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U.S., Mexico delay trade text for more time to land U.S.-Canada deal

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U.S., Mexico delay trade text for more time to land U.S.-Canada deal

U.S., Mexico delay trade text for more time to land U.S.-Canada deal
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HENRY ROMERO(Reuters)
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By David Lawder and Adriana Barrera

WASHINGTON/MEXICO CITY (Reuters) - The United States and Mexico abruptly cancelled plans to publish the text of their trade agreement on Friday to give Canada and the Trump administration more time to resolve their differences and save the North American Free Trade Agreement as a trilateral pact.

Mexican Economy Minister Ildefonso Guajardo said the text was delayed due to a "very serious" attempt by Ottawa and Washington to reach a deal.

"In the next 48 hours we will know if we are going to get to a trilateral text or if we are going to have to put forward the text of the bilateral agreement," Guajardo said in televised remarks to the Mexican Senate.

Guajardo said his U.S. and Canadian counterparts "specifically requested" to delay publishing the text.

The Trump administration had threatened to proceed with a Mexico-only trade pact as U.S. talks with Canada foundered in recent weeks amid deep differences over Canada's dairy market and a mechanism for settling trade disputes.

The NAFTA text -- either bilateral or trilateral -- is due by late Sunday night to meet U.S. congressional notification requirements to allow U.S. President Donald Trump and outgoing Mexican President Enrique Pena Nieto to sign the pact by Nov. 30, Pena Nieto's final day in office.

Mexico's president-elect, Andres Manuel Lopez Obrador, told reporters in Mexico City that he would insist that all three countries be part of NAFTA and said Washington had made a new counter-proposal to Ottawa.

A spokesman for the U.S. Trade Representative's office declined to comment on the status of the U.S.-Mexico text and the talks with Canada.

Officials in the offices of Canadian Prime Minister Justin Trudeau and his foreign minister, Chrystia Freeland, did not respond to queries about the counterproposal.

Lopez Obrador told reporters in Mexico City that Trudeau asked him during a Thursday phone call "to intervene and call on the U.S. government to reach an agreement" with Canada. "We agreed to that."

He said that the NAFTA language between Washington and Mexico City was now final. "We are not going to re-open the negotiation. That you can be sure of," Lopez Obrador said.

One source close to the talks said Mexican Foreign Minister Luis Videgaray was also acting as an intermediary between Canada and the United States.

Canada's Liberal government says it does not feel bound by the latest NAFTA deadline, and it repeated on Friday that it would not bow to U.S. pressure to sign a quick deal.

"We are in a very tough negotiation with the United States over NAFTA ... there is no deadline on this. As far as we are concerned we want a deal that is good for Canadians and that's the bottom line," Transport Minister Marc Garneau told reporters in Ottawa.

THE IMPORTANCE OF CANADA

Some U.S. Democratic lawmakers said on Thursday after a meeting with U.S. Trade Representative Robert Lighthizer that they could not support a NAFTA deal without Canada.

"Canada is exceptionally important. I think it would be malpractice, both for economic and political reasons, not to have a major agreement with Canada," said Senator Ron Wyden, the top Democrat on the tax and trade Senate Finance Committee.

Trump, a Republican who blames the 1994 NAFTA pact for the loss of U.S. manufacturing jobs, trumpeted the deal with Mexico as a win for Americans and threatened to close the door on Canada if it did not sign on by Sept. 30.

Trump also floated slapping auto tariffs on Canada, which could sow disarray in supply chains, take the wind out of the sails of a resurgent Canadian economy and rattle investors already unnerved by an escalating U.S.-China trade war.

The U.S.-Mexico text will flesh out an agreement in principle that aims to rebalance automotive trade between the two countries and update NAFTA with new chapters on digital trade and stronger labour and environmental standards.

It is expected to conform to details already released on auto rules requiring an increase in regional value content to 75 percent from 62.5 percent previously, with 40 percent to 45 percent coming from "high wage" areas, effectively the United States.

Auto industry executives say it is unlikely those targets can be met if Canada is not part of the deal, given supply chains in which parts crisscross NAFTA borders multiple times.

More light is likely to be shed on the enforcement of new labour standards and trade dispute settlement arrangements. The United States has said Mexico agreed to eliminate a system of settlement panels to arbitrate disputes over anti-dumping and anti-dumping tariffs.

The release of the trade deal text starts a months-long process for U.S. congressional approval that will require a lengthy analysis by the independent U.S. international Trade Commission and notification periods before an up-or-down vote.

(Additional reporting by Ana Isabel Martinez, Diego Ore, Frank Jack Daniel, Daina Beth Solomon, Lizbeth Diaz and Anthony Esposito in Mexico City and David Ljunggren in Ottawa; Writing by David Lawder and Paul Simao; Editing by Chizu Nomiyama and Leslie Adler)

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