U.S. Hopeful of Framework Nafta Deal Soon, Lighthizer Says

(Bloomberg) -- The Trump administration is hopeful it can reach agreement “in principle” on a new North American Free Trade Agreement “in the next little bit,” the president’s top trade negotiator said as the U.S. touted a new accord with South Korea.

“I’m hopeful,” U.S. Trade Representative Robert Lighthizer said Wednesday in an interview on CNBC television. “If there’s a real effort made to try to close out and to compromise and do some of the things we all know we should do, I’m optimistic we can get something done in principle in the next little bit.”

However, Lighthizer cautioned there’s a “short window” to clinch a deal because of “elections,” a likely reference to a presidential vote in Mexico in July and U.S. midterm congressional elections in November. Canada’s chief Nafta negotiator, meanwhile, cautioned that much work remains and that it’s not clear what such a deal would look like, adding the country hasn’t yet been formally invited to the next negotiating round.

“We have yet to see exactly what the U.S. means by an agreement in principle,” Steve Verheul told reporters Wednesday in Ottawa. The U.S. hasn’t proposed a framework agreement yet, he said. “And if we are going to achieve that we would clearly require some considerable flexibility in U.S. positions, in order to be able to obtain that, as would Mexico.”

‘Significant Gaps’

Politicians from the U.S., Canada and Mexico are showing increasing optimism they can reach a deal as negotiators prepare for what would be the eighth round of talks, expected to get underway next month in Washington. The U.S. has said it wants quick progress, and has threatened to impose tariffs on steel and aluminum imports from Canada and Mexico on May 1 without a deal.

There are still “significant gaps,” Verheul said, including on the auto sector, dispute settlement panels, government procurement, a U.S. proposal for a sunset clause and “a number of other issues.” The Canadian negotiator conceded that there’s room for progress but said the wheels aren’t yet in motion for talks.

“We can accomplish quite a bit between now and then, and we’ve made it clear to the U.S. that we will be prepared to negotiate at any time, any place, for as long as they are prepared to negotiate, but so far we haven’t really seen that process get going,” he said. “I would re-emphasize that we have to see flexibility from all sides if we have any hope of making progress.”

The U.S. this week confirmed it has reached agreement in principle on a revised free-trade agreement with South Korea. Under the revamped deal, U.S. automakers will gain greater access to the South Korean market. The two countries are also working on a related agreement on currency manipulation aimed at securing Seoul’s commitment to avoid competitive devaluations of its currency.

Mexico and Canada have so far balked at contentious proposals by the U.S. designed to “rebalance” trade flows on the continent, including tighter restrictions on regional content in cars and rules on procurement that favor the U.S.

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