The Trump administration has dropped a contentious demand that all vehicles made in Canada and Mexico for export to the United States contain at least 50 per cent U.S. content, removing a key roadblock to a deal for a new North American free-trade agreement.

Sources with knowledge of the talks said the United States took one of its toughest protectionist demands off the table during NAFTA meetings in Washington last week, which included a sit-down between Foreign Minister Chrystia Freeland and U.S. Trade Representative Robert Lighthizer. The people spoke on condition of anonymity in order to discuss the confidential discussions. 

Autos have been one of the biggest sticking points in the talks. Washington had originally demanded both the 50 per cent U.S. content requirement and jacking up an existing requirement for North American content from 62.5 per cent to 85 per cent. Canada and Mexico flatly rejected the U.S. content demand, since it would give the United States a guaranteed economic advantage over its North American trading partners. 

Canada's ambassador to Washington, David MacNaughton, said on Tuesday that meetings over the past two weeks "have been more positive than I've seen them before. 

This has been excerpted from the 20 March 2018 edition of The Globe and Mail.