Officials are expected to announce that the U.S. and Mexico, which have been meeting together for the last several weeks, have made enough progress on various two-way issues to be able to announce what one source described as a "handshake" deal.
Despite the growing optimism around a deal, the U.S. Trade Representative's office cautioned that significant issues remain and there is no agreement yet.
Two American sources briefed on the talks said this week that Canada is likely to come under intense pressure to compromise when it does finally rejoin the negotiations - and is presented with a finished accord between the other two.
The Trump administration's talks with Mexico are seen as an important precursor to a three-way final deal with Canada on a revised NAFTA. U.S. President Donald Trump is expected to attend the announcement, the report said.
That demand has been causing friction at the latest U.S. -Mexico talks, according to an industry source familiar with the process, who spoke on condition of anonymity. Mexico's economy minister said all three sides - Mexico, the USA and Canada - would need to be present for even a handshake deal.
U.S. and Mexican officials say they will push for a deal on reworking automotive industry rules that could open the door for Canada to return to negotiations soon.
The Canadian official said Canada does not intend to budge on these two issues.
"We share the administration's overall goals of strengthening USA auto manufacturing and creating jobs and given the importance of NAFTA to U.S. industry we urge the negotiators to quickly complete the negotiations", added Blunt.
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Chrystia Freeland said Wednesday that she's been in close contact - including this week - with her US and Mexican counterparts throughout their two-way NAFTA talks, which are now in their fifth week.
Whether the announcement moves forward as planned could depend on how a high-level meeting scheduled for Wednesday goes between US Trade Representative Robert Lighthizer and Mexican Economy Secretary Ildefonso Guajardo. He expected bilateral issues to be resolved by early next week. "Obviously rules of origin is an issue where detail matters, and Canada will very much have a voice in the finalization of all of this". However, on the possibility of a handshake deal, Guajardo said it would have to involve all three countries.
But the minister declined to offer specifics on what kind of a compromise might be in the works between them, saying she'd let the other two talk about that.
President Donald Trump, who launched the renegotiation of the 1994 pact a year ago, has said he wants the reworked deal to bring manufacturing jobs back to the U.S., particularly in autos and auto parts, the news agency noted.
Trump's negotiating team has offered proposals that at times have caused Mexico and Canada to balk.
Automotive experts said that some of the foreign automakers with smaller manufacturing footprints in North America and fewer research and development staff in the US might have problems meeting the stringent requirements for content being proposed.
American business groups have urged the White House to exercise caution, warning that NAFTA's demise would disrupt supply chains and put hundreds of thousands of jobs at risk. "We're working to achieve a good deal, not just any deal", he said.