Published: Fri, October 13, 2017
World | By Melba Underwood

Trump Says New Trade Deal with Canada Could Exclude Mexico

Trump Says New Trade Deal with Canada Could Exclude Mexico

When Canadian Prime Minister Justin Trudeau meets President Donald Trump on Wednesday, he will try to persuade the USA leader to focus on Mexico as a source of potential problems at talks to update NAFTA.

"We all understand that it has worked", he said of the 23-year-old North American Free Trade Agreement, before adding, "As we think about redoing trade agreements between Canada, the United States and Mexico, there is opportunity for improvement".

As the pair sat down, trade negotiators huddled nearby in the Washington suburb of Arlington, Virginia for another round of talks, complicated by the aerospace spat.

"It's possible we won't be able to make a deal, and it's possible that we will".

During talks at the White House Wednesday, President Trump suggested the possibility of replacing NAFTA with a new U.S.

Those proposals include removing dispute resolution mechanisms, limiting trade in fresh produce and introducing