NAFTA ministers set to announce talks will continue amid optimism

By David Ljunggren and David Lawder

MONTREAL (Reuters) - The United States, Canada and Mexico look set to announce on Monday that talks to revamp the NAFTA trade deal will continue and that the talks were "at a better moment," according to Mexico's economy minister.

Heading into the sixth of seven planned rounds of talks in Montreal last week, some officials had feared the United States might be prepared to pull the plug on the $1.2-trillion North American Free Trade Agreement amid frustration over slow progress.

The mood lightened after Canada presented a series of suggested compromises to address the main U.S. demands for reform.

"For the next round, we will still have substantial challenges to overcome. Yet the progress made so far puts us on the right track to create landing zones to conclude the negotiation soon," said Economy Minister Ildefonso Guajardo.

Lawmakers who had met U.S. Trade Representative Robert Lighthizer on Sunday said he was also sounding more optimistic.

Asked whether the issues could be settled, U.S. Congressman Sander Levin told reporters on Sunday: "Hopefully they are resolvable."

Lighthizer did not respond to reporters' questions on Monday morning.

Canadian Foreign Minister Chrystia Freeland, Mexican Economy Minister Ildefonso Guajardo and Lighthizer are due to review progress on Monday and speak to reporters at around 11:20 a.m. Eastern time (1620 GMT).

After previous rounds of NAFTA talks, the three politicians have issued a joint statement but will not do so this time, said three sources close to the talks.

"That's unusual," said one of the sources, who declined to give more details.

U.S. President Donald Trump, who has described the 1994 pact as a disaster that has cost manufacturing jobs, frequently threatens to announce he is withdrawing from the deal. His comments have unsettled markets that fret about the potential damage to a highly integrated North American economy.

Officials from all three nations are now suggesting the talks could extend beyond the end-March deadline, which had initially been set to avoid interfering with a Mexican presidential election in July.

"I don't think the timetable is the issue ... instead we should talk about the substance," said Levin.

The three sides are still far apart over U.S. demands to boost regional auto content requirements and require 50 percent U.S. content in North American-built vehicles.

Other challenges are Washington's demands that NAFTA largely eliminate trade and investment dispute-settlement systems and contain a "sunset" clause to force renegotiations every five years.

(Writing by David Ljunggren; Editing by Bernadette Baum and Nick Zieminski)