Mexico proposed that NAFTA allow for a review every 5 yrs

Credit Alex Covarrubias  Wikimedia Commons

The U.S.is frustrated with what it perceives to be the reluctance of Canada and Mexico to present counter-proposals to U.S. positions on key issues such as regional content requirements and dispute settlement, said a person close to the negotiations.

U.S. President Donald Trump is threatening to quit NAFTA, which has reshaped the continent's auto sector over the past 23 years, unless major changes can be made to return manufacturing jobs to the United States.

"While we have made progress on some of our efforts to modernize NAFTA, I remain concerned about the lack of headway".

The US wants to see domestic US components in cars rise to 50 percent, to the ire of Mexico and Canada.

A Canadian official said on condition of anonymity: "On the controversial proposals, we can not really negotiate as there seems to be little room to do so and little logic to the proposals". For example, the Trump Administration wants to raise the made-in-America requirements in the auto sector, kill Canada's supply management program in dairy, and restrict Mexican and Canadian access to USA government contracts.

That approach has frustrated the USA side.

Canada and Mexico do not seem willing to engage on rebalancing the North American Free Trade Agreement (NAFTA), US Trade Representative Robert Lighthizer said on Wednesday.

In the latest round, Mexico proposed limiting access to government contracts for USA firms, effectively a tit-for-tat proposal after the US made a similar move. On the issue of Buy American, the Mexicans said they could respond with equivalent Buy Mexico policies for public projects - and the biggest loser would be the U.S. That's because American companies do more construction business in Mexico than vice-versa, they argued.

"I remain concerned about the lack of headway", said US trade czar Robert Lighthizer.

They said, for instance, that there are no pre-session strategy hurdles between Canada and Mexico.

Economists, and even Guajardo, say it's unlikely Trump would actually withdraw in the coming weeks because many congressional Republicans support NAFTA.

"You can only slow-walk a negotiation for a short period of time", he said.

The CBC source said procurement was a topic during the discussions, with the USA showing no flexibility in its demand that Mexico and Canada's access should be on a dollar-for-dollar basis.

"We don't think that's a good foundation for a lasting relationship".

This round appeared to be created to lower the rhetorical temperature after an October round that ended with Freeland and Lighthizer exchanging accusations in Washington.

The Mexico City round ended with uncertainty on multiple fronts.

Talks scheduled for next month in Washington will be on a smaller scale than previous rounds. The negotiators will then move to Montreal in January.

"Some of the proposals that we have heard would not only be harmful for Canada but would be harmful for the U.S.as well", Freeland added, citing concerns from USA and Canadian auto companies.

"Chief negotiators reaffirmed their commitment to moving forward in all areas of the negotiations, in order to conclude negotiations as soon as possible", the countries said in a joint statement.

"If they reject the premise, I'm not sure where that leaves us". The Canadian and Mexican arguments were fully based on quantitative arguments. "Everybody's past feelings", Volpe said.

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