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NAFTA Washington talks said to leave major differences untouched

Washington | Reuters — Talks this week to update the North American Free Trade Agreement made some progress on less-controversial chapters and technical language, but did little to resolve deep differences on autos, dispute settlement and a five-year sunset clause, some participants said on Friday.

The “intersessional” round in Washington, which did not include trade ministers from the U.S., Canada and Mexico, were largely aimed at preparing groundwork for a pivotal round of talks in January in Montreal.

Thus far, Canada and Mexico have not offered counterproposals to the Trump administration’s automotive demands that half the content for North American-made vehicles come from the United States along with sharply higher regional content, a proposal that would dramatically reshape the industry.

Canada and Mexico rejected the U.S. proposal as unworkable last month in Mexico City, but some officials said they expect alternatives to emerge in Montreal.

“There wasn’t much of a discussion on autos” at the Washington talks this week, Mexican chief negotiator Ken Smith told reporters.

“So we’ll take that conversation up again in Montreal, and hopefully, what I told my U.S. counterparts, is that we should start a dialogue that takes into consideration the position of the industries of the three countries because we cannot operate in a vacuum.”

U.S. Trade Representative Robert Lighthizer has repeatedly expressed frustration that Canada and Mexico have not accepted his demands in autos and other areas to “rebalance” the trade agreement to shrink U.S. trade deficits.

“The United States continues to look for serious engagement and meaningful progress in these talks for a modernized and rebalanced NAFTA,” USTR spokeswoman Amelia Breinig said in a statement on Friday as the talks wound down.

But she said the three countries did manage to substantively complete a sectoral annex on energy efficiency standards, marking the first time a NAFTA chapter had closed since September.

— Reporting for Reuters by David Lawder and Lesley Wroughton.

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