The move, approved in a government decree, eliminates January 2024 as the date for the country to forbid GM corn for animal feed and industrial use, a statement by the economy ministry said.

Amid a brewing dispute over the possible disruption of billions of dollars worth of corn trade, U.S. officials and farmers had called for clarity on the ban from Mexico. The latter buys about 17 million tonnes of mostly GM yellow corn from the U.S. annually, most of which is used for animal feed.

Mexico said it still plans to revoke and refrain from granting new authorizations for GM corn for human consumption, which the decree defined as flour, dough or tortilla made from the grain. The ban does not apply to GM corn used in the industrial manufacturing of products like cosmetics, textiles and paper, the decree said.

About 18-20 per cent of the corn Mexico imports from the U.S. is white corn, used in food products like tortillas, according to sector experts.

Under the decree, the new measures were to take effect Tuesday. A spokeswoman for the economy ministry did not immediately respond to a question about whether Mexico would begin revoking authorizations of GM corn for human consumption on Tuesday.

The decree also said Mexico will revoke authorizations and permits to import, produce, distribute and use the herbicide glyphosate, a plan it has had since late 2020. A transition period would be in effect until March 31, 2024.

Health authority COFEPRIS will be responsible for authorizations of GM corn to be used as animal feed or in industrial manufacturing processes, subject to supply availability. It will also conduct scientific studies with counterparts from other countries to investigate the health impacts of consuming GM corn, Mexico’s decree added.

Mexico and the U.S. have been at loggerheads over an original decree issued by Mexican President Andres Manuel Lopez Obrador in 2020 that sought to phase out imports of GM corn and glyphosate by January 2024.

U.S. officials have threatened to take action under the Canada-U.S.-Mexico Agreement (CUSMA) over the potential disruption of the corn trade.

The new U.S. agriculture trade chief last week told Reuters that he had given Mexico until Feb. 14 to respond to a request to explain the science behind Mexico’s planned bans.

U.S. Agriculture Secretary Tom Vilsack said Tuesday the U.S. is “disappointed” in Monday’s announcement from Mexico. “The U.S. believes in and adheres to a science-based, rules-based trading system and remains committed to preventing disruptions to bilateral agricultural trade and economic harm to U.S. and Mexican producers.”

The National Corn Growers Association, a U.S. industry group, also expressed concern over Monday’s decree.

“Singling out corn — our No. 1 ag export to Mexico — and hastening an import ban on numerous food-grade uses makes (CUSMA) a dead letter unless it’s enforced,” said the group’s president, Tom Haag.

— Reporting for Reuters by Cassandra Garrison and Adriana Barrera in Mexico City, Leah Douglas and David Lawder in Washington and Julie Ingwersen in Chicago; writing by Valentine Hilaire.

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Buenrostro said President Andres Manuel Lopez Obrador had told the U.S. Mexico could delay the contentious GM corn transition until 2025, a year later than previously expected.

Mexico is crafting a proposal to modify and “make clearer” the presidential decree which is currently set to ban herbicide glyphosate and GM corn in 2024, she added.

“Right now, we are working here within the government to make this new decree and present it,” Buenrostro told reporters at a news conference in Mexico City.

The country’s GM corn decree has shaken the international agriculture sector and prompted threats of legal action from the U.S., Mexico’s source of about 17 million tonnes of imported corn. In November, U.S. Secretary of Agriculture Tom Vilsack said Washington could consider steps under the Canada-U.S.-Mexico (CUSMA) trade pact.

Soon after, Lopez Obrador said he was seeking a deal with Washington, which could include extending the transition.

The ban was focused on corn for human consumption, he said, and that GM yellow corn imports for animal feed would still be allowed, pending a permit by health regulator COFEPRIS.

Buenrostro’s comments were one of the clearest signs yet that Mexico is ready to backpedal on the planned corn import ban.

U.S. farmers want stronger action than just an extension, said Angus R. Kelly, director of public policy at the National Corn Growers Association.

“Any attempt to ban any form of biotech corn, including corn grown for human consumption, is illegal under (CUSMA),” Kelly said by email. “Extending the deadline would also extend the uncertainty for America’s corn growers who are making decisions now that will affect crops well into the future.”

About 18-20 per cent of corn Mexico imports from the U.S. is white corn, used in food products such as tortillas.

Juan Carlos Anaya, director of Mexico’s Agricultural Markets Consultant Group, called Buenrostro’s comments “good news” for Mexico’s corn purchasing sectors and international producers and exports.

A meeting with U.S. officials to discuss Mexico’s new proposals could be scheduled on Dec. 16, Buenrostro said.

— Reporting for Reuters by Dave Graham, Adriana Barrera and Cassandra Garrison.

