US and Mexico target Nafta cars deal by end of week

Workers in a car factory (Bloomberg pic)

MEXICO CITY: US and Mexican negotiators are working to reach a Nafta cars deal this week that would allow Canada to rejoin talks and move toward resolving the toughest issues that affect all three nations, according to three people familiar with the discussions.

Getting an agreement on automobiles would let the US turn its attention to demands that only affect Canada, such as increasing American access to the dairy market north of the border. It would also leave the thorniest issues that affect all three nations, like a so-called sunset clause and dispute-settlement panels, to be worked out with all countries at the table, according to the people, who asked not to be named discussing private talks.

The press offices of Mexico’s Economy Ministry and US Trade Representative Robert Lighthizer declined to comment. The peso advanced as much as 0.2% to 18.4130 per US dollar, trading near a three-month high in afternoon trading. The Canadian dollar erased an earlier loss and climbed 0.2% to C$1.3031 per US dollar.

The US has been looking for ways to discourage factories and jobs from moving to Mexico because its labour is cheaper. Canada’s automotive wages are closer to those of the US, making that issue one where its interests align with the US. Jerry Dias, the Canadian labour leader whose Unifor union represents autoworkers from his country, has long complained about wage and workers’ rights disparities that lead companies to move jobs to Mexico, a criticism that’s shared by US President Donald Trump.

Mexican Economy Minister Ildefonso Guajardo, Foreign Minister Luis Videgaray and Jesus Seade, a representative of the next President Andres Manuel Lopez Obrador, met Wednesday with Lighthizer in Washington. Guajardo afterward said meetings will resume at 10am Thursday and that “we are definitely encouraged to keep on working.”

When asked whether negotiations over automobile issues within Nafta could be finished this week, Guajardo said “nothing is agreed until everything is agreed.” The meeting marked the third straight week of talks between the two nations, which are nearing an accord on content and salaries for auto manufacturing, the three people said.

The US, Canada and Mexico are pushing for an agreement this month in order to allow sufficient time for Trump and Mexican President Enrique Pena Nieto to sign the pact before Lopez Obrador takes office December 1. That would take the pressure off Lopez Obrador and allow him to focus on other priorities.

While Canada hasn’t attended meetings in the past three weeks, and Trump administration officials have been more publicly optimistic about talks with Mexico, Canada and Mexico have reiterated that they expect Nafta to remain a three-nation agreement.

Canada’s Ambassador to the US, David MacNaughton, was set to be in Ottawa on Wednesday for meetings with officials from Prime Minister Justin Trudeau’s office in anticipation of rejoining Nafta talks, according to a government official familiar with the schedule.