U.S. Trade Representative Robert Lighthizer said on Monday that bilateral deals could replace NAFTA if the pact is not renegotiated soon, ramping up pressure on Canada and Mexico, already smarting from President Donald Trump’s plan to impose steel and aluminium tariffs.
Talks on the $1.2 trillion NAFTA pact are moving slowly, in part because Canada and Mexico are resisting U.S. demands for major changes such as adding a sunset clause, which would lead to the automatic termination of NAFTA if it was not reworked every five years.
The Trump administration also wants to boost the North American content of autos produced inside NAFTA.
But speaking to media, Canadian Foreign Minister Chrystia Freeland said progress has been made in the latest round of talks.
The Mexico City round of NAFTA talks was thrown into disarray after Trump announced a plan last week to impose a 25 percent tariff on steel imports and a 10 percent tariff on aluminium imports, arguing they were needed to protect U.S. industries and jobs.
Lighthizer has said that meant Canada and Mexico would enjoy tariff exemptions once a NAFTA deal was reached, calling the tariffs an “incentive” to conclude the talks.
Canada and Mexico say they should be exempted from such moves, and have warned they could retaliate.
Mexico Economy Minister Ildefonso Guajardo said there would be no concessions made in the NAFTA negotiations to placate Trump on steel and aluminium, while Freeland said the two issues were separate.
Guajardo raised the possibility, however, that Mexico might not respond to Trump’s metals tariffs, saying it was not necessarily beneficial to escalate matters.
Negotiators had hoped to wrap up their work with an eighth and final session by the end of March, but officials say they will not now meet that deadline.