“No fireworks” at NAFTA talks, but few signs of progress

Time is running short to seal a new deal to update the North American Free Trade Agreement by the deadline of end-March 2018. (Reuters)
Updated 19 November 2017
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“No fireworks” at NAFTA talks, but few signs of progress

MEXICO CITY: Negotiations in Mexico to update NAFTA have not made much progress on tough US demands that could sink the 1994 trade pact, but the current round of talks are progressing with civility, some participants said on Saturday.
Officials from the US, Canada and Mexico are meeting in Mexico City for the fifth of seven planned rounds to update the North American Free Trade Agreement, from which US President Donald Trump has threatened to withdraw.
Time is running short to seal a deal by the deadline of end-March 2018. Officials say next year’s Mexican presidential election means talks after that date will not be possible.
The US administration has made demands that the other members say are unacceptable, such as a five-year “sunset” clause and tightening so-called rules of origin to boost the North American content of autos.
“It is very slow moving but there are no fireworks,” said a Canadian source with knowledge of the talks, adding there had “not been much conversation at all” on the more contentious US proposals.
Within hours of the latest round of talks formally starting on Friday, Canada was complaining about inflexibility by the US.
Officials have so far discussed other issues such as labor, gender, intellectual property, energy and telecommunications but it is too soon to say whether there will be any breakthroughs this round, added a source familiar with the talks.
“The work is moving forward,” Mexican deputy economy minister Juan Carlos Baker told reporters, adding that the three countries had prioritized technical work in Mexico City.
But he said negotiators were aware that much work lay ahead and “we have to double our efforts.”
“The atmosphere is good, the atmosphere is one of work,” Baker added.
The mood was calmer than the tense scenes during last month’s round in Arlington, Virginia, where tough US demands were revealed. Still, the negotiations have passed the halfway point of an initial schedule with few clear signs of process.
Mexican officials hope chapters on telecommunications and e-commerce will be concluded by the end of business on Tuesday, but there has been no indication of this yet.
Although negotiators are scheduled to discuss rules of origin every day, the source said detailed talks on boosting North American content would not be held before the end of the round on Tuesday.
Canada and Mexico say the new rules of origin are unworkable and would damage the highly-integrated auto industry.
“I hope the US understands there are things ... that Mexico won’t accept, and (I hope) the negotiating process becomes more rational,” Moises Kalach, head of the international negotiating arm of Mexico’s CCE business lobby, told Reuters.
On Friday, the US Trade Representative’s office revised its official objectives to conform to its current demands.
The move prompted US Senator Ron Wyden, the top Democrat on the Senate Finance Committee, to remove a “hold” he had put in place to block confirmation of two Trump administration nominees for deputy USTR positions, a Wyden aide said.
Wyden had complained the trade office was keeping members of Congress “in the dark.”


Oil prices drop on potential increase in OPEC output

Updated 5 min 42 sec ago
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Oil prices drop on potential increase in OPEC output

SEOUL: Oil prices fell on Thursday on expectations that OPEC members will step up production in the face of worries over supply from both Venezuela and Iran.
A surprise build up in crude oil inventories in the United States also weighed on prices, driving the spread between Brent crude and US West Texas Intermediate (WTI) close to its widest in three years.
International benchmark Brent futures were down 27 cents, or 0.34 percent, at $79.53 per barrel at 0300 GMT.
US West Texas Intermediate (WTI) crude futures were down 17 cents, or 0.24 percent, at $71.67 a barrel.
The Organization of Petroleum Exporting Countries (OPEC) may decide to increase oil output to make up reduced supply from Iran and Venezuela in response to concerns from Washington over a rally in oil prices, OPEC and oil industry sources told Reuters.
Supply concerns in Iran and Venezuela following new US sanctions had pushed both Brent and WTI to multi-year highs, with Brent breaking through an $80 threshold last week for the first time since November 2014.
“The chat is still that OPEC will do something at its June meeting in reaction to the looming prospect of a fall in crude production and exports from both Iran and Venezuela as the year progresses,” said Greg McKenna, chief market strategist at CFD and FX provider AxiTrader.
OPEC and some non-OPEC major oil producers are scheduled to meet in Vienna on June 22. The group previously agreed to curb their output by about 1.8 million barrels per day to boost oil prices and clear a supply glut.
“Any signs that the group may be heading toward an early exit from the production cut agreement would weigh on prices,” ANZ bank said in a note.
Meanwhile, commercial US crude inventories rose by 5.8 million barrels in the week to May 18, beating analyst expectations for a decrease of 1.6 million barrels, the Energy Information Administration (EIA) said on Wednesday.
Elsewhere, Libya, which is an OPEC member, cut its oil production by about 120,000 barrels per day as unusually hot weather prompted power problems, an official from the National Oil Corp. said on Wednesday.
Stephen Innes, head of trading for Asia-Pacific at futures brokerage OANDA in Singapore, said that prices were getting some support from talk that Sinopec, Asia’s largest refiner, would increase US crude oil imports to a record high.
“Recent flow is suggesting short-term traders are looking to sell the $80 per barrel chart-toppers anticipating a possible compliance shift within the OPEC-Non Opec supply agreement,” he added in a note on Thursday.