Dive Brief:

• The fourth round of talks to renegotiate NAFTA ended on a sour note Tuesday, as myriad reports indicated hard-line stances had derailed the originally proposed timeline.
• The fifth round of negotiations will take place in Mexico City, from Nov. 17 to Nov. 21 — a longer interim period to help find "creative ways" to close a "conceptual gap" that plagued negotiators. Further negotiating rounds will be scheduled for the first quarter of 2018.
• Not all news was bad: The three countries stated the fourth round in Arlington, Virginia, saw more than 30 topics discussed and "substantive completion" of the chapter on competition. Deliberations on trade facilitation, digital trade, good regulatory practices and sectoral annexes also saw major advances.

Dive Insight:

NAFTA talks so far have proceeded on a sort of dual course, with one leading to a dead end while the other leads to success. It's no surprise, then, that news that the talks would be delayed come with equally mixed feelings.

On one hand, various reports suggest the delay is actually great. In fact, the Mexican peso and Canadian dollar both rose on the news. After all, an extended timeline means no party has walked from the table so far, making an eventual deal more believable.

On the other hand, a withdrawal is still very much on the table. The mood was apparently so sour during this round of talks, both The New York Times and The Wall Street Journal published articles on their editorial page defending the deal. Meanwhile, the tweet below shows even CEOs are taking withdrawal seriously. After all, it's a part of risk management.

I had dinner with 3 Mexican CEOs last night, big companies, all NAFTA poster boys, they all assumed NAFTA was dead, and they were OK.

— Jorge Guajardo (@jorge_guajardo) October 17, 2017

The veil of progress has clearly fallen apart. The ministers' comments to press pool were stern, with Mexico reaffirming its red lines. Canada acknowledged "distance" between its position with the U.S. — calling out its southern neighbor for a "winner-takes-all" mentality, and the U.S. questioning its neighbors' "resistance to change."

The deal was reportedly derailed by a host of issues presented by the U.S. that were unacceptable to both Mexico and Canada. In particular, proposals over a change to auto rules of origin, dairy supply management, a "sunset clause" and government procurement rules (or 'Buy American' rules) stood out as the main disagreements.

As negotiators take a month off to ponder "creative ways" to shift positions, the jury is still out on whether the talks will succeed at all. The fifth round should prove more instructive.