosphere is complicated,” one trade official told reporters, adding that his fears about some “pretty harsh, pretty horrible” demands from the US side of the negotiating table were coming true.

Speaking on condition of anonymity because the talks are confidential, the official added the US stance “has a clear protectionist bias, a bias that is trying to eradicate, minimize, eliminate the mechanisms that existed in NAFTA in the last 20 years.”

Trump, who blamed NAFTA for shifting US manufacturing jobs to Mexico during his election campaign last year, has repeatedly vowed to scrap the treaty unless it can be renegotiated on more favourable terms.

At the mid-point of seven scheduled negotiating rounds, many of the US proposals appear aimed at turning back the clock on changes in the global economy since NAFTA took effect 23 years ago. Collapse of the deal could reverberate well beyond North America, where trade between the United States, Canada and Mexico has more than quadrupled since 1994.

Former Mexican Trade Minister Jaime Serra, who was responsible for negotiating the original trade pact, said there was no economic logic to the US demands.

“Issues are being put on the table that are practically absurd,” he told Reuters. “I don’t know if these are poison pills, or whether it’s a negotiating position or whether they really believe they’re putting forward sensible things.”