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Breakthrough on NAFTA?

A potential breakthough to an impasse over automobiles has created a new sense of optimism in NAFTA negotiations, with players more hopeful of a deal than they've been in some time.

Canada's ambassador to the U.S., David MacNaughton, suggested Tuesday his newfound optimism was based on two developments in recent days: progress on the top U.S. priority of auto-parts rules, as well as a more general thawing of the frosty tone in earlier talks.

This comes as the United States appears increasingly keen on securing a quick agreement, with an upcoming round in Washington expected to feature a final push to obtain a deal before election campaigns in Mexico and in the U.S. Congress punt the process into 2019.

MacNaughton said the most recent American proposals could help the U.S. achieve its goal of safeguarding auto production there, potentially without a strict American-made content requirement in every car, an idea that has been a source of friction with Canada and Mexico.

He cautioned that the autos impasse isn't completely sorted out yet.

"They came back with some ideas that if you take them to their logical conclusion would mean that you wouldn't need that (American content) requirement," MacNaughton told reporters after speaking at a Washington gathering of the American Association of Port Authorities.

"They put some interesting ideas on the table ... which were actually quite creative. To which we sort of said, 'Yeah, we can work with that.'... Did we get to somewhere where you could shake hands and say, 'We've got a deal?’ Absolutely not... Whether or not we can get there I don't know. But I took it as being a positive thing that they had another way of getting at that issue."

His assessment came after a discreet high-level meeting.

Foreign Affairs Minister Chrystia Freeland did not make any public appearances last week when she was in Washington to meet U.S. trade czar Robert Lighthizer, who has said he is hoping for an agreement in principle within weeks.

While cautioning that the talks can't be bound by artificial deadlines, MacNaughton said there really is a good-faith effort to get as close to a deal as possible early next month: "We will meet seven days a week, 24 hours a day to make as much progress as we can."

There are rumours of a lengthy, two-week round planned in Washington starting in early April. In the runup, MacNaughton said the countries have not only been meeting in person, but also in phone discussions.

"I must say that in the last two weeks the talks that we've had ... have been more positive than I've seen them before," MacNaughton told Tuesday's conference.

"We still have a long way to go. But certainly the environment is one which is conducive to making a lot more progress in the next short while... I'm optimistic. I am confident that we are going to move forward. ... Certainly the environment is conducive to making a lot more progress in the next short while."

He cited two reasons for optimism. In addition to the autos progress, he lauded the attitude around the table recently: "I was encouraged as much by the tone as by the substance."

One autos stakeholder said he's newly hopeful, too.

"We're optimistic. We're hopeful about the timeline," said Flavio Volpe of Canada's Automotive Parts Manufacturers' Association, whose group was recently invited by the U.S. to offer ideas for breaking through the impasse. "Certainly I haven't said that before."



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