BLOOMBERG: U.S. Demands Risk Scuttling Nafta Talks





U.S. officials in Nafta negotiations are making proposals on battleground issues that Canada and Mexico would never agree to, intensifying doubts of reaching compromise on their tight timeline, according to three officials familiar with the talks.


U.S. proposals on government procurement, textiles and fresh produce are seen by the Canadian and Mexican governments as red-line issues with little or no hope of agreement, said the officials, who spoke on the condition of anonymity because the discussions are private. The last round of talks that ended Wednesday in Ottawa took on a more negative tone at times compared with previous sessions, the officials said.

The U.S. stance sets up a showdown in the next negotiating session in Washington from Oct. 11-15. Officials expect the U.S. will present contentious proposals on automotive rules of origin — the share of a car that must be made in the three countries to get Nafta’s tariff-free benefits — and on an overall U.S.-specific content requirement. They expect those will also be essentially impossible for the other countries to accept.

The U.S. Trade Representative’s office, which is leading the U.S. Nafta negotiations, didn’t immediately respond to requests for comment.


President Donald Trump has made cutting the trade deficit as the top-line goal of a Nafta re-negotiation, and autos is the main source of America’s $64 billion goods gap with Mexico. The administration launched the revamp in August by warning that a revised version of the deal that underpins $1.2 trillion of trade annually must have better terms for American workers and industries.

Two of the officials speculated that the U.S. is designing such hard-line positions to make it impossible to reach a settlement.

Trump has repeatedly threatened to pull out of Nafta, saying in an interview in April that he was “psyched” to terminate the deal but reconsidered after Canada and Mexico asked him to renegotiate instead. Commerce Secretary Wilbur Ross reiterated the threat earlier this month, adding that Nafta “has not worked the way it was intended.”

U.S. Trade Representative Robert Lighthizer told reporters Wednesday that “significant progress continues to be made” in areas including competition, state-owned enterprises, digital trade and telecommunications. But he said “there is an enormous amount of work to be done, including on some very difficult and contentious issues.”


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