President Trump appeared to downplay the odds of succeeding in the renegotiation of the 1993 North American Free Trade Agreement, conceding that Canada and Mexico have little incentive to agree to the changes he wants.
"On NAFTA I am working very hard to get a better deal for our country and for our farmers and for our manufacturers," he said in remarks to the American Farm Bureau Federation. "But think of it: When Mexico is making all of that money, when Canada is making all of that money, it is not that easy of a negotiation."
Trump devoted only a few lines to discussing NAFTA in the speech. He did not guarantee that he was "winning," as he customarily does.
The sixth round of talks is scheduled to begin Jan. 23 in Montreal and runs through Jan. 28. The round is widely seen as do-or-die for the Trump White House to get the changes it wants.
The NAFTA renegotiations have been strained for several months. Canadian and Mexican officials rejected U.S. demands to change the rules for determining when a product can be labeled as "made in America" or "made in the U.S.A.," arguing that the changes would damage the auto industry, whose supply chain is spread throughout the continent, according to an official with knowledge of the talks. The administration also is pushing to add an end clause to NAFTA as well as to allow countries to opt out of its investment dispute settlement system, changes the trading partners also object to. The effort has surprised Trump's liberal critics, who generally support those changes.
The lack of progress has clearly frustrated administration officials. "Thus far, we have seen no evidence that Canada or Mexico are willing to seriously engage on provisions that will lead to a rebalanced agreement," U.S. Trade Secretary Robert Lighthizer said after the fifth round concluded last year. "Absent rebalancing, we will not reach a satisfactory result."
That has sparked concern from groups such as the Chamber of Commerce that Trump may follow through with earlier threats to pull the U.S. out of the deal. Canada and Mexico are looking to China and the European Union to potentially fill in for the U.S.
Administration officials say the potential for a deal remains, but said the onus was on the U.S trading partners. "We have put a number of proposals on the table to modernize NAFTA, and critically for agriculture, to address key sectors left out of the original agreement – dairy and poultry tariffs in Canada. Now, we want to see our negotiating partners step up and engage so we can get the deal done," Agriculture Secretary Sonny Perdue said.
The agricultural industry has been watching the talks with particular interest. Most in the industry believe NAFTA has been a success and saw little reason for reopening the deal, though the dairy and poultry industries wanted changes to Canadian policies.