NAFTA talks miss U.S. Congress deadline

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In a blow to President Trump’s trade agenda, officials for the United States, Canada and Mexico are running out of time to agree on new terms for the renegotiation of the North American Free Trade Agreement (NAFTA), and analysts say it’s increasingly unlikely a new deal will be presented to Congress this year.

Trump has repeatedly vowed to scrap the 24-year-old trade pact which he called a "horrible" deal and replace it with something better that would bring manufacturing jobs back to the United States, a promise Republicans hoped to deliver before the November mid-term elections.

After nine months of intense negotiating major disagreements remain, according to officials from all three countries. The current talks were given an informal May 17 deadline by House Speaker Paul Ryan because the Trade Promotion Authority, which allows the executive branch to negotiate on the country’s behalf, requires that Congress be given several months’ notice. Trump briefed members of Congress on Tuesday, reiterating his desire for a new deal, though he recognized that would be hard to achieve before November, according to congressional sources.

"I see signs of progress at the margins, but not on the most disruptive issues which have been driving the negotiations," said Eric Farnsworth, vice president of the Council of the Americas business group in New York. "So, NAFTA will likely continue under a cloud of uncertainty. Not a good outcome. Only thing worse would be one of the parties actually pulling out," he added.

Canadian Prime Minister Justin Trudeau on Thursday said he felt “positive” about talks to rework the NAFTA trade pact, while Mexico’s Economy Minister Ildefonso Guajardo said he had not given up hope that a deal could be reached by the end of May.

U.S. Trade Representative Robert Lighthizer told members of Congress on Wednesday that he didn’t think a deal could be completed in the immediate term, according to Bloomberg news. Lighthizer also has his hands full with China trade issues and is due to meet Thursday with Chinese vice premier, Liu He.

Lead negotiators for the three countries canceled meetings in Washington and are not scheduled to meet on a trilateral basis this week. Officials have not resolved any of the “big hot topics” Wilbur Ross, U.S. Secretary of Commerce, told the National Press Club Monday. Mexican officials have expressed frustration over the lack of flexibility on the U.S. side.

One sticking point is the amount of foreign content an imported car may contain to qualify for tariff-free entry when crossing the U.S.-Mexico border. Another issue for the auto sector is discussion over wages in Mexico. The U.S. has sought to raise wages up to $15 an hour in an effort to lure more production back to the United States.

Also, Mexican officials have baulked at U.S. demands to end a dispute resolution mechanism as well as U.S. efforts to include a “sunset clause" requiring renewal of the treaty every five years.

The U.S. agricultural lobby have also pressured Congress and the White House not to pull out of NAFTA, warning that it would hurt U.S. farmers.

Presidential elections in Mexico July 1 are a further complication. The expected winner, Andrés Manuel López Obrador, is a populist who is expected to take a harder line on NAFTA.

Any country can quit on six months’ notice, though none have done that so far. White House spokeswoman Sarah Huckabee Sanders told Fox News the Trump administration would continue the renegotiation effort. "We still want to see something happen, and we're going to continue in those conversations. They're ongoing now, and we're pushing forward and hopeful that we can get something done," she said.