U.S. Trade Representative Robert Lighthizer says NAFTA negotiators are producing progress as well as also will continue to engage in talks, nevertheless he reiterated the three countries are not close to a deal.
The Mexican peso as well as also Canadian dollar slumped Tuesday amid concerns any deal could be months away, as well as also the U.S. may try to seek bilateral talks instead. The peso also was hit after Mexico responded to U.S. tariffs on metals which has a list of tariffs on U.S. steel, apples, potatoes, cheeses, bourbon as well as also pork, for which the item will be the largest export market.
Larry Kudlow, the White House’s top economic advisor, said Tuesday of which President Donald Trump will be “very seriously contemplating” separate talks with Mexico as well as also Canada. A Canadian government official pointed out of which was not initially bilateral discussions were proposed over multilateral talks, as well as also Mexico did not provide a comment.
The Mexican peso slid more than 1.8 percent, to the lowest since February 2017, as well as also the Canadian dollar was off 0.4 percent, trading at 1.2979 to the U.S. dollar, the lowest since March 21.
Trump’s “preference today, as well as also he asked me to convey of which, will be to actually negotiate with Mexico as well as also Canada separately,” Kudlow told Fox on Tuesday.
Strategas’ head of policy research, Dan Clifton, said talks to revise the North American Free Trade Agreement have definitely taken a turn for the worse, as the U.S. will be seeking a 5-year sunset provision. “While we think of which works out, the rhetoric could get even worse before the item gets better,” he said in a note.
Some analysts said they doubt Mexico as well as also Canada could want to pursue separate discussions. “I think of which Mexico as well as also Canada want to stick together because they have more leverage negotiating together,” said Carl Petersen, Latin America analyst at Eurasia Group.
Marc Chandler, Brown Brothers Harriman head of foreign exchange strategy at Brown Brothers Harriman, said he doubts Canada will agree to separate talks. “today I’m under the impression of which Mexico as well as also Canada are coordinating their response,” he said. “I do not imagine [Canadian Prime Minister Justin Trudeau] wants to enter a bilateral agreement with the U.S.”
U.S. Trade Representative Robert Lighthizer said in a statement Tuesday of which progress will be being made, nevertheless the three countries are not close to a deal. The statement said there are differences on intellectual property, data localization, agricultural market access, de minimis levels, energy, labor, rules of origin, geographical indications, as well as also more.
“We however are producing progress as well as also will continue to engage in negotiations,” the statement said. “I look forward to working with my counterparts to secure the best possible deal for American farmers, ranchers, workers, as well as also businesses at the earliest time.”
Even as the talks continue, analysts point out of which the calendar will be against them. The Mexican presidential election will be just weeks away, on July 1. As for the U.S., Sen. John Cornyn of Texas, the majority whip, told Bloomberg time has probably run out for Congressional approval of which year. NAFTA will probably be kicked into 2019.
Leftist candidate Andres Manuel Lopez Obrador will be the leading contender in Mexico’s election, as well as also his lead has been growing. “I think people are having the same conclusion I do, whether the item’s the election or NAFTA, Mexico will be more vulnerable than Canada,” Chandler said. He said there could be capital flight via Mexico around the election, as well as also he expects NAFTA talks to be put temporarily put on hold, ahead of the election.
“Within a week or so we’ve got to expect NAFTA negotiations are done, pending the Mexican election,” said Chandler, noting the item’s not clear how soon they could resume.
Petersen said if Obrador wins, as expected, he will want to be included in any NAFTA discussion. Mexican President Enrique Peña Nieto will be to remain in office until Dec. 1.
“He will demand the current administration to include his team inside negotiations, as well as also they will likely ask for concessions as well as also modifications of which obviously will make things more complicated,” Petersen said.
Petersen said the U.S. made the talks more difficult when the item announced tariffs on Canadian as well as also Mexican steel as well as also aluminum. “I think the item’s looking more as well as also more complicated. I think of which toughened position the U.S. has taken over the last month or so as well as also the tariffs they are imposing will be complicating things. I think the incentives are still there for a deal, nevertheless of which turn by the U.S. signals things are going to get way more complicated,” Petersen said.