Canada reports progress on NAFTA, says 'we're not there yet'

By David Ljunggren and Veronica Gomez

OTTAWA/MEXICO CITY (Reuters) - Mexico, Canada and the United States have made good progress in their bid to modernize the NAFTA trade pact but still have work to do, Canadian Foreign Minister Chrystia Freeland said on Wednesday.

Freeland also said she would be flying to Washington for a meeting on Thursday with U.S. Trade Representative Robert Lighthizer, who is pushing hard for a quick deal in principle to finish before a July 1 presidential election in Mexico.

The three members of the North American Free Trade Agreement (NAFTA) could announce by mid-April the outlines of a settlement that would likely tackle the key issue of autos content while leaving other contentious chapters to be dealt with later, say sources familiar with the matter.

"We're making good progress on NAFTA ... having said that, we're not there yet," Freeland told business executives in Winnipeg. The meeting was televised.

One of the biggest chapters to be resolved is a U.S. demand that the North American content of vehicles made in NAFTA nations be increased to 85 percent from 62.5 percent.

A Mexican source said U.S. negotiators had shown "some flexibility" on the issue, adding that the three nations were now looking at alternatives.

Only six of the roughly 30 chapters have been closed and wide differences remain on topics such as dispute resolution and government procurement.

Canadian officials do not see how the three nations can close the remaining chapters in the next two weeks, a source familiar with Canada's negotiating position said on Wednesday.

"There's a possibility they could come up with a symbolic agreement in principle that signalled they had reached a consensus on five or six key issues," said the source, who requested anonymity given the sensitivity of the situation.

Chief negotiators will meet in Washington next week and there are no current plans for an eighth round of talks, which officials had earlier suggested would start on April 8, the source added.

U.S. President Donald Trump has threatened to ditch NAFTA if it cannot be reworked to his satisfaction, and talks to modernize the 24-year-old treaty have dragged on since August.

Trump's top economic adviser, Larry Kudlow, predicted on Wednesday that there would be "some positive news on NAFTA ... and I think the stock market is going to love that."

Moises Kalach, a senior member of the CCE business lobby, which represents Mexico's private sector in the NAFTA talks, said he expects signs of progress even if ministers do not reach a formal agreement.

The United States "is in more of a rush than before ... the window of opportunity is now open, it's a couple of weeks," Kalach said on Mexican television.

Mexican Economy Minister Ildefonso Guajardo was holding talks with Lighthizer in Washington on Wednesday ahead of a planned trilateral meeting including Freeland, the Mexican government said in a statement.

NAFTA negotiating teams have been meeting for weeks to try to narrow their differences, Guajardo said on Monday, sounding a positive note for making further advances at a regional summit of leaders in Peru that begins on April 13.

If an initial NAFTA deal is reached, a longer period will be needed to finalize technical details, Guajardo said.

(Additional reporting by Anthony Esposito and Daina Beth Solomon in Mexico City and Steve Holland in Washington; Editing by Chizu Nomiyama and Sandra Maler)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)