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Mexico will not be rushed into poor NAFTA deal: minister

WASHINGTON (Reuters) – Mexico will not be rushed into revamping the North American Free Trade Agreement (NAFTA) to get a deal, Economy Minister Ildefonso Guajardo said on Friday, while his Canadian counterpart spoke of a long “to-do list” in the negotiations.

Mexico’s Economy Minister Ildefonso Guajardo delivers a news conference at Los Pinos presidential residence in Mexico City, Mexico May 1, 2018. REUTERS/Henry Romero

Guajardo, speaking a few hours before an early afternoon meeting with Canada’s Foreign Minister Chrystia Freeland and U.S. Trade Representative Robert Lighthizer, said the three are closer to agreeing new rules for autos that are vital to a deal.

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

“I have to make very clear (that) the quality of the agreement and the balance of the agreement has to be maintained. So we are not going to sacrifice balance and quality for time,” he told reporters on the doorsteps of Lighthizer’s office.

“We believe there is a way to solve autos,” he said, noting that they had not yet reached a final agreement on the issue.

“We are looking at the whole set of items we have to solve. So it’s not autos, it’s everything else,” he added.

Guajardo and Freeland have been meeting Lighthizer separately since the start of the week. Friday’s trilateral meeting will be the first held this week.

Entering the meeting, Freeland said the three sides had made “meaningful” progress this week but still had a “very long to-do list.” As he walked into the meeting, Guajardo said he did not expect the three to make a joint statement at its conclusion.

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.

Moises Kalach of the CCE business lobby, which represents Mexico’s private sector at the talks, told local radio the U.S. side had not shown enough flexibility. He added that Trump’s threat to pull out of NAFTA would resurface if the three countries could not narrow their differences.

U.S. House Speaker Paul Ryan has set a May 17 deadline to be notified of a new NAFTA to give the current Congress a chance of passing it. The United States will hold elections in November for a new Congress that will be seated early next year.

Mexico’s top trade official, however, said time was running short to meet such a deadline. Mexico will hold its presidential election on July 1.

Reporting by David Ljunggren; Additional reporting by Anthony Esposito in Washington and Daina Beth Solomon in Mexico City; Writing by Dave Graham; Editing by Paul Simao

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