Washington: Trade ministers from the United States, Canada and Mexico wrap up a contentious round of NAFTA trade talks on Tuesday marked by aggressive US demands that have left the future of the 23-year-old free trade pact in doubt.
The proposals to drastically reshape the North American Free Trade Agreement (NAFTA) to help shrink US trade deficits have cast a pall over the modernization talks, leaving some participants and analysts wondering how the NAFTA partners can avoid an impasse.
The US demands, previously identified as red lines by its neighbors, include forcing renegotiations every five years, reserving the lion's share of automotive manufacturing for the United States and making it easier to pursue import barriers against some Canadian and Mexican goods.
Lighthizer has made no apologies about his hard negotiating line, which he has said reflects US President Donald Trump's desire to claw back lost manufacturing jobs and shrink US goods trade deficits amounting to $64 billion with Mexico and $11 billion with Canada last year.
Trump has continued his attacks on NAFTA throughout the talks launched in August, repeating his threats to terminate the pact if Mexico and Canada won't agree to changes.
US negotiators opened a new front over the weekend with a proposal that Canada dismantle its system of protections for the dairy and poultry sectors, a move that Ottawa will reject, a source briefed on the matter said on Monday.
US opposition to NAFTA's dispute resolution mechanisms, plans to restrict outside access to government contracts and attacks on Canadian dairy and softwood lumber producers have further stoked the grim mood among trade officials.
While Mexican and Canadian officials have expressed dismay at the US proposals, they have publicly taken a less confrontational stance, with three more negotiating rounds scheduled through December.
"This is what negotiations are like," Vanessa Rubio, Mexico's deputy finance minister, said on Saturday.
"There are sectors where you get to a deal quicker, and in other sectors where you don’t. But let’s just say we’re in the normal process of a free trade negotiation."
Canadian and Mexican officials are loosely allied with US industry, farm and services lobbying groups who are opposed to the Trump proposals and stepping up their efforts to persuade administration officials to ease them.
Financial markets have taken notice of the acrimony over the negotiating table. By Monday, Mexico's peso hit a near five-month low with fears growing about the future of the deal underpinning $1.2 trillion in annual trade between the three countries.
Mexico sends nearly 80 per cent of its exports to the United States.