MEXICO CITY, Aug 26 — The US and Mexico are close to resolving bilateral differences on Nafta and may wrap up as soon as tomorrow, said three people familiar with the progress, clearing the way for Canada to possibly return to talks to update the three-nation trade pact.

The nations achieved significant breakthroughs in the past several days on the critical issues of automobiles and energy, according to the people, who asked not to be named discussing private talks. Talks are expected to continue today.

President Donald Trump was optimistic yesterday, saying on Twitter that the US could have a "big Trade Agreement” with its southern neighbour soon. The terms of any deal struck by US Trade Representative Robert Lighthizer would need Trump’s final approval.

It remains unclear how US and Mexican negotiators would make public the completion of work on their bilateral issues, given that Mexican Economy Minister Ildefonso Guajardo has signalled that the nation won’t make an announcement on Nafta until Canada also signs on to a new deal.

White House Press Secretary Sarah Huckabee Sanders said this morning that the administration has "no announcements or anything finalised at this time.”

Five weeks

The administrations of Trump and Enrique Pena Nieto have been working for five weeks to resolve their bilateral issues so Canada can rejoin the talks to update the decades-old trade pact. The US and Mexico are pushing for an agreement this month that would give the countries time to sign the pact before Mexico’s President-elect Andres Manuel Lopez Obrador takes office in December.

Guajardo press office didn’t immediately respond to a request for comment. A Canadian official declined to comment and referred back to remarks last week from Prime Minister Justin Trudeau, who said he was encouraged by optimism coming from the US and Mexico but won’t sign just any deal.

Yesterday, Lopez Obrador’s envoy Jesus Seade told reporters upon arrival at a meeting with Lighthizer in Washington that the nations have resolved concerns that the deal had too many restrictions on how the next government can treat foreign oil companies investing in Mexico.

Guajardo, going into the same meeting, said that he expected Saturday to be an "important day” for the negotiations. Neither Seade or Guajardo commented when they emerged from the talks some hours later.

Factory jobs

The US and Mexico in recent weeks had largely focused on the thorny issue of car manufacturing, as the Trump administration pushes for a deal that would boost factory jobs in America. The US has proposed tightening regional content requirements for car production and having a certain percentage of a car manufactured by higher-paid workers.

While a US proposal to increase tariffs on cars imported from Mexico that don’t meet stricter new content rules was a sticking point as recently as last week, that issue appeared to be resolved by Thursday.

The US agreed to keep the 2.5 per cent tariff currently applied under World Trade Organisation rules if the cars are made at factories that already exist, according to two people familiar with the plans, who asked not to be named discussing private negotiations.

That would leave open the possibility that cars that don’t meet the rules and are built at new plants could face tariffs of 20 per cent to 25 per cent, pending the results of a Section 232 national security investigation that Trump ordered in May, the people said.

While Trump has floated the idea of negotiating bilateral trade accords — finalising one with Mexico before moving on to Canada — both Mexico and Canada have said they want to keep a three-nation deal. — Bloomberg