Canada sees progress on crucial autos file at NAFTA talks

By Makini Brice

WASHINGTON (Reuters) – Canadian, Mexican and U.S. ministers seeking to revamp the NAFTA trade deal have made good progress on the vital question of autos content, Canadian Foreign Minister Chrystia Freeland said on Thursday as pressure to wrap up a deal intensified.

Freeland spoke after Washington talks with U.S. Trade Representative Robert Lighthizer and Mexican Economy Minister Ildefonso Guajardo in search of a breakthrough on the $1.2 trillion North American Free Trade Agreement.

Although Lighthizer is pressing for a quick deal to avoid clashing with a July 1 presidential election in Mexico, major differences remain on several U.S. demands.

In particular, Canada and Mexico have struggled with the U.S. insistence for tougher rules of origin, which dictate how much North American content vehicles made in NAFTA nations have to contain.

“I will say that we have been making good progress on the rules of origin in our conversations with the U.S., with Mexico, and in our trilateral conversation,” Freeland told reporters, but declined to give details.

Asked about a CNBC report that the United States wanted a deal in the next three weeks, she said, “Our commitment is to get a really good win-win-win outcome as quickly as possible and…we’ll work as long as it takes to get a great deal”.

Freeland said she, Lighthizer and Guajardo would meet again on Friday.

A deal on automotive content rules would remove one of the biggest sticking points in talks to update the 24-year-old pact.

The Trump administration had initially demanded that North American-built vehicles contain 85 percent content made in NAFTA countries by value, up from the current 62.5 percent.

Auto industry executives said last week that Washington had significantly softened this in an effort to move more quickly towards a deal in the next few weeks.

Other areas of contention include U.S. proposals to overhaul dispute resolution mechanisms and introduce a clause that could automatically kill NAFTA after five years.

U.S. President Donald Trump, who regularly threatens to walk away from NAFTA unless major changes are made, says the pact has cost many U.S. manufacturing jobs.

Canadian Prime Minister Justin Trudeau told reporters in London on Thursday that “we’ve seen an opportunity to make significant progress on the NAFTA file”.

Lighthizer injected fresh momentum into the talks in early March by floating the prospect of a quick deal “in principle”, though Mexican and Canadian officials say only an agreement covering the essential details would be viable.

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