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Reuters reported earlier in the day that Canada was increasingly convinced that Trump would soon announce the U.S. intends to pull out of the North American Free Trade Agreement (NAFTA), sending the Canadian and Mexican currencies lower and hurting stocks across the continent.

“I think it’s indisputable that if Trump announces a U.S. withdrawal from NAFTA, well at that moment the negotiations stop,” said Raul Urteaga, head of international trade for Mexico’s agriculture ministry.

The two other sources, who are involved in the trade talks and asked not to be named, said that Mexico remains firm on its position to get up and leave from the negotiating table if Trump goes through with the move.

While a NAFTA termination letter would start the six-month exit clock ticking, the U.S. would not be legally bound to quit NAFTA once it expires. Washington could use the move as the ultimate sleight of hand as it seeks to gain leverage over Canada and Mexico in talks to update the 24-year-old trade pact.

Trump has long called the 1994 treaty a bad deal that hurts U.S. workers. His negotiating team has set proposals that have alarmed their Canadian and Mexican counterparts.

Among the most divisive are plans to establish rules of origin for NAFTA goods that would set minimum levels of U.S. content for autos, a sunset clause that would terminate the trade deal if it is not renegotiated every five years, and ending the so-called Chapter 19 dispute mechanism.

‘Baby seal’

Though observers in Canada and Mexico have become increasingly gloomy in recent weeks about the upcoming Jan. 23-28 Montreal round, some took heart from a recent speech made by Trump to farmers this week in which he held back from provocative comments about the trade deal.

Urteaga, who was a member of Mexico’s original NAFTA negotiating team in the 1990s, said that Trump’s speech was an “interesting signal.”

“No news, means good news sometimes.”

Michael Sabia, CEO for Caisse de Depot et Placement du Quebec, said Wednesday he believes that if Trump abandons NAFTA, the U.S. would then negotiate a new deal with Canada.

Speaking at a Thomson Reuters Breakingviews event in Toronto discussing predictions for 2018, he said his view is that a U.S. pullout would be “just a prelude to another negotiation.

“We need to think about that in the context of making sure that we handle things in a way that we are well positioned for the subsequent negotiation because it’s hard to imagine that there is never another trade agreement.”

Other factors, such as entrepreneurial activity, could help mitigate the impact of the NAFTA talks failing, he said.

“The future sources of jobs and growth in the Canadian economy are going to come from elsewhere,” he said. “It’s not as though Canada is some baby seal waiting to be slaughtered.”

— Reporting for Reuters by David Alire Garcia, Adriana Barrera and Anthony Esposito; additional reporting by Matt Scuffham in Toronto.

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Officials from the U.S., Mexico and Canada are in Ottawa for the third of seven planned rounds of talks. The U.S. delegation has yet to unveil its precise position on several points, prompting concerns the process to update the 1994 pact could drag on beyond the scheduled end-December finish.

“We’ve been working very hard so I don’t see a problem,” John Melle told reporters when pressed on the matter. “We’re moving across the board, so it’s very ambitious.”

Canadian Prime Minister Justin Trudeau earlier predicted some tough days ahead for negotiators and declined to say whether he thought the talks could meet the deadline.

“The negotiations are still under way and of course there will be more difficult discussions in some cases than others,” he told a Toronto news conference.

Asked whether he was concerned the talks might not end on schedule, he replied: “The negotiations move forward at a certain pace and we respect that reality.”

U.S. President Donald Trump, who frequently describes the treaty as a disaster, is threatening to walk away unless major changes are made.

Canada’s chief negotiator on Sunday said he did not expect the U.S. side to present detailed proposals in Ottawa on major issues such as dispute settlement, the dairy sector and tougher rules for North American content on autos.

Canadian officials say it is still possible to meet the year-end deadline although they concede there are significant uncertainties about the timetable.

Earlier this month, U.S. Trade Representative Robert Lighthizer said the negotiators were working at warp speed.

“I think that’s accurate,” said Melle.

Trudeau said Ottawa’s team of officials was “moving forward in good faith” and repeated a promise to defend Canada’s system of tariffs and import restrictions put in place to defend its domestic dairy sector. The U.S. industry dislikes the measures.

Kenneth Smith, Mexico’s chief negotiator, told reporters late on Sunday that “we feel there is a positive environment in the negotiations.”

Lighthizer, Canadian Foreign Minister Chrystia Freeland and Mexican Economy Minister Ildefonso Guajardo — the three top officials driving the NAFTA modernization — will meet in Ottawa on Tuesday and Wednesday, the last two days of the third round.

— Reporting for Reuters by Adriana Barrera and David Ljunggren.

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