NAFTA: Countries seeking to nail down broad outline of preliminary agreement

WASHINGTON — The three NAFTA countries are in Washington today trying to come to terms on the broad outlines of an interim agreement.

Canada’s foreign minister, Chrystia Freeland, dined with her U.S. and Mexican counterparts last night, and the three are in meetings today.

Sources say that if there is to be such an agreement in the coming weeks, today’s meetings will be key.

What remains unclear is what form such a deal might take.

One trade insider says there are two realistic possibilities for a quick deal. According to Eric Miller, one is a very preliminary statement where the countries agree to general principles and resume detailed negotiations after July’s election in Mexico.

The second possibility, Miller says, is a modest revamp of NAFTA he describes as the South Korea model: the U.S. recently agreed to less-drastic-than-expected changes to its agreement with the Koreans.

But several sources both inside and outside government are skeptical that a bona-fide, wide-ranging renegotiated NAFTA is possible this spring.

It’s unclear the countries have even discussed in any detailed way key sticking points like dairy. Yves Leduc of the Dairy Farmers of Canada says he’s in Washington following the discussions, and whether his sector is part of them.

The talks lately have revolved around one key industry: autos.

Multiple sources say the U.S. has softened its earlier demands, and is now presenting a proposal that would encourage production in high-wage jurisdictions — namely, the U.S. and Canada.

The U.S. proposal is based on the idea of granting credits to parts-makers that pay wages beyond $15 per hour. Higher salaries would help auto makers meet the proposed U.S. floor of 85 per cent North American parts for a car to avoid a tariff.

It’s an extension of a Canadian proposal from January. Canada proposed doing away with an old list for counting parts, and replacing it with a new formula that credits jurisdictions for producing high-value content.