Regional News NAFTA negotiators trade barbs, indicate wide differences

WASHINGTON, (Reuters) - The top U.S. and Canadian and trade officials yesterday accused each other of sabotaging efforts to renegotiate the North American Free Trade Agreement, even as they and Mexico agreed to extend talks into the first quarter of 2018.

A seven-day round of talks in suburban Washington ended in acrimony over aggressive U.S. demands on autos, a fiveyear sunset clause on the pact itself and Canada’s dairy regulations, among other key issues. Canada’s foreign minister, Chrystia Freeland, accused Washington of pursuing a “winner take all” approach.

In a major setback, Freeland, U.S. Trade Representative Robert Lighthizer and Mexican Economy Minister Ildefonso Guajardo said they faced “significant conceptual gaps” in their views and agreed to stretch out the talks in search of solutions.

Lighthizer complained that the Mexican and Canadian sides showed no evidence of willingness to make changes that would “rebalance” NAFTA to shrink U.S. trade deficits.

He warned that U.S. companies could no longer count on NAFTA trade rules that since 1994 have encouraged investment in Mexico and Canada and that he views as primarily aimed at exporting to the United States.

“Everybody has to give up a little bit of candy, that’s really what this is about,” Lighthizer told a news briefing.

But the talks hit a wall on his proposals to radically reshape NAFTA, causing some observers to wonder whether the Trump administration intends to sink the trade pact.

Washington’s demands, previously identified as red lines by its neighbors, include forcing renegotiation of the pact every five years, reserving the lion’s share of automotive manufacturing for the United States and making it easier to pursue import barriers against some Canadian and Mexican goods.

“We have seen proposals that would turn back the clock on 23 years of predictability, openness and collaboration under NAFTA,” Freeland said.

News of the talks’ extension through to the first quarter of next year, from the end of this year, lifted the Mexican peso 1.2 percent after a volatile day of trading. The peso has fallen 7 percent since July on expectations that NAFTA would not survive.

Mexico sends about 80 percent of its exports to the United States, and is home to a host of factories for U.S. companies that manufacture products there that are then sent to the United States for sale.

Guajardo avoided direct criticism of Lighthizer’s approach, but said Mexico would stand firm against the U.S. demands.

“A bad deal would be against the interest of Mexico itself, and therefore you have my guarantee that there will not be a bad deal,” Guajardo told reporters.

He added that rather than being intransigent, Mexico and Canada were taking a “good sense” approach to the talks.