NAFTA talks enter critical week with US pushing hard line

Talks to update the NAFTA trade deal enter a make-or-break week on Monday, as senior Canadian, US and Mexican officials seek to resolve an impasse in key areas before elections in Mexico and the United States complicate the process.

Discussions in Washington will center on rules of origin governing what percentage of a car needs to be built in the North American Free Trade Agreement region to avoid tariffs, the pact's dispute-resolution mechanism, and US demands for a sunset clause that could automatically kill the deal after five years.

US Trade Representative Robert Lighthizer warned last week that if the talks took too long, approval by the Republican-controlled Congress might be on "thin ice." The aim is to complete a vote during the "lame-duck" period before a new Congress is seated after November's congressional elections.

Sources close to the talks suggest there is a creeping feeling of uncertainty and pessimism going into the new round because of gridlock on the most critical issues.