Not much progress expected during fifth round of NAFTA talks

Despite the general lack of progress, the 2018 Mexican election promises to instill some fire into the negotiations.

On Tuesday, negotiators from Canada, Mexico and the U.S., completed their fifth round of negotiations aimed at reworking the North American Free Trade Agreement (NAFTA).

The talks have brewed a stalemate on the contentious proposal to ramp up the regional content for automobiles.

As per lobbyists and officials, Canada and Mexico are expected to firmly push back the U.S. demand for raising the minimum threshold for NAFTA autos to 85% from 62.5%.

The U.S. proposal is central to U.S. President Donald Trump’s America First strategy to make America great again by bringing back manufacturing jobs to the U.S. The move has drawn flak from the auto industry which has questioned its viability.

According to Canadian and Mexican officials, the U.S. should explain how its auto plan can gain traction in view of the heavy skepticism loaded against it. Both countries have repeatedly hinted that they have absolutely no intention of responding to its demand with a counterproposal.

Tuesday will be the 7th day negotiators would have met in Mexico with officials hoping to make announcements that can inject some momentum into the negotiations over pessimistic fears that the talks are running out of steam.

The talks have however covered much ground: the U.S. has taken on a less confrontational tone in comparison to talks held in October where it set out a series of demands, including the auto plan, said Caroline Freund, a senior fellow and trade expert with the Peterson Institute for International Economics in Washington.

“With U.S. tax reform front and center, the U.S. government really didn’t want to make this a big round, and (wanted) to let the technocrats get on and do the negotiating on the less controversial bits,” explained Freund.

In fact, expectations for any significant progress, during this fifth round, was scaled back with the three countries announcing their ministers in charge of the NAFTA trade portfolio would not be attending the talks.

They have however agreed to continue negotiations through the end of March, when the campaign for the 2018 Mexican presidential election will get underway.

Incidentally, negotiators have said they want the NAFTA revamp not to be politicized by the Mexican election campaign.

The 1994 landmark NAFTA agreement underpins more than $1 trillion in annual trilateral trade.

Trump’s repeated threats of walking out of the agreement has spooked investors in Mexico where 80% of its exports have destinations in the U.S.

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