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NAFTA Renegotiation Advances Despite Threat of Termination

Thursday, September 07, 2017
Sandler, Travis & Rosenberg Trade Report

Despite renewed threats from President Trump in recent weeks to withdraw the U.S. from NAFTA, the second round of talks on the renegotiation and modernization of that agreement yielded “important progress,” according to a Sept. 5 joint statement.

The statement said more than two dozen working groups “worked diligently to advance the discussions” during five days of talks in Mexico City. U.S. Trade Representative Robert Lighthizer said text for more than two dozen chapters has now been tabled, and according to the statement several working groups were able to consolidate proposals into a single text that will be the focus of their work in subsequent rounds. The third round is scheduled for Sept. 23-27 in Canada.

While the statement reaffirmed a goal of concluding talks by the end of 2017, prospects for meeting that objective remain uncertain. Lighthizer said the three sides “have found mutual agreement on many important issues” and that “work continues at a record pace.” According to an Associated Press article, however, Mexican Secretary of the Economy Ildefonso Guajardo told the country’s Senate recently that difficulties on labor issues, e-commerce, and other issues were already evident during the first round in August.

Trump has accused Mexico and Canada of being “very difficult” in the negotiations so far and warned that the U.S. may have to initiate the process of terminating NAFTA to secure satisfactory changes. Press sources report that Mexican and Canadian officials increasingly see this threat as a negotiating tactic, due among other things to questions about whether Trump has the legal authority and political support to end the agreement. However, Mexican officials have said Mexico will not continue negotiating if Trump follows through on that threat and is taking steps to boost trade with other countries in the event that NAFTA is terminated.

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