Despite a report that the United States has dropped one of its most contentious demands in the NAFTA renegotiations, a former ambassador to the U.S. warns that Canada isn’t in the clear just yet.  

“We’re not out of the woods,” said Derek Burney, who is now senior strategic advisor for Norton Rose Fulbright, in an interview with BNN Wednesday. “There are things that still need to be reconciled."

“What they’re looking at is an agreement in principle,” he added. “It’s not something we’re going to be taking to the bank anytime soon.”

The Globe and Mail reported that there’s been a major breakthrough with NAFTA talks, in which the U.S. is dropping its demand that all vehicles exported from Canada and Mexico into the U.S. must be at least half-built with American content.

The development happened last week, according to the Globe, while Foreign Affairs Minister Chrystia Freeland was holding meetings in Washington, D.C.

Even though he remains cautious, Burney, who served as Canada’s Ambassador to the U.S. from 1989 to 1993, said this has been “the most positive tone we’ve seen on this front” in a while.  

“It sounds to me like the Americans have finally come around to a more practical approach to the issue of auto content than they have shown thus far, he said. “They seem to be responding in a constructive way to what Canada put forward at the meetings in Montreal in January.”

“There are reasons for that,” he added. “I think there are time pressures on the Mexicans in particular – but perhaps even on the Americans as well.”

Pressure has been mounting on the three NAFTA nations to save the agreement, as Mexico’s July 1 election looms and uncertainties around the trade pact weigh on businesses.

“I’m not predicting a Canadian win at this point,” Burney said. “I think that would be a bit of a stretch. After you’ve been hit over the head for six months and then all of the sudden the hitting stops, you have a sense of relief. And I guess that’s what we should be sharing today. But we can’t get carried away with it – there are still difficult issues to resolve.”

But the reported developments are “encouraging,” and Canada should try to build on it to secure a deal, Burney said.  

“Let’s take it – let’s use the momentum, see if we can get an agreement in principle.”  

NAFTA talks began in August, with the most recent round finishing in Mexico earlier this month. The next round of NAFTA negotiations are reportedly tentatively scheduled to begin April 8.