The latest Nafta talks are nearing conclusion without a majorbreakthrough or agreements on even the least-contentious topics,officials familiar with the negotiations say, fueling doubts amongobservers that a deal can be reached this year.

U.S. Trade Representative Robert Lighthizer is scheduled tospeak publicly alongside Mexican Economy Minister IldefonsoGuajardo and Canadian Foreign Minister Chrystia Freeland Tuesday toconclude the second round of talks toward a new North American FreeTrade Agreement. Their appearance will cap a five-day session inMexico City.

While negotiators have made some progress, they have yet toagree on any major contentious issue and are far from a deal onindividual Nafta chapters, the officials said, asking not to beidentified discussing private matters. On some topics, discussionhas been verbal with no specific text proposals submitted, theysaid.

The talks came after U.S. President Donald Trump threatenedoutright withdrawal from the agreement. While slow progress isnormal in most trade negotiations, the nations have been seeking anunusually quick timeline for Nafta, and officials expressed doubt adeal could be reached by the target date of December. Thatsentiment is shared by many observers and stakeholders who say theU.S. has been slow in detailing its actual demands.

“They can't possibly finish. The Americans haven't startednegotiating yet,” said Peter Clark, a trade strategist and formerCanadian official. Jerry Dias, a Canadian labor leader, saidhe'd ”be shocked if it gets done before Christmas.”

Clark said the earliest possible date for a deal is February orMarch, and even then it would likely be an agreement-in-principlethat wouldn't be finalized until after Mexican and U.S. elections.“It's not really a negotiation. What you have is a president whosays he's been robbed for years,” Clark said. “He wants to break acontract without any penalty.”

Juan Pablo Castanon, the leader of the Mexican business chamberknown as CCE, told reporters on Monday there had been progress ontopics including small and medium businesses, trade facilitationand telecommunications, while others — including autos and labor —were less advanced. The next talks, expected for Ottawa later thismonth, will be key to knowing if a deal can be reached this year,Castanon said.

“It's what we all want,” Castanon said. “If we begin to closechapters and advance very fast, then we'll be able to say there's apossibility to find solutions by the end of the year.”

Over the first four days in Mexico City, government officialshad said progress was being made on subjects such as the digitaleconomy, a topic on which the three countries largely alreadyagree. Controversial subjects like rules-of-origin and disputesettlement were discussed Monday by negotiators, according to aschedule obtained by Bloomberg.

No Text

“There's a will of the three countries” to get a deal, Bosco dela Vega, the head of Mexico's agriculture chamber, told reporters.In the original Nafta negotiations in the early 1990s, when de laVega represented the interests of potato farmers, “we met everyfour or six months,” he said. “Now we're meeting every two or threeweeks.”

David Wiens, a farmer and vice president of the Dairy Farmers ofCanada, said he's been surprised by the lack of written and firmpolicy proposals put forward by the U.S. government. That makes himbelieve it's “a bit unrealistic” to get a deal by December.

“What we're hearing on the ground here is the Americans havestill not posted all the texts for the different chapters,” Wienssaid in an interview in Mexico City. “If there's a strategy behindall of that, I'm certainly not recognizing it.”

Auto Sector

One key issue without a firm policy proposal is what thresholdthe U.S. is seeking for the so-called rules of origin on the autosector — the share of a vehicle that must be sourced within Naftacountries to receive the pact's benefits. The current level is62.5% and Dias said U.S. Secretary of Commerce Wilbur Ross wants a“significantly” higher figure.

The auto threshold is “the heart of the American objective,”said Flavio Volpe, president of the Automotive Parts Manufacturers'Association in Canada. “Negotiators will be very careful beforepegging a rate that would drive assessments of success orfailure.

The outlook isn't entirely gloomy. One official described atwo-track process — a political one dominated by Trump's threats,and a more constructive and technocratic track with negotiatorsplodding forward in search of agreement.

The fast pace for Nafta is spurred by a Mexican presidentialelection in July 2018 and American midterm congressional electionsin November. Canadian officials are said to also favor a quick dealto put an end to economic uncertainty created by the talks,officials said.

From: Bloomberg News

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