Chances for revamped NAFTA deal slipping away

WASHINGTON — Despite a flurry of negotiations in recent weeks, hopes are fading fast that a revamped North American Free Trade Agreement will be completed and approved by lawmakers this year.

House Speaker Paul D. Ryan said Thursday that there are only a couple of weeks left to reach a deal in time to meet various trade-legislation requirements to get a new NAFTA pact to Congress for a vote by the end of 2018.

Ryan backpedaled from his previous declaration that the deadline was May 17, which congressional Democrats criticized as an arbitrary and misleading date designed to forestall an emerging deal that he and some other Republicans don’t like.

But whether a real deadline is two weeks away or a month from now, as some analysts maintain, most agree that significant gaps remain among the three NAFTA countries on key issues. Although talks are continuing, top trade ministers from Canada and Mexico left town last week. And with momentum slipping, negotiations to revise the 24-year-old trade pact look more and more likely to be pushed into next year.

If that happens, it will prolong the uncertainty that has hung over businesses and hampered some investments. And it could prove politically costly for President Trump in an election year.

Overhauling NAFTA has been at the top of the president’s economic agenda, and he is said to have sought a prompt conclusion so that he could brandish it as a victory before the midterm election. During the 2016 campaign and as president, Trump repeatedly denounced NAFTA as a “disaster” and blamed it for America’s big trade deficit with Mexico and destruction of domestic manufacturing and jobs.

Now analysts say it appears the best that Trump can hope for this year is a so-called skinny NAFTA fix, in which Canada and Mexico agree to strengthen auto rules aimed at bolstering U.S. production. That has been been a dominant issue and one that the parties have already spent much of their time negotiating.

“The only way I can see a finality to this process in 2018 is a skinny NAFTA. It’s that or nothing,” said Daniel Ujczo, an international trade lawyer who specializes in Canada-U.S. affairs at the law firm Dickinson Wright and has been closely monitoring the talks.

A revision of auto rules that includes raising regional content requirements and incorporating certain wage standards would be meaningful, and it will almost certainly be held up as a big win for the Trump administration. Still, Ujczo and other experts doubt that it would be enough to convince Trump’s base of supporters and others backing sweeping changes in NAFTA that the president had made good on his promise to radically transform the agreement.