NAFTA Renegotiations Continue As Trump Administration Hopes for Agreement In Early May

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In April, leaders from Canada, Mexico, and the United States met again in Washington to continue negotiating amendments to the North American Free Trade Agreement (NAFTA). The meetings among the Parties reached the point of “perpetual negotiation,” over several days and nights in Washington working toward an amended agreement. Whether and when the amended agreement will be reached, and what the agreement will look like, are still unclear.

As previously reported, and given the various political elections that are taking place in each NAFTA country this year, the United States Trade Representative Robert Lighthizer said in March that “our time is running very short.” In early April, the media reported that the Trump Administration sought to have a preliminary NAFTA agreement ready in time to be announced at the Summit of the Americas (Summit) held in Peru April 13-14. Before the Summit began, however, leaders from the three NAFTA countries reported progress on the agreement but acknowledged that there would be no agreement to announce at the Summit.

After the Summit, negotiators continued discussions in Washington. Mexico’s Economy Minister Ildefonso Guajardo explained that the discussions on telecommunications, energy, and digital trade were very advanced. The parties reportedly concluded the amended agreement’s “chapter” on telecommunications, which means that the countries have now agreed to seven of the approximately thirty chapters that will comprise the amended NAFTA.

Minister Guajardo also said that “I think there’s still a lot of work to do.” Among other issues, negotiators have struggled to reach a consensus on changes to NAFTA's rules of origin, particularly for automobiles. Canada’s Foreign Minister Chrystia Freeland said that these rules are the “heart” of NAFTA, and negotiations surrounding them are sensitive and complicated. The United States “is demanding several changes to the rules of origin in a bid to ensure more North American content in vehicles – particularly steel, aluminum and glass.” Other sticking points for the negotiators involve dispute resolution, limits on U.S. government contracts, agricultural issues, and others.

Leaders from Canada and Mexico have stated that the parties are making “good progress” on the amended agreement, and President Trump said that “we’re doing very nicely with NAFTA.” The Trump Administration is hoping to have an agreement reached by early May “so that a final deal can be signed before the Mexican presidential election July 1 and before the window closes” to complete necessary steps in the U.S. Congress before the 116th U.S. Congress takes office in 2019.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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