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NAFTA ministers meet to work on possible deal, focus on autos

WASHINGTON/OTTAWA, April 6 (Reuters) - Top U.S., Mexican and Canadian trade officials will meet on Friday to discuss prospects for a deal to update NAFTA amid pressure from Washington to strike a quick agreement despite several unresolved issues.

No time limit has been set for the Washington talks between U.S. Trade Representative Robert Lighthizer, Mexican Economy Minister Ildefonso Guajardo and Canadian Foreign Minister Chrystia Freeland, a Canadian government source said. The three were scheduled to start talks at 10 am EST (1400 GMT).

Lighthizer, citing the need to avoid clashing with a Mexican presidential election on July 1, says he wants a deal in principle to update the North American Free Trade Agreement.

U.S President Donald Trump, who has repeatedly threatened to walk away from NAFTA, on Thursday said the three nations should have something to announce fairly soon.

"An agreement in the next few days is difficult to see, but a quick result can't be ruled out either," Mexican Foreign Minister Luis Videgaray told broadcaster Televisa on Friday.

Mexican and Canadian officials say some kind of an announcement could be made at a regional summit in Lima, Peru at the end of next week.

Unveiling the outlines of a deal would allow leaders to claim a political victory while leaving officials to work out the precise details in the months to come.

Yet major challenges remain, including a U.S. demand that the North American content of vehicles made in NAFTA nations be increased to 85 percent from 62.5 percent.

A Mexican source said U.S. negotiators had shown "some flexibility" on the so-called rules of origin issue, adding that the three nations were now looking at alternatives.

Insiders though say the question of automotive content has to be nailed down now.

"We are dealing in black and white. You can't leave things gray," said one source with direct knowledge of the talks, citing the huge complexity of the industry.

"The last thing you want to do is to be making something that isn't compliant and to be told in an audit 'You're not NAFTA compliant and you owe duties'," said the source, who requested anonymity given the sensitivity of the situation.

Canada's chief negotiator last week said there were still major differences over government procurement and dispute resolution.

A dispute between Washington and Mexico City over Trump's plan to send National Guard troops to the border is also hanging over the talks. Mexico's president on Thursday rebuked Trump. (Additional reporting by Lizbeth Diaz in Mexico City Editing by Susan Thomas)