Push for Nafta Forges On as Congress, Tariff Deadlines Loom

(Bloomberg) -- Canada’s foreign minister is holding talks in Washington as the clock ticks down to reach a deal on updating the North American Free Trade Agreement that could pass Congress this year and skirt metal tariffs.

Chrystia Freeland spoke to reporters Tuesday afternoon in Washington after meeting for more than two hours with U.S. Trade Representative Robert Lighthizer. The two will speak again later in the day by phone, she said. Freeland will be in Washington through Wednesday, according to a statement from her office, which didn’t provide a detailed itinerary.

“Over the past week our teams have been very intensely engaged,” she told reporters outside Lighthizer’s office building, adding that she has also been speaking with Mexico’s Economy Minister Ildefonso Guajardo. “We have continued working hard on the negotiation.”

Time is running out. The U.S. has exempted Canada and Mexico so far from tariffs on steel and aluminum, but tied that to Nafta talks. Those exemptions are set to expire Friday morning, at the end of what the White House has called a “final” extension. U.S. House Speaker Paul Ryan has also suggested a Nafta deal is needed around then to pass the current Congress. Adding to pressure is a Mexican election on July 1 that could usher in populist Andres Manuel Lopez Obrador as president, and the new threat of auto tariffs, which would hurt Canada and Mexico.

The trio of Nafta ministers doesn’t look set to meet. Mexico’s Guajardo, leading Nafta talks for his country, is in Paris on Tuesday and Wednesday for Organisation for Economic Co-operation and Development meetings. Lighthizer attended those meetings last year and is expected to this year, but hasn’t formally confirmed a trip.

Nafta talks have lately focused largely on the automotive sector, though other key barriers remain, such as over U.S. demands for an automatic termination clause. Mexico is said to have offered a major concession on autos -- agreeing to require 20 percent of a car is built at high wages -- in exchange for the U.S. dropping other controversial provisions. The U.S. hasn’t publicly responded.

Speaking Monday in Ottawa, Freeland said the government is standing “firmly behind” her country’s autoworkers, and chastised U.S. officials for the premise of auto tariffs -- that Canada’s vehicle-manufacturing industry threatened U.S. national security. “The idea that Canada and Canadian cars could pose any kind of security threat to the United States is frankly absurd, and I have made that clear to the U.S. administration,” Freeland told lawmakers in Ottawa. She repeated that argument to reporters in Washington on Tuesday.

Guajardo said last week he sees a 40 percent chance of reaching a Nafta deal before July 1, Mexico’s election day. Unifor President Jerry Dias, whose union represents Canadian autoworkers and others, said there are many barriers to a deal.

“They have a lot of foolishness on the table that nobody’s going to agree to,” Dias said in an interview aired Sunday on Global News, referring to U.S. proposals. He frequently downplays the likelihood of reaching a deal, and did so again. “The talks will continue, but there is no way that we can get this thing done in the short term.”

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