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Washington (AFP)

US Commerce Secretary Wilbur Ross on Wednesday said odds favor a successful renegotiation of the landmark North American Free Trade Agreement but warned there are limits on what Washington will accept.

A sixth round of negotiations is underway this week in Montreal, with time running out to reach a deal to update the 24-year-old trade pact as officials from the United States, Mexico and Canada work to resolve the their toughest disagreements.

"I think there's a good chance" for the NAFTA talks, Ross told CNBC on the sidelines of the World Economic Forum in Davos, Switzerland.

"Everybody would prefer to have it be a satisfactory deal for all three parties but the president has made it clear that if it's not a deal that he likes, he won't do it."

President Donald Trump is due to take his "America First" economic message to the global gathering later this week.

The NAFTA talks have deadlocked over contentious demands from Washington that Canada and Mexico oppose, as do many in the business community.

The White House has pushed for a "sunset clause" that would end the trade deal after five years unless it is renewed by the parties, and wants tough US-made content requirements for the auto industry.

Mexican Finance Minister Jose Antonio Gonzalez Anaya was guarded in his remarks about the NAFTA talks, saying simply that Mexico is pushing for "a good deal."

"We believe trade is good for all three nations and that's what we're hoping for," he told CNBC from Davos.

The Trump administration's aggressive stance on trade has prompted concerns that a trade war could jeopardize economic growth.

Jim O'Sullivan of High Frequency Economics said "trade frictions remain a source of downside risk" even amid the more upbeat global forecasts.

But "We remain hopeful that trade frictions will not escalate to the point that confidence is undermined," he said in a research note.

"We also expect NAFTA negotiations to culminate in a new agreement, which the president will describe as the best trade deal ever written."

© 2018 AFP