U.S. 'very close' to proceeding with Mexico-only trade deal, says Trump adviser

The United States is getting "very, very close" to having to move forward on its trade deal with Mexico without Canada, White House economic adviser Kevin Hassett said on Friday.

There is just over a week to go before an Oct. 1 deadline to publish the text of a deal to update the North American Free Trade Agreement, and the United States and Canada have still not agreed on terms, Hassett told Fox News Channel.

"We're still talking to Canada, and we're getting very, very close to the deadline where we're going to have to move ahead with Mexico all by themselves," said Hassett, who chairs the White House Council of Economic Advisers.

"I'm a little surprised that the Canadians haven't signed up yet," Hassett added. "I worry that politics in Canada is trumping common sense because there's a very good deal that was designed by Mexico and the U.S. to appeal to Canada. And they're not signing up and it's got everybody over here a little bit puzzled."

Canadian Foreign Minister Chrystia Freeland left Washington on Thursday after two days of bilateral talks with the United States failed to achieve a breakthrough. Access to Canada's dairy market, trade dispute settlement panels and U.S. demands for the ability to impose auto tariffs on its northern neighbour remain sticking points.

The Trump administration in late August reached a bilateral trade deal with Mexico that included quotas for tariff-free autos trade in the event that U.S. President Donald Trump imposes a 25 percent tariff on imported cars and parts on national security grounds.

To meet a Nov. 30 deadline for Trump and outgoing Mexican President Enrique Pena Nieto to sign the pact, the text of the agreement must be published by Oct. 1, but major differences remain.

"We discussed some tough issues today," Canada's Freeland told reporters on Thursday after meeting with U.S. Trade Representative Robert Lighthizer.

The two trade leaders are due to be in New York next week for the United Nations General Assembly, but it was unclear if they would meet. A USTR spokeswoman did not immediately respond to queries about Lighthizer's UN meeting schedule.

Investor concerns over the future of the 1994 pact, which underscores $1.2 trillion in trade, have regularly hurt stock markets in all three nations, whose economies are highly integrated.