“Big Trade Agreement Could Be Happening Soon”: US, Mexico On Verge Of Resolving Key Nafta Negotiation Hurdles

On Saturday morning, in addition to his latest attack on Jeff Sessions, Hillary Clinton and the DOJ, Donald Trump had some unexpectedly kind words for the southern US neighbor on whose border the president has been eager to build a big wall: “Our relationship with Mexico is getting closer by the hour,” tweeted President Trump as negotiators continued their work. “A big Trade Agreement with Mexico could be happening soon!”

“Some really good people within both the new and old government, and all working closely together,” Trump added.

He may have been right because according to the WSJ, the U.S. and Mexico are getting close to reaching a bilateral agreement on key issues holding back the NAFTA renegotiation, removing a hurdle to completing a deal that would eventually include Canada.

Trump administration officials and their Mexican counterparts are debating a proposal to exempt some industries from dispute-settlement provisions, which would remove one of the most difficult issues, the people said.

The negotiations have also included discussions over how much local content a car should have, and the cost of labor to produce a car, to qualify for tariff-free treatment under Nafta. The auto-related discussions are at an “advanced” stage, said one official familiar with the matter.

As the WSJ reports, a key sticking point of recent Nafta negotiations between the U.S., Mexico and Canada has been Trump’s desire to remove a provision known as investor-state dispute settlement, or ISDS, in which companies can bring claims to an international tribunal when they believe their overseas investments were unfairly treated by an action from another Nafta government.  While the U.S. has argued that the tribunals erode national sovereignty, many U.S. companies have pressured the administration to preserve the dispute-settlement provisions, arguing that otherwise their international investments would be exposed and unprotected.

The Chamber of Commerce, Business Roundtable, National Association of Manufacturers, and American Petroleum Institute are among major industry groups that have fought to preserve the dispute-settlement provisions

Meanwhile, Mexico and Canada have also favored keeping the provisions, believing they bolster the confidence of investors.

Still, there are potential complications, and as the WSJ notes, “while a compromise on dispute settlement may bring some industry groups along, it could spark further opposition from the exempted industries that believe they are losing meaningful protection of their international investments.”

The strategy could split the united front that many business groups have advanced, with some major industries potentially welcoming a resolution, leaving behind a smaller group with objections.

Separately, Bloomberg reports that Mexico’s Nafta representative signaled that the “thorny issue of rules for the energy industry seems to be resolved.” The envoy from incoming Mexican leader Andres Manuel Lopez Obrador, Jesus Seade, arrived at a meeting with U.S. Trade Representative Robert Lighthizer saying the nations have resolved concerns that the deal had too many restrictions on how the next government can treat foreign oil companies investing in Mexico.

“It was a rich, fun, important negotiation, from which everything emerged in a very satisfactory way for all involved,” Seade told reporters after returning to Washington following meetings with the incoming administration in Mexico City on Thursday.

“We’ve adjusted very well the focus, but without changing the content, the substance, and we’ve arrived at a solution that should be satisfactory for everyone,” Seade said. “We still need to check technical texts, and I want to be respectful of everyone, but it’s now substantially agreed, with the correct focus.”

Mexican Economy Minister Ildefonso Guajardo and Foreign Minister Luis Videgaray also attended the meeting with Lighthizer, and Guajardo said he expects Saturday to be a big day for negotiations.

Andres Manuel Lopez Obrador, the president-elect of Mexico

Mexico and the U.S. have signaled in recent days that they are making significant progress resolving their remaining disagreements. But they have stressed nothing is final. Talks are set to continue over the weekend and spill into next week, pushing up against the goal for a deal by the end of the month, as the countries work out their issues before Canada is expected to rejoin the talks to update the three-nation agreement.

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Author: Tyler Durden

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