July 19, 2017 / 3:38 PM / a month ago

Exclusive: U.S., Canada, Mexico agree on fast-paced NAFTA talks - sources

5 Min Read

FILE PHOTO - U.S. President Donald Trump and Canadian Prime Minister Justin Trudeau in Washington, DC, U.S. on February 13, 2017.Kevin Lamarque/File Photo

MEXICO CITY/OTTAWA (Reuters) - U.S., Mexican and Canadian officials have agreed to an aggressive timetable to renegotiate the North American Free Trade Agreement (NAFTA), sources said, aiming to conclude early next year to avoid Mexico’s 2018 presidential elections.

The plan is to hold seven rounds of talks at three-week intervals, according to two Mexican officials who asked not to be identified because of the sensitivity of the issue.

Described by one Mexican official as a "very aggressive calendar," the sources said the goal was to conclude the talks before the electoral campaign was in full swing.

Negotiators fear the renegotiation process could become a political punching bag in Mexico due to President Donald Trump's repeated swipes at Mexico and as Andres Manuel Lopez Obrador from the leftist National Regeneration Movement (MORENA) party leads a number of early polls for next year's election.

Trump has pushed for a renegotiation of NAFTA, threatening to dump it if he cannot rework the accord to the benefit of the United States. He argues it has fueled a trade deficit with Mexico and cost thousands of U.S. jobs.

The first round of talks to upgrade the accord underpinning over a trillion dollars of trilateral trade between the United States, Mexico and Canada is due to take place in Washington from Aug. 16-20, U.S. Trade Representative Robert Lighthizer said on Wednesday.

The talks will alternate sites among the three countries and the second round is slated to happen in Mexico, one of the Mexican sources said. However, a U.S. Trade Representative spokesperson said the countries have not all agreed to the number of rounds and the frequency of talks.

A well-placed Canadian source familiar with discussions said the United States had proposed the "staggering" schedule but could also not confirm whether an agreement had been reached on the timetable.

U.S. administration officials said Mexico had asked for the negotiations to be completed by the end of the year before the Mexican presidential election heats up.

Lighthizer has said he hopes the negotiations could be wrapped up by the end of the year, while noting that he was not prepared to set a deadline for the talks. John Melle, assistant U.S. trade representative for the Western Hemisphere, will lead the day-to-day negotiations of NAFTA for the United States.

Lighthizer, who by U.S. rules is the chief NAFTA negotiator, said in June that completing the negotiations by the year end was a "very, very quick time frame and we're not going to have a bad agreement to save time."

Impact on Immigration

David MacNaughton, Canada's ambassador to Washington, told reporters on Tuesday, "Obviously if we could get a clarification of the trading relationship sooner rather than later, it would be better, but having said that, we're not going to rush into a bad deal."

Canadian officials said there is no chance of making substantial changes to NAFTA if talks wrap up by the end of 2017. Modernizing the pact in a serious way will take two years, they forecast.

After the United States unveiled on Monday its much-anticipated objectives for the renegotiation, the agenda was generally viewed as fairly limited in scope and greeted as such by Mexico and Canada.

A U.S. administration official and a congressional source said there were growing concerns within the Trump administration, on Capitol Hill and in the business community that Trump policies could embolden anti-U.S. populist Lopez Obrador, who has tapped into Mexico's resentment toward Trump.

Some see the series of recent high-level visits by Trump cabinet members to Mexico, including Homeland Security Secretary John Kelly, Secretary of State Rex Tillerson and Energy Secretary Rick Perry, as signs of those concerns.

U.S. officials caution that if things go badly on the trade front, Mexico would gain leverage on immigration. It has been praised by U.S. officials for curbing the flow of Central American immigrants through Mexico, but it could decide to reduce its border enforcement.

"If the current president of Mexico were to capitulate in any major way to Trump's unreasonable demands, then it would be a huge bonanza for Lopez Obrador," said Fred Bergsten, a senior fellow at the Peterson Institute for International Economics.

Reporting by Anthony Esposito and David Ljunggren; Additional reporting by Dave Graham in Mexico City and Lesley Wroughton in Washington; Editing by Cynthia Osterman

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