Nafta Talks Ramp Up in Washington as Trump Says It's Going Well

(Bloomberg) -- As President Donald Trump says Nafta talks are “doing very nicely,” negotiations between ministers from the U.S., Mexico and Canada are ramping up in Washington in a redoubled push for a deal.

Mexican Economy Minister Ildefonso Guajardo and Canadian Foreign Affairs Minister Chrystia Freeland both attended meetings Tuesday at the U.S. Trade Representative’s Office in Washington. High-level meetings are expected to continue Wednesday and probably Thursday, according to an official familiar with talks, speaking on condition of anonymity. The push comes ahead of a U.S. trade mission to China, as Mexican and U.S. elections bear down.

Nafta Talks Ramp Up in Washington as Trump Says It's Going Well

The sides have picked up the pace in recent weeks, though the goal is unclear. The U.S. has mused about a deal “in principle”; Mexico says it’s seeking a comprehensive agreement to update a 24-year-old deal. Meanwhile, Trump’s latest comments are a mixed signal, saying talks are going well but expressing concern about a quick deal.

“Nafta as you know is moving along,” Trump said in a meeting with French President Emmanuel Macron on Tuesday in Washington. “I could make a deal very quickly, but I’m not sure that’s in the best interest of the United States. We’ll see what happens, but we’re doing very well.”

Under optimistic conditions, negotiators have a 75 percent chance of reaching a deal soon, Moises Kalach, the trade head for the Mexican business chamber known as CCE, said in an interview Tuesday with Grupo Formula radio. An agreement on an updated North American Free Trade Agreement could be reached in the next 10 days, he said.

Nafta Talks Ramp Up in Washington as Trump Says It's Going Well

If no deal is reached in the coming days, it could make sense to put negotiations on hold until the end of the year or early 2019, given the presidential election in Mexico in July and the U.S. congressional midterm vote in November, Kalach said.

Negotiating teams have agreed on nine or 10 more topic areas that are ready for ministers’ review and approval, Kalach said.

Washington Talks

Even so, wide differences remain on some of the toughest issues, such as tightening up the rules of origin for cars and their components, aimed at boosting American manufacturing but that could upend existing supply chains.

Negotiators have also finished work on the telecommunications chapter, two people familiar with the talks said last week, asking not to be identified discussing private negotiations.

Canada’s Freeland said Tuesday’s talks focused on automotive rules of origin -- a crucial sticking point, which she sees as the linchpin to a deal -- and noted that negotiators have been having constructive talks on the subject for some time, moved ahead in part due to some creative thinking put forward by the U.S. side last month.

Conceding that “there are other issues that still need to be resolved,” she maintained that “we think a win-win-win agreement is possible.”

Nafta Talks Ramp Up in Washington as Trump Says It's Going Well

Trump’s negotiators have been pushing for a deal by early May. That would meet the U.S. timeline for having an agreement approved, at the latest, by the lame-duck session that will follow U.S. congressional elections on Nov. 6, said two people familiar with the negotiations.

Guajardo said this month he sees an 80 percent chance of an agreement by the first week of May. Negotiators are also rushing for a deal as Mexico approaches elections on July 1. Mexican left-wing presidential candidate Andres Manuel Lopez Obrador, who has stoked investor concern with talk of canceling an airport and slowing an oil-industry opening, has consistently led in polls.

This week’s talks are set to cover the most ground since the final official negotiating round in Mexico City in early March, according to a preliminary agenda obtained by Bloomberg. Topics include automotive rules, agriculture, and legal and institutional matters such as dispute settlement mechanisms.

In the spirit of what Guajardo has called a permanent round of negotiation, Freeland told reporters on Tuesday that "we are going to be working hard late into the night based on some of the issues, some of the points that were raised today, and we’ll be back at it tomorrow."

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