Governors Look to Save Nafta Amid Washington’s Tough Talk

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WASHINGTON — As the Trump administration continues to cast doubt on the future viability of the North American Free Trade Agreement, American business leaders, members of Congress and governors have paraded into the White House to warn about the economic dangers of unraveling the pact.

Government officials and business executives have met in recent weeks with President Trump and Vice President Pence, a development that’s being viewed by proponents of Nafta as a positive sign for the future of the agreement. But as American, Canadian and Mexican trade negotiators met this week in Washington to reach a new deal, there has been no sign that the United States is ready to alter its tough negotiating stance.

Mr. Trump continues to criticize the deal and talk about withdrawing from the 1994 pact, including at a rally last Friday in Pensacola, Fla. And talks with Canadian and Mexican negotiators, which took place a few blocks from the White House, concluded Friday still deadlocked over several proposals by the United States.

Instead, negotiators meeting in what they call an “intersessional” round this week focused on forging agreements on less contentious parts of the pact, including reducing regulatory barriers, setting standards related to the electricity sector, and regulating state-owned enterprises.

Officials are trying to lay the foundation to announce more progress at the sixth official round of negotiations over Nafta, which is scheduled to take place in Montreal on Jan. 23-28. The lead negotiators are angling to reach agreement on as many as six of the pact’s roughly two dozen legal chapters at that meeting, people familiar with the negotiations say.

It’s an ambitious goal, but one that many see as necessary, given that the timeline for resolving the pact will soon run up against political issues next year, including a presidential election in Mexico and midterm elections in the United States.

With time running out and the United States continuing to take a tough stance, industry leaders and state officials have begun trying to convince the administration to avoid upsetting a trade pact they say has benefited many American companies and communities. In 2016, 33 American states counted Canada as their biggest export market, while six states ranked Mexico first.

Pushback from automakers and farmers, two groups that are likely to be harmed if the United States withdraws from Nafta, helped result in the series of meetings between the administration and Nafta’s supporters.

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Mr. Pence discussed Nafta’s importance to the economy with the governor of Indiana and auto manufacturers on Tuesday, and the governors of Arkansas, Iowa, Michigan and Tennessee on Thursday. Last week, Mr. Trump and Robert Lighthizer, the trade adviser who is leading the Nafta negotiations, held several meetings with senators to talk about the pact. On Nov. 27, Mr. Pence met with Mr. Lighthizer and representatives from the United States’ three largest automakers.

In a statement following the meeting on Thursday, Asa Hutchinson, the governor of Arkansas, said he had told the administration that his state “must be able to continue its access to North American markets unimpeded by trade barriers.”

“It is clear that there is great potential for harm in Arkansas, especially to our farmers, if the United States reverses course regarding cross-border trade,” Mr. Hutchinson said.

The meetings followed a somewhat contentious visit by Mr. Pence to the Republican Governors Association’s annual conference in mid-November. At the meeting, in Austin, Tex., governors complained to the vice president about the state of Nafta negotiations and their inability to air concerns with the United States trade representative, according to people close to the talks who were not authorized to speak.

The latest round of meetings were a bit of a push and pull, according to those familiar with the talks. Mr. Lighthizer, the strategist behind many of the administration’s goals for Nafta, stood his ground in these meetings and tried to differentiate legitimate complaints from hype, these people said.

To those concerned about agricultural trade, Mr. Lighthizer emphasized that the administration’s goal is to preserve duty-free access by successfully reworking Nafta and remaining in the pact. To auto companies and officials concerned about tougher manufacturing requirements, he talked about creating a transition period that would help companies gradually meet the stricter rules.

The administration’s supporters have argued that panic among industry leaders and elected officials about the United States leaving Nafta is a false narrative designed to chip away at the White House’s support for eliciting more favorable terms for America.

“The Chamber of Commerce is playing this as status quo or pull out, that’s the way they want to present this,” said Sherrod Brown, a Democrat from Ohio who identifies as an ally of the administration on trade. “But that’s not what this is about.”

Yet the United States, Canada and Mexico remain deeply split over American proposals to rewrite rules that govern government purchases, automobile manufacturing, the settlement of trade disputes, and a “sunset clause” that would cause the pact to automatically expire unless the members vote to continue it.

Significant gaps also remain between the Nafta partners on topics that have been less in focus in the American administration, including labor standards and intellectual property.

Canada and Mexico are still mostly refusing to engage on the United States’ biggest proposals, which opponents have termed “poison pills” for their potential to divide the Nafta partners and kill the pact entirely.

There are signs that the United States is looking to Mexico, which is heavily dependent on the pact, to compromise first. Mr. Lighthizer dined with Mexico’s economy minister, Ildefonso Guajardo, on the sidelines of World Trade Organization meetings in Buenos Aires.

Mexico and Canada have also been working to influence the United States to compromise on its negotiating positions.

Arturo Sarukhan, a senior fellow at the Brookings Institution and former Mexican diplomat, said Canada, Mexico and the private sector in all three countries had adopted an explicit policy of appealing to governors and mayors of both parties “because of the political heft they can bring to bear on this White House.”

Canadians, in particular, have initiated an outreach in the last year to American governors, as well as Congress and the White House, to help defuse tensions surrounding trade and Nafta.

In January, the prime minister’s office created a new unit focused on Canada-United States relations and assigned certain ministers to focus on certain states, Canadian officials said. Navdeep Bains, the Canadian minister of innovation, who is responsible for the auto sector, was dispatched to Michigan. Transport minister Marc Garneau, the first Canadian in space, was sent to Florida, the home of NASA and Senator Bill Nelson, who has also served as an astronaut.

Justin Trudeau, the Canadian prime minister, also joined the outreach, meeting with the governor of Texas in March and the governor of Iowa in July, and visiting the House Ways and Means committee in October.

Mr. Sarukhan greeted the surge in visits of lawmakers and governors to the White House as potentially good news for the survival of the pact, but said that, in his view, the risk of the United States withdrawing remained high.

“Whether it’s the proverbial too little too late, or it really has an impact on this administration,” he said, “I think we still have to wait and see.”