The United States, Mexico, and Canada could be headed toward a standoff later this year in the renegotiation of the North American Free Trade Agreement (NAFTA), after the second round of five days of talks concluded on September 5.  It has been reported that little progress was made in what industry officials and sources say is becoming an increasingly difficult discussion, according to a report from Politico.

Policy positions were reportedly hardened throughout the five-day round and few new proposals were introduced on controversial areas.  However, all three countries’ top trade ministers, including U.S. Trade Representative Robert Lighthizer, Canada’s Foreign Minister Chrystia Freeland,  and Mexican Economy Secretary Ildefonso Guajardo said publicly at a joint press conference that they were committed to reaching a deal toward the end of this year.

The relatively rosy review of the round stood at odds with the perspective offered by industry officials and private-sector sources who expressed frustration with the lack of new ideas put forward.  In some circles, officials began referring to the Mexico City round of talks as a continuation of Round 1 rather than a new Round 2 because so few new policy positions were brought up.

Meanwhile, U.S. Commerce Secretary Wilbur Ross said on Tuesday this week that the United States was seeking to add a five-year sunset provision to NAFTA to provide a regular “systematic re-examination” of the trade agreement.  USTR Robert Lighthizer has also agreed on the need for such a sunset provision, which means NAFTA would automatically end after five-years unless renewed.  Lighthizer will put forward the sunset provision in the next round of NAFTA negotiations, but it is currently unclear wither Canada and Mexico would a willing to accept the provision.

Ross said a sunset provision was needed because forecasts for U.S. exports and job growth when NAFTA took effect originally in 1994 were “wildly optimistic” and failed to live up to expectations.  Canadian and Mexican ambassadors pushed back at the idea, saying such a provision would add uncertainty to a NAFTA agreement and affect long-term business planning.

Lighthizer said in his closing remarks on the second round of negotiation that texts for more than two dozen chapters were put on the table, which he cited as evidence that negotiations were moving forward at a “record pace.” But he did not mention any specific policy areas that were addressed. It is likely that a bulk of the presented proposals centered on areas where the countries are already largely in agreement, including digital trade, for example, and e-commerce.

The lack of fireworks in the Round 2 of talks raises the stakes for the parties to address the more contentious issues in Round 3, scheduled for September 23-27 in Ottawa, Canada. U.S. officials have also privately pushed for all texts to be presented by the end of the month, setting the stage for negotiators to address controversial policies head-on during that round.