WASHINGTON—Canada, the U.S. and Mexico are moving toward a solution on the automotive dispute that has been a key obstacle to the success of North American Free Trade Agreement negotiations, President Donald Trump’s trade chief said Wednesday.

The unusually positive words from U.S. trade representative Robert Lighthizer, who had been sharply critical of Canada’s posture at the bargaining table, corroborated Tuesday’s auto-related optimism from Canadian Ambassador David MacNaughton. Taken together, their words suggest that prospects for a NAFTA deal have brightened.

“The U.S. had a proposal, Canada had a proposal and Mexico has been engaged on the issue. And I think we’re in a position where we’re finally starting to converge,” Lighthizer said in testimony to the House Ways and Means Committee.

MacNaughton said Tuesday that NAFTA talks over the last two weeks have been “more positive than I’ve seen them before.” He told reporters, according to The Canadian Press, that the Trump administration has introduced ideas that would essentially replace its controversial previous proposal for a strict minimum on the amount of each car that would have to be made in the United States to avoid tariffs.

Lighthizer did not offer any such details. But in the most positive public comment he has made on the automotive issue, he told lawmakers that “I think we’re in a pretty good place.”

Prime Minister Justin Trudeau said Wednesday morning that a deal is “eminently possible.” Speaking to reporters in Toronto later in the day, he declined to comment on the automotive situation, but said “there seems to be a certain momentum around the table now that I certainly take as positive.”

He added: “But we will see what new challenges come up in the coming weeks as it continues.”

The shift in the U.S. tone comes after a lengthy meeting last week between Lighthizer and Canadian Foreign Affairs Minister Chrystia Freeland, and amid a pressure campaign from the U.S. auto industry, which strongly opposed a previous U.S. proposal for a new 50-per-cent U.S. content requirement, plus an increase in the North American content requirement from 62.5 per cent to 85 per cent.

“Probably the first glimmer of light on these tough issues in eight months of talks,” said Canadian trade lawyer Lawrence Herman. “Whether it’s enough to move matters forward overall will depend on what happens over the course of this upcoming critical round.”

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As recently as last week, Trump said he is skeptical a good NAFTA deal is possible without first terminating the existing treaty. But Trump’s trade officials, including Lighthizer, now clearly appear to prefer a deal to a termination.

Analysts said the U.S. officials appear to be making a push in advance of the Mexican presidential election on July 1.

“I think there is a realization that if the U.S. can get something that meets some of its goals ... it actually does want to stay in NAFTA,” said Robert Fisher, a U.S. negotiator for the original NAFTA talks in the early 1990s.

“I don’t think the preferred option at this point is withdrawal. I think the preferred option is a revised agreement. And that’s also a change from, say, a year or 15 months ago. That said: anything is possible.”

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If there is no deal in the next month or so, talks will likely be put on hold for months. Mexico’s new president will not take office until December, and the U.S. has congressional midterm elections in November.

Lighthizer has regularly decried what he has described as a lack of progress. On Wednesday, he sounded more understanding. He said he did not expect Canada and Mexico to budge on important issues like agriculture and intellectual property until the end of the negotiating process, wanting to avoid concessions before a deal is in sight.

Lighthizer also criticized various Canadian policies, making clear that significant sticking points remain. Among his complaints: Canada’s “ridiculous” $20 threshold for applying duties to purchases from abroad, such as those from U.S. online stores; Canada’s “third-world intellectual property protection”; and Canada’s protectionist supply management system for dairy and poultry.

Trump’s administration, citing sovereignty concerns, has sought to eliminate or significantly weaken the current dispute resolution tribunal system in which corporations can use NAFTA to challenge decisions of the Canadian, Mexican or U.S. governments. As Lighthizer spoke, Senate Finance Committee chairman Orrin Hatch, a Republican, announced that 103 Republicans had sent Lighthizer a letter warning that excluding the investor-state dispute settlement system from a new NAFTA, or making it optional, “will jeopardize Republican support” for the deal even among supporters of free trade.

“Our position on the importance of these protections has not changed and is as strong as ever: ISDS is an essential enforcement mechanism for investor protections and must be maintained rather than weakened or abandoned,” they wrote.

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