Talks aimed at revising the North American Free Trade Agreement (NAFTA) are starting again at a high level after a tit-for-tat trade war that broke out between the United States and both Canada and Mexico.
While NAFTA negotiations at the working level remain on hold, Canadian Foreign Affairs Minister Chrystia Freeland is scheduled to discuss NAFTA this when she meets in Mexico City with officials from the incoming and outgoing Mexican administrations. On Thursday, Mexican Economy Minister Ildefonso Guajardo is traveling to Washington to discuss the status of NAFTA talks with U.S. Trade Representative Robert Lighthizer.
These bilateral gatherings mark the most activity on NAFTA negotiations since May of this year.
The talks, which have been underway since last August, stalled in the lead-up to Mexico’s July 1 presidential election. Andres Manuel Lopez Obrador won and takes office this December. The challenge for negotiators is picking up from where they left off, with gaping differences remaining over key issues including rules for auto content and a sunset clause that would kill the deal after five years unless the parties agreed to extend it.
Further complicating the talks are U.S. President Donald Trump’s tariffs on steel and aluminum that took effect on June 1 for Canada and Mexico, which triggered immediate retaliation from both neighbours, and the administration’s threat to impose duties on foreign vehicles and auto parts. Mexico and Canada are the largest source of auto imports to the U.S.
Trump has also threatened to scrap NAFTA altogether and instead pursue bilateral deals with Canada and Mexico, saying last week he may seek separate talks with Mexico as a priority before Canada. On Monday, Trump said he was talking with Lopez Obrador about doing something "very dramatic, very positive" on trade, though the Mexican president-elect later said he didn’t know to what Trump was referring.
While the stakes are high, expectations are low that this week will yield sufficient progress to finish a deal anytime soon. And even if talks were concluded this year, key Republicans in Congress have signaled that time has run out for lawmakers to consider the new agreement for a vote before a new Congress and Senate takes over in 2019 following midterm elections this fall.
