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Negotiators fail to reach NAFTA deal, say talks to resume

WASHINGTON (Reuters) – Senior American, Canadian and Mexican officials on Friday ended a week of talks without a deal to modernize NAFTA, agreeing instead to resume negotiations soon, ahead of a deadline next week issued by a key U.S. congressional leader.

After meeting for barely half an hour on Friday, the top Mexican and Canadian politicians involved in the talks to update the 1994 trade pact made it clear that major differences remained.

Canadian Foreign Minister Chrystia Freeland said officials would continue working in Washington while the Canadian and Mexican ministers returned home for consultations.

“We plan to meet again as needed which I think will be soon… the negotiation will take as long as it takes to get a good deal,” she told reporters after the meeting.

Friday’s talks were the first involving all three of the top officials in the NAFTA negotiations – Freeland, Mexican Economy Minister Ildefonso Guajardo and U.S. Trade Representative Robert Lighthizer – since the latest round started on Monday.

Pressure to reach a deal increased this week after U.S. House of Representatives Speaker Paul Ryan said he needed to be notified of a new NAFTA by May 17 to give the current U.S. Congress a chance of passing it.

Mexico has not agreed to a U.S. proposal to boost North American content for autos made in the NAFTA region, one of the main sticking points. Guajardo said his team tried hard during the week to bridge the gap.

“We’re not going to sacrifice the quality of an agreement because of pressure of time. We’ll keep engaged,” he said.

Guajardo, who wants to reach an agreement on all the principal aspects of a modernized NAFTA before sealing a new deal, says plenty of other issues were outstanding.

U.S. President Donald Trump has called NAFTA a “disaster” and blames it for the loss of U.S. manufacturing jobs to lower-cost Mexico. He has repeatedly threatened to withdraw from the 1994 trade pact if it is not reworked to his liking.

Drafting new rules of origin governing what percentage of a car needs to be sourced from the NAFTA region to avoid tariffs has been at the center of the talks.

It forms a key plank of the Trump administration’s aim to boost jobs and investment in the United States.

Officials and industry sources say the three sides have been gradually narrowing their differences on autos.

However, several other major issues are still unresolved, including U.S. demands for a sunset clause that would allow NAFTA to expire if it is not renegotiated every five years, and elimination of settlement panels for trade disputes.

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