U.S. has not moved an inch during NAFTA talks: sources

By Anthony Esposito and David Ljunggren

MONTREAL (Reuters) – U.S. negotiators have held firm in their demands for a wide-ranging overhaul of NAFTA, three sources close to the talks said on Thursday, raising questions about whether any real movement is happening at the latest round of negotiations on the treaty.

Officials from Canada, Mexico and the United States are in Montreal for the sixth and penultimate set of talks on the North American Free Trade Agreement. Major differences remain to be settled ahead of the end-March deadline.

“We have brought flexibility, we have brought ideas, but the problem is that the United States has not moved an inch. They say, ‘It is my proposal or nothing’,” said one of the sources, who spoke to reporters on condition they not be named.

The administration of U.S. President Donald Trump, which has repeatedly threatened to walk away from the 1994 pact, wants more North American content in autos and is pressing for a sunset clause that would allow one party to pull out of the treaty after five years.

Senior Canadian and Mexican officials, who met at the World Economic Forum in Davos, struck a more upbeat note on Thursday.

Canadian Foreign Minister Chrystia Freeland said nobody was expecting a deal to be struck in the current round of talks. Mexican Economy Minister Ildefonso Guajardo said the attempt to find creative solutions on NAFTA was in a much better place than a year ago.

Guajardo said negotiators needed to listen to what Trump had promised to achieve in NAFTA reform, and try to interpret that in a way that did as little damage as possible.

At the talks in Montreal, the source cited news media reports indicating that the United States wanted to stay in the negotiations and was prepared to accept changes to its demands.

“Let’s see if that is reflected in the (talks) and what the United States will bring. If they do (show flexibility), I think we are in a position to have quite important agreements,” said the source.

On Wednesday, Canadian negotiators unveiled what they called “creative” ideas to address U.S. demands on auto content and a sunset clause. At the same time, Prime Minister Justin Trudeau urged top U.S. executives in Davos to back free trade.

Uncertainly over NAFTA’s future is weighing on some North American markets and policy makers. Bank of Canada Governor Stephen Poloz told CNBC on Thursday that NAFTA is the “number one” thing that keeps him up at night.

(Additional reportinng by Tom Miles in Davos and Andrea Hopkins in Ottawa; Editing by David Gregorio and Jonathan Oatis)

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