A preliminary deal on the North American Free Trade Agreement may be coming as early as this month. A revised NAFTA would be a political win ahead of the congressional midterm elections in November. The Trump administration would probably have to finalize a new trade agreement before the end of May for it to be approved by the current Republican-controlled congress.
Officials in the three countries have made a series of upbeat comments about the chances of striking some kind of deal soon. At an event in West Virginia, U.S. President Donald Trump said, “We’re working very hard on NAFTA with Mexico and Canada. We’ll have something I think fairly soon.” Prime Minister Justin Trudeau of Canada said, “We are in a moment where we are moving forward in a significant way. Hopefully there will be some good news coming.”
The talks appeared on the brink of collapse a few months ago. Earlier this week, President Trump called NAFTA an “embarrassment.” Reports say the White House is now revising some of its more aggressive demands. A final agreement is far from guaranteed.
The administration’s new steel and aluminum tariffs kicked the discussions back into gear. The White House temporarily exempted Canada and Mexico from those tariffs through May 1. Canada is a top supplier of metal to the United States military. American negotiators would make those exemptions permanent if the three nations agree to a revised NAFTA.
Automobiles have been a source of tension with Canada and Mexico. Previously, the administration demanded that vehicles contain a large percentage of auto parts produced in the United States. Now, to qualify for NAFTA’s preferential tariffs, the proposal would require an automobile to contain components made by workers earning a specific wage level.
The goal is to stop United States automakers from shifting production to Mexico in search of cheap labor. Critics complain that Mexico’s low wages are the reason companies have relocated auto production from the United States. The new proposal is likely to encourage Mexico to ultimately pay higher wages.
Robert Lighthizer, the United States trade representative, Foreign Minister Chrystia Freeland of Canada and Economy Minister Ildefonso Guajardo of Mexico are meeting this week in Washington to discuss the issue. Out of the trade agreement’s roughly 30 chapters, negotiators have only concluded work on six. Wide differences remain on topics such as dispute resolution and government procurement.