(Bloomberg) -- Canadian and Mexican ministers leading NAFTA discussions struck an upbeat tone at the World Economic Forum, saying the trade deal can be modernized while warning against hasty negotiations.
Canadian Foreign Minister Chrystia Freeland and Mexican Economy Minister Ildefonso Guajardo spoke on a panel at Davos, Switzerland on Thursday as their teams met thousands of miles away in Montreal during the the sixth round of talks on the North American Free Trade Agreement. Freeland cautioned that discussions on complex issues shouldn’t be rushed, and Canada is prepared for any eventuality on NAFTA, while Guajardo reiterated a willingness to compromise on the key issue of automobiles.
“Today we are in much better standing than a year ago to try to find those creative solutions that will mean a win-win-win for the three countries,” Guajardo said.
Freeland, Guajardo and U.S. Trade Representative Robert Lighthizer will meet in Montreal on Monday to close out the current round of talks, a pivotal gathering where progress will determine the likelihood of reaching a deal to prevent President Donald Trump from abandoning the pact.
Nafta talks began in August and have been slated through March, with the seventh round expected in late February in Mexico City. Trump had initially wanted a deal by December, though trade negotiations of this scale typically take years.
Freeland called on political and business leaders at Davos to do more to build support for trade, saying it’s proven that protectionism doesn’t work.
“What’s very easy if you’re a politician, speaking to that insecure middle class, is to say, ‘It’s the fault of foreigners, it’s the fault of that terrible country,”’ she said. “And so it actually does take political leadership. I think you have to acknowledge the insecurities of the middle class and you have to say, ‘This is what we’re doing about it.’”
She said Nafta talks will be a success if they cut red tape and lead to more companies taking advantage of the accord, as 40 percent of Canadian exporters to the U.S. don’t bother using Nafta because of the regulatory burden. She cautioned against moving too quickly, particularly on discussion around “insanely complicated” automotive rules.
“It’s a complicated agreement and updating an existing agreement upon which so much economic activity depends is also a delicate task,” she said.
NAFTA talks on the automotive industry revolve around the U.S. demand to hike the rules of origin, which govern what share of a car must be made in the three countries to be traded freely within the zone. Guajardo said the threshold must increase gradually, to give companies time to adapt.
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