NAFTA talks making progress, Canada's Freeland says

Canadian Foreign Minister Chrystia Freeland said Friday officials were making progress in intensive talks to revamp the 24-year-old North American Free Trade Agreement with the United States and Mexico.

Freeland met over two days in Washington with US Trade Representative Robert Lighthizer and Mexican Economy Minister Ildefonso Guajardo to try to reach an agreement on a new NAFTA.

The discussions have entered "a new, more intensive phase of engagement," she told Canadian television.

"The tone is positive. We are making progress. And we're just all very committed to working as hard as we can to get a good deal, a win-win-win."

She said talks would continue and she would stay on in Washington "a little while longer."

"The bottom line is we had two days of intensive and constructive and productive work."

The administration of US President Donald Trump is increasing pressure in hopes of quickly reaching a deal. Looming on the horizon are July's presidential elections in Mexico and November's midterm US congressional elections.

The sides reportedly are aiming to have a deal in principle finished by the time of next week's Summit of the Americas in Peru.

The White House also is contending with deepening public fears of an all-out trade war with China, amid escalating tariff threats that sent global markets lower and Wall Street tumbling two percent Friday, for a loss of nearly 10 percent since the peak in late January.

- Stumbling blocks remain -

Freeland noted there had been progress in recent weeks on requirements for US content in autos, which she said was one of the most complex issues for all three countries. But she declined to provide details on any other areas under discussion.

Under the current agreement, 62.5 percent of the content of a vehicle must be produced within the NAFTA countries to move duty-free across borders.

Washington wants to bump this requirement up to 85 percent, with 50 percent of US origin -- a proposal that Ottawa and Mexico City have rejected.

Several other stumbling blocks remain to be resolved, particularly Washington's proposals to include a "sunset clause" for the agreement and to modify a key dispute resolution mechanism.

Mexico, meanwhile, reportedly is holding out against a US demand that would require automakers to source auto parts from factories that pay workers at least $15 per hour -- in line with US and Canadian wages, versus Mexico's current average wage of $3 per hour.

The auto parts sector is concerned that higher wages will increase costs throughout the supply chain, leading to higher prices for vehicles or a shift in work to lower-wage jurisdictions outside of North America.