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US wants Nafta talks to end quickly

18 Sep 2017, 8.25 pm GMT

US wants Nafta talks to end quickly

Washington, 18 September (Argus) — President Donald Trump's administration is pushing for a speedy conclusion of talks to revise the North American Free Trade Agreement (Nafta) in order to avoid political complications from upcoming elections.

"We are moving at warp speed, but I am not sure if we are going to get to the conclusion," US trade representative Robert Lighthizer said today during a discussion at Washington-based think tank Center for Strategic and International Studies. "We are running quickly, somewhere."

Negotiators from Canada, Mexico and the US already have held two rounds of talks in Washington and Mexico City and the next round will take place in Ottawa on 23 September. The electoral calendar in Mexico and the US is one of the reasons the US administration wants to finish the negotiations by the end of the year, Lighthizer said. Mexico will hold a presidential election in July 2018 and midterm congressional elections take place in the US in November 2018. Canada and Mexico also said they want to conclude the talks by the end of this year.

The process of negotiations "already is having an effect on people" and allowing the talks to stretch for years will compound that negative effect on trade flows and businesses dependent on that trade, Lighthizer said.

Trump's ultimate intentions add to uncertainty over the outcome of the negotiations. "Hopefully we can renegotiate Nafta," Trump said last month, after the first round of talks in Washington. "But if we cannot, we will terminate it and we will start all over again with a real deal."

Trump's frequent, unprompted comments about withdrawing from Nafta undermine US negotiators' authority at the table, said David Goldwyn, an adviser with think tank Atlantic Council who served as special energy envoy under former president Barack Obama.

But Lighthizer said Trump's position reflect the verdict of US voters who, he said, have soured on free trade. Both Trump and his Democratic opponent Hillary Clinton pledged to revise their predecessors' approach to trade agreements, Lighthizer said.

Nafta talks likely will last well beyond 2017, according to Gary Hufbauer, a senior fellow at the Washington-based think tank Peterson Institute for International Economics. Hufbauer and other experts at the institute predict that US partners could make offers that the US administration can paint as a concession, such as greater purchases of natural gas by Mexico.

Mexico's natural gas imports from the US averaged 3.7 Bcf/d (105mn m³/d) last year, up by almost a third from 2015. Mexico also is importing more crude products from the US. US energy exports to Mexico — mostly natural gas and products — exceeded imports — mostly crude — by $3bn in January-June, US government data show.

Claiming such a concession by Mexico and portraying negotiations as successful in the administration's push for modernization "might ensure patience in the Trump team for Nafta talks" that last beyond December, Hufbauer and his colleagues said.

Energy may be one of the few areas without major disagreements among the three countries. But even on this subject, North American energy companies have compiled an extensive wish list for negotiators. Their demands include fully liberalizing trade in oil, natural gas and products between the three countries and enshrining the liberalization of Mexico's energy sector in the text of the revised agreement. Energy accounts for less than 10pc of Nafta trade flows of more than $1 trillion annually.

Negotiators have released few details from the initial rounds of talks, beyond a pledge to complete the process this year.

The US administration's foremost goal is to cut US trade deficits with Canada and Mexico, while Ottawa and Mexico City point out Nafta's competitive advantages for North American manufacturers and service providers in all three countries.

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