President Donald Trump's trade negotiators enter the latestround of NAFTA talks under growing pressure inside their owncountry to step back from a confrontational stance that's left theU.S. isolated at the negotiating table.

The fourth round of talks to update the North American FreeTrade Agreement began Wednesday in the Washington area. Trump hasmaintained his threat to walk out, even amid rising opposition athome to his hardline stance. On the eve of talks, the top U.S.business group pledged to fight to preserve the pact, while aCongressional committee said it was committed to successful talksand Mexico signaled it can live without the accord.

“There is life after NAFTA,” Mexican Economy Minister IldefonsoGuajardo said Tuesday in an interview with Radio Formula.Mexico could leave NAFTA and have the strength to move on withoutany serious long-term structural damage to the economy, hesaid.

U.S. Trade Representative Robert Lighthizer kicked off thelatest round by announcing an agreement on a chapter oncompetition. The countries have agreed to increased “proceduralfairness in competition law enforcement,” his office said in astatement. It's the second topic to be agreed on along with thechapter on small and medium-sized businesses.

“Thus far, we have made good progress, and I look forward toseveral days of hard work,” Lighthizer said in the statementWednesday. Scheduled talks in this session have been extended bytwo days to Oct. 17.

Trudeau and Canadian Foreign Minister Chrystia Freeland met withmembers of the U.S. House Committee on Ways and Means in WashingtonWednesday morning, with Chairman Kevin Brady saying the committeewas dedicated to “successful” negotiations. “When North Americawins, America wins and the American people win as well,” hesaid.

An updated Nafta must account for the digital economy, makeprogress on customs rules, beef up intellectual propertyprotections and boost market access for U.S. dairy producers, Bradysaid.

Rep. Richard Neal, the ranking Democrat on the committee, saidhe hopes Nafta will expand Canadian market access for U.S. culturalindustries and “will be an opportunity to update intellectualproperty rules.”

'Hard Work'

One of the most contentious U.S. proposals is around so-calledrules of origin for vehicles, which govern what share of a car mustbe built within NAFTA countries to receive the pact's benefits. TheU.S. is expected to propose substantially raising the regionalrequirement, from 62.5% currently, and potentially add aU.S.-specific content requirement.

Rules of origin will be discussed by negotiators on Friday,Sunday and Monday, according to an agenda obtained byBloomberg.

An auto-parts industry executive warned Wednesday thattightening the rules of origin for cars will add complexity andcosts.

“If the required content to hit the threshold for a NAFTAvehicle is too high, people may say, 'Look, it's just toodifficult, it's too high, so we'll just ship the vehicles in,'”Magna International CEO Don Walker said in an interview ahead ofthe talks. “In which case, they pay the duty, and it's alose-lose.”

U.S. Chamber of Commerce CEO Thomas Donohue, speaking in MexicoCity on Tuesday, said the rules of origin proposal would send morebusiness overseas. Donohue pledged to fight “like hell” to defendNAFTA if Trump tries to pull out, and urged Lighthizer to get adeal.

He said the 23-year-old accord is facing an “existential threat”because of the Trump administration's hardline stance. “There areseveral poison pill proposals still on the table that could doomthe entire deal,” Donohue said.

From: Bloomberg News

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