Flags of Canada, Mexico and the US. Picture: REUTERS/EDGARD GARRIDO
Flags of Canada, Mexico and the US. Picture: REUTERS/EDGARD GARRIDO

Washington — US and Mexican trade negotiators are close to squaring away bilateral differences on the North American Free Trade Agreement (Nafta) and will resume talks on Monday morning, Mexican economy minister Ildefonso Guajardo said on Sunday.

Earlier, Guajardo told reporters the two sides were probably "hours" away from reaching a common position, but in the evening he said more work still needed to be done, and that talks would start again on Monday at 9am local time in Washington.

"We’ve continued making progress," Guajardo said.

The Mexico-US discussions have focused on crafting new rules for the automotive industry, which US President Donald Trump has put at the heart of his drive to rework the 24-year-old pact he says has been a "disaster" for American workers.

Canada has sat out the most recent phase of the year-long discussions, and once it rejoined the talks, the three sides would need to work for at least another week, Guajardo said.

Leaving the offices of US trade representative Robert Lighthizer late on Sunday, Mexican foreign minister Luis Videgaray said Canada would return once bilateral issues were resolved. "But we haven’t finished this stage yet," he said.

The two sides have been gradually nearing agreement on cars, and one source close to the negotiations said at the weekend there was now "little" separating the two.

Industry sources say they are close to agreeing on raising the regional automotive content threshold for tariff-free access under Nafta to about 75% from 62.5%. Still, the Trump administration has been seeking to impose a cap on Mexican car and SUV exports to the US that could be sent duty-free or at a 2.5% tariff, complicating the car talks, three people with knowledge of the matter said.

Two carmakers say the US wants Mexican exports of cars and SUVs to be capped at about 2-million units, up from about 1.77-million exported in 2017, excluding pickup trucks.

Including pickups, Mexico exported more than 2.3-million vehicles to the US in 2017.

Mexico’s economy ministry declined to comment. A representative of the US trade representative did not respond to a request for comment.

Trump said on Saturday that Washington could reach agreement with Mexico "soon" as the chief trade negotiator of Mexico’s incoming president signalled possible solutions to energy rules and a contentious US "sunset clause" demand.

Since Mexico’s July 1 presidential election, the bilateral talks have been complicated by divisions between the incoming and outgoing Mexican administrations over energy policy.

The team of leftist Mexican president-elect Andres Manuel Lopez Obrador has resisted enshrining the 2013-14 opening of the oil and gas sector enacted by outgoing president Enrique Pena Nieto in the new Nafta, people close to the talks say.

Long sceptical of foreign companies entering the Mexican oil industry, Lopez Obrador opposed Pena Nieto’s energy reform.

Jesus Seade, the incoming Mexican government’s chief Nafta negotiator, said the issue had been "ironed out" at the Nafta talks, without going into detail. He said this week it was not a "substantive" matter and that Lopez Obrador’s team had wanted to check the terms were consistent with the Mexican constitution.

If three-way talks run into September, final approval of the deal in Mexico is likely to pass to Lopez Obrador, because under fast-track authority, the US Congress needs 90 days’ notice to vote on a new Nafta once the renegotiation is finished.

Lopez Obrador is due to take office on December 1.

Reuters