Nafta Deadline Arrives With Little Prospect for an Agreement

(Bloomberg) -- House Speaker Paul Ryan warned a new Nafta deal had to be completed by Thursday, but President Donald Trump’s trade chief told lawmakers he expects that deadline will not be met.

Citing American trade law, Ryan had said May 17 was the last day to receive notice of intent to sign a deal for a new North American Free Trade Agreement that could be passed by the current Congress before a new crop of lawmakers change the political calculus. Talks, however, remain hung up on key issues.

U.S. Trade Representative Robert Lighthizer told lawmakers in a meeting on Wednesday that he didn’t think a deal could be completed by then or in the immediate term, according to two Democratic representatives who attended the meeting.

“He was not optimistic this was all going to get wrapped up in the next 24 hours, to be sure," said Representative Ron Kind of Wisconsin, the chairman emeritus of the New Democrat Coalition, referring to Lighthizer.

Kind was one of about 35 members of Congress who met with the trade representative. “He felt there was some back-sliding going on with Mexico, and Canada, to a certain extent,” Kind added.

The lack of an agreement doesn’t mean the Nafta talks are dead -- Mexico and Canada have downplayed the need to reach a deal this week, with negotiators saying a series of challenges remain after about nine months of formal discussions.

Trade talks normally take years. The existing deal remains in force and negotiations will continue, but the window to pass it in the current Congress is about to close as U.S. attention shifts to other challenges, like the simmering trade dispute with China.

Lighthizer ‘Hopeful’

Lighthizer is scheduled to attend meetings on Thursday and Friday with the Chinese vice premier, Liu He.

He has not met with his Nafta counterparts since last week.

Kind said Lighthizer was “hopeful” that he could rebalance the trade agreement to ensure bipartisan support. “We also told him, look, listen, it’s more important to get a good negotiated agreement, rather than a fast one."

Representative Gerald Connolly, a Virginia Democrat who was also at the meeting, said that Lighthizer "indicated it is unlikely that an agreement would be reached by tomorrow."

Lighthizer’s office did not immediately respond to a request for comment.

Since his presidential campaign, Trump has called the Nafta accord, which took effect in 1994, a "horrible" deal for the U.S. and threatened to withdraw if it could not be renegotiated. Any country can quit on six months’ notice; none of the parties has given that notice.

“An awful lot of things would have to go right in order for this to be voted on in this Congress,” said Eric Miller, a Washington-based trade adviser and Woodrow Wilson Center fellow.

Now, or Later

Ryan has said the deadline is just the cold reality of U.S. trade law. “We can’t work a bill unless we have an agreement that’s in writing that we can work, and that hasn’t occurred yet,” Ryan told reporters in Washington. “This isn’t my arbitrary deadline.”

Kevin Brady, the Republican chairman of the House Ways and Means Committee that has oversight over trade, this week also said there’s not much wiggle room on May 17.

Earlier Wednesday, Mexican Economy Minister Ildefonso Guajardo said a deal by Thursday was practically impossible, but it was possible to reach one later this month or early June and still pass it under the current U.S. Congress. Mexico is under pressure to strike a deal before presidential elections in July further inject politics in negotiations. Canadian Foreign Affairs Minister Chrystia Freeland’s spokesman called the deadline a U.S. issue.

A Canadian official, speaking on condition of anonymity, said it will be up to Trump to decide whether he wanted a compromise deal now, or if he’d rather hold out for the hope of something better in the next Congress.

Lori Wallach, director of Public Citizen’s Global Trade Watch and a supporter of some of the Trump administration’s Nafta demands such as a five-year sunset clause, pushed back against Ryan’s deadline. She told reporters Wednesday that May 17 was an “arbitrary” date and that the real deadline for a 2018 vote was “probably around mid-June.

Even if the parties wanted to seal something quickly, there would have to be a breakthrough on multiple fronts. The countries remain divided on key issues like auto sector rules, a sunset clause and dispute settlement panels.

“The state of play is uncertainty,” said Maryscott Greenwood, chief executive officer of the Canadian American Business Council in Washington, which represents firms in both countries. “Mexico and Canada clearly have a desire to modernize Nafta, and it’s unclear if the U.S. has a desire to modernize Nafta on Speaker Ryan’s timeline.”

To contact the reporters on this story: Josh Wingrove in Ottawa at jwingrove4@bloomberg.net;Jenny Leonard in Washington at jleonard67@bloomberg.net;Eric Martin in Mexico City at emartin21@bloomberg.net;Billy House in Washington at bhouse5@bloomberg.net

To contact the editors responsible for this story: Sarah McGregor at smcgregor5@bloomberg.net, John Harney

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