Mexico has 'positive expectations' for three-way NAFTA

Mexico is confident the United States and Canada will reach a deal on keeping the regional NAFTA trade agreement a three-country deal, the economy minister said Thursday.

"Today is the second day of bilateral US-Canadian negotiations in Washington, and we have positive expectations that they will reach an agreement," Economy Minister Ildefonso Guajardo told journalists.

But he added: "Obviously, there's no guarantee."

Since the United States reached a two-way deal with Mexico last week on an updated version of their trade agreement, President Donald Trump has repeatedly suggested the US could leave Canada out of it.

The United States and Canada abruptly broke off talks on updating the North American Free Trade Agreement last Friday, after inflammatory comments from Trump angered officials in Ottawa.

But the mood was brighter when they resumed talks Wednesday. Canadian Foreign Minister Chrystia Freeland said the two sides were making "good progress."

Trump blasts the 25-year-old deal as a "rip-off" for the United States, but Canadian Prime Minister Justin Trudeau has repeatedly said he would rather walk away from the table than sign a NAFTA 2.0 that would be a "bad deal" for Canada.

Mexican officials insist they want NAFTA to remain a three-country deal -- a stance Guajardo reiterated -- but have said if that proves impossible they will accept a two-country deal with the United States, the destination for more than 80 percent of Mexico's exports.

Trade experts say it is unclear whether Trump actually has the authority to replace the original NAFTA with a two-country deal.

"There's a difference of opinion among some members of Congress and the administration in Washington" on that point, Guajardo said on the sidelines of an economic forum in Mexico City.

"It's an issue they will have to resolve internally."

He said that although Mexico does far more trade with the United States than Canada, a three-way deal had "strategic relevance" for key sectors such as the auto, aerospace and medical device industries.

"That means we have to give it our best possible effort to keep this a trilateral deal," he said.

Sticking points in the talks include Canada's insistence on retaining a dispute-resolution mechanism in Chapter 19, and US objections over Ottawa's tight controls on its dairy market.