NAFTA talks to sputter as other parties reject America hard line

­­­­­­­­­­­Bloomberg

The quest to renew NAFTA is slowing to a crawl as Canada and Mexico tiptoe around America’s most controversial proposals, throwing into doubt the ability of the three nations to reach a quick deal.
The US is frustrated with the reluctance of Canada and Mexico to present counter-proposals on key issues such as regional content rules for cars, which could make or break a deal. Mexico and Canada continue to portray key US demands as unworkable, and are holding out hope the Trump administration will bow to pressure from US lawmakers and corporations to keep core elements of the deal alive.
There has been an air of technocratic calm to the talks in Mexico City as bureaucrats plug away at less explosive issues. Trade chiefs from the three countries aren’t attending this round, which has dialed down rhetoric on the ground, but also left a political void for overcoming some of the sticking points. The sprint for a US tax overhaul this year has overtaken the agenda in Washington, diverting some attention from NAFTA.
Yet there’s still no clear path to a deal on a successor to the North American Free Trade Agreement, which governs more than $1 trillion in trade and underpins the supply chains of companies from General Motors Co. to Caterpillar Inc.
President Donald Trump has repeatedly threatened to pull out of the deal if the US doesn’t get what it wants, and American officials want to get an agreement by next March, before a general election in Mexico and congressional midterms in the US inject even more politics. “The US has put some extremely unique proposals on the table and many of those are and will remain problematic for Canada and Mexico,” said Robert Holleyman, who was a deputy US. Trade Representative in the Obama administration. “We have a long way to go before we’re able to say there are insurmountable barriers, although it’s very choppy waters.”
The fifth round of talks has largely avoided the most divisive US proposals on dairy, automotive content, dispute panels, government procurement, and a sunset clause. Negotiators plan to meet next month in the US, before convening again in Canada in January. US companies and business groups, led by the US Chamber of Commerce, have been mounting a campaign to mobilise Congress and convince the White House to back down from proposals they see as damaging to corporate interests. The Chamber warned that an American pullout would hit hardest some of the states that Trump took on his road to power.
One of those states is Texas. At a Senate hearing in San Antonio, business leaders from energy to farming countered Trump’s argument that NAFTA has been a disaster, saying it has bolstered trade and that the pact’s demise would cost jobs and hit the state’s economy.
Negotiators also spent much of their time in the fifth round on rules of origin, which govern how much of a product must be produced in North America to trade without tariffs, though discussions on that centred on mundane details such as paperwork requirements.
The White House has proposed major changes to NAFTA’s auto requirements, introducing a stipulation that 50 percent of parts or vehicles be US-made, and increasing the minimum amount of regional content needed to 85 percent from 62.5 percent. Sensing danger, the auto industry has stepped up its lobbying to preserve NAFTA. A coalition of industry associations called Driving American Jobs travelled to Mexico City to make its case.