Second round of NAFTA talks amid Trump threats

The United States, Mexico and Canada dove into the details of revamping the North American Free Trade Agreement at a second round of talks Friday, amid threats from President Donald Trump to axe the deal.
After setting an ambitious "accelerated" calendar during the first round -- held in Washington last month -- negotiators got down to the nitty gritty business of modernizing the 1,700-page deal as five days of closed-door talks opened at Mexico City's swank Hyatt Regency hotel.
Gathering at 25 separate roundtables, one for each topic on the agenda, the delegations began hashing through subjects including e-commerce, the environment, anti-corruption measures, investment and access to property markets.
The thorny issue of "rules of origin" is also on the agenda, the Mexican economy ministry said.
The United States is pushing to change these rules, including for the hotly debated auto sector. It wants to require a certain percentage of cars' components to be built in the US in order to remain duty-free.
Few details were expected to emerge from the discussions. All three countries have agreed to keep mum on specifics until the talks conclude after an estimated seven to nine rounds.
At the end of the second round on Tuesday, US Trade Representative Robert Lighthizer, Mexican Economy Minister Ildefonso Guajardo and Canadian Foreign Minister Chrystia Freeland will hold a series of two- and three-way meetings, then make a joint statement, Mexico said.
- Failure is an option -
Trump doubled down on his anti-NAFTA rhetoric in the build-up to the second round, saying Mexico was "being difficult" and that the United States would "end up probably terminating" the deal, which he says has been disastrous for US industry and jobs.
Mexico, which sends 80 percent of its exports to the United States, has dismissed Trump's threats as posturing.
But it says it has developed a Plan B just in case, focused on diversifying its export destinations.
Trump himself has sent mixed signals about the deal.
On Thursday, he and Canadian Prime Minister Justin Trudeau spoke on the phone and "stressed their hope to reach an agreement by the end of this year," according to the White House.
Most experts say NAFTA is likely to survive with modest changes -- though with Trump, nothing is certain, they warn.
The Republican president may ultimately have little room to maneuver, however, no matter how much he hates the $64 billion US trade deficit with Mexico.
Some 14 million US jobs depend on trade with Mexico and Canada, according to the US Chamber of Commerce.
"As long as discussions on the technical issues are moving forward, it's a good sign. We hope to separate the political issues from the technical issues," said Moises Kalach of Mexico's Business Coordinating Council.
- Symbol of globalization -
Instituted in 1994, NAFTA eliminated most tariffs across a region representing some 28 percent of the global economy.
To supporters, it has been instrumental in creating tightly integrated supply chains that ensured North America's competitiveness at a time of Asia's rise as an economic power.
To opponents, it is synonymous with the dirty word of globalization and the ills they say it has wrought -- the decline of US manufacturing might, to some; to others, multi-national corporations' drive for ever-cheaper workers and ever-lower labor standards.
Negotiators are rushing to reach a deal before the process gets caught up in campaigning for Mexico's July 2018 presidential elections -- where a leftist populist, Andres Manuel Lopez Obrador, leads in the polls -- and the November 2018 US midterm election.
Mexico is facing pressure to overhaul its labor laws and deliver wage increases to factory workers who make an average $2.30 an hour, or about one-tenth of the average US factory wage.
The US trade balance with Canada is more even, but that relationship also has points of tension in some sectors, including dairy products, wine and grains.