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July 17, 2018 4:45 PM, EDT
Mexico Sees Chance to Finish NAFTA by Year’s End, Official Says
Sam Hodgson/Bloomberg News

There is a fair chance that North American Free Trade Agreement negotiations can wrap up by the end of the year, Mexico’s Ambassador to the U.S., Geronimo Gutierrez, said July 17.

Gutierrez, who spoke at Politico Pro’s annual summit, said the recent election of Andres Manuel Lopez Obrador as Mexico’s new president might make it easier to reach a deal.

Lopez Obrador has said he would like to see a NAFTA deal wrapped up this year, Gutierrez said.

RELATED: Trump says he’ll quit NAFTA if new deal can’t be reached

NAFTA renegotiation talks slowed down after an all-out push to try to reach a preliminary agreement in May.

Gutierrez said it would be a matter of “weeks, not months,” before the next high-level ministerial meeting.

RELATED: Trucking industry prospers amid NAFTA uncertainty

When asked if she thought a NAFTA deal was possible by Dec. 1, Kirsten Hillman, deputy ambassador with the Embassy of Canada, said “we would be delighted.” She added that the sides are waiting for “certain pieces to be in place before reengaging.”

Dec. 1 is also the date for Lopez Obrador’s inauguration.

Effect of Tariffs

NAFTA talks have also been complicated by U.S. actions on tariffs.

The U.S. slapped tariffs on steel and aluminum from Mexico and Canada as well as other countries, citing national security concerns. Mexico and Canada both struck back by hitting billions of U.S. goods with tariffs. The U.S. is threatening additional tariffs on auto and auto parts.

Both Gutierrez and Hillman declined to say whether their respective countries would retaliate if the U.S. imposed tariffs on autos and auto parts.

But such tariffs “would be a thing of the past” if the sides achieve success on NAFTA, Gutierrez said. Mexico remains optimistic that “we’ll find common ground to move forward on NAFTA,” he added.

For Canada, the Commerce Department’s national security investigation on auto imports has had a significant impact.

Hillman said it’s too early in the probe to make any pronouncements about retaliatory tariffs. As a key NATO ally of the U.S., the national security aspect of the tariffs is “incomprehensible” to Canada, she said. Canada would be “very pleased” to remove its retaliatory tariffs as soon as the U.S. removes its tariffs, she said.

Maintain Progress

Mexico is determined to try to keep NAFTA and see it modernized, according to Gutierrez. “We’re in better shape in trying to get this done.” However, he took issue with Trump’s notion that the U.S. trade deficit is the proper way to measure NAFTA’s success. “If we are going to address the deficit, let’s do it by expanding trade instead of reducing it,” Gutierrez said.

“If NAFTA goes away, it will be a very hard blow for the world and certainly for the U.S. side,” Gutierrez said when asked if Mexico would swallow hard proposals to keep the U.S. from withdrawing. “I don’t think it’s a good idea from the geopolitical perspective. It doesn’t make sense.”

NAFTA negotiators have made progress on regulatory cooperation, electronic commerce, and modernizing the agreement to bring it into 21st century, according to Hillman. Canada wants an agreement that opens markets, incentivizes trade and investment, and creates a stable environment, she added. “Any [U.S.] proposals that either roll back market openness or makes the agreement less stable would be challenging for us.”

Canada wants NAFTA rules of origin that reflect the current state of the economy and of supply chains and that would provide a proper platform for the future, Hillman said. Rules of origin determine what products get NAFTA duty-free preferences. Auto rules of origin have been a stumbling block in the negotiations.

The current U.S. proposal to eliminate supply management in dairy isn’t acceptable, Hillman said, restating Canada’s position. Canada’s dairy supply management is a system of tariffs, quotas, and price and production controls.