New Nafta talks aim to clear pathway to toughest issues

MEXICO CITY Mexico and Canada aim to finish reworking broader chapters of the Nafta trade deal with the US in talks that started yesterday.

In six months, negotiators have ground out progress on technical details of a revamped North American Free Trade Agreement but have made little advance on the radical demands made by the administration of US President Donald Trump.

Ranging from demands for major changes to automotive content rules, to imposing a clause that could automatically kill Nafta after five years, the chief stumbling blocks laid by the White House look unlikely to be removed in the latest round.

But if the three teams manage to iron out differences on areas of broader consensus, officials hope the political leaders will turn their attention to brokering a compromise on trickier US proposals.

Mr Bosco de la Vega, head of the Mexican Natural Agricultural Council, believes once agreement is reached on technical chapters such as state-owned enterprises, barriers to trade and e-commerce, about 10 per cent of the modernised accord would be left over for political leaders to work out.

Mexico hopes to build on the previous round of talks in Montreal, when Canada floated what it called "creative" solutions to the US demands.

Canada countered US demands for a higher auto content requirement with a proposal to include expenses for engineering, research and development and other high-value work in the total.

Under Nafta, at least 62.5 per cent of the net cost of a passenger car or light truck must originate in the region to avoid tariffs.

Mr Trump wants the threshold raised to 85 per cent. Final agreement would need to be reached between him and auto sector bosses in the US, a source said.

The North American auto industry has pushed back against his demands, arguing it would hurt competitiveness and regional supply chains. - REUTERS