Non-U.S. Nafta Negotiators Seek Compromise in Montreal

By Paul Vieira Features Dow Jones Newswires

The chief negotiators for Canada and Mexico on Tuesday vowed flexibility and cooperation in trying to address the toughest U.S. demands for a renegotiated North American Free Trade Agreement.

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They said they hoped to make progress at this sixth round of Nafta talks, which formally opened at a downtown hotel in Canada's second-largest city. After a contentious stalemate in the fall, the Montreal talks are widely seen as a make-or-break moment for the trade pact.

U.S. President Donald Trump said at an event in Washington on Tuesday that Nafta talks were "moving along pretty well," but reiterated he was prepared to terminate the pact if negotiations falter. "We'll see how it works out," he said.

Canadian and Mexican officials in Montreal said they were ready to finalize chapters on the trade pact's least controversial elements, such as telecommunications and anticorruption measures, while laying the ground work on compromise with the U.S. on the thorniest issues.

"We have to come Montreal with a lot of new ideas and creative strategies to bridge some of the gaps. We have high hopes for making progress but of course it depends on the other partners as well," Steve Verheul, Canada's chief Nafta negotiator, told reporters.

Mr. Verheul said Canada was bringing new proposals to address the auto sector, where the U.S. is taking a harder line.

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The Trump administration has proposed that to qualify for duty-free trade among the three countries, North American-made light vehicles must have regional content of 85%, up from the current 62.5%, and that at least half of the parts be U.S.-made. Canada and Mexico oppose these changes.

Mr. Verheul said Canada wouldn't be introducing a formal counterproposal to the U.S. demand. Instead, he said, Canada would advance ideas meant to generate a discussion and possibly create a path toward compromise. Mexican officials signaled a similar strategy ahead of the Montreal talks.

"We are hoping when we are bringing flexibility to the table, we will see that reciprocated on the other side," Mr. Verheul said. He later warned: "If concessions of interest to us are either being withdrawn or not provided in this negotiation, we are hardly going to show flexibility."

Kenneth Smith Ramos, Mexico's chief negotiator, said all three countries were working constructively toward modernizing Nafta. "We are moving ambitiously on the trade agenda," he said.

At Davos, Switzerland, Mexico Economy Minister Ildefonso Guajardo told attendees at the World Economic Forum he envisaged the U.S. midterm elections in November as the target deadline for a Nafta deal.

The start of this Nafta round coincided with an announcement from Tokyo that 11 Pacific Rim countries reached an agreement on the Trans-Pacific Partnership trade deal. Canada and Mexico are signatories, and Mr. Smith said the TPP deal shows the two countries can work together on the trade front. The U.S. was part of TPP until Mr. Trump withdraw from the pact last year.

U.S. lawmakers are set to visit the talks over the weekend. On Tuesday more than 180 House Democrats called on U.S. trade representative Robert Lighthizer in a letter to push for "strong, clear and binding provisions that address Mexico's labor conditions."

--William Mauldin contributed to this article.

Write to Paul Vieira at paul.vieira@wsj.com

(END) Dow Jones Newswires

January 23, 2018 17:34 ET (22:34 GMT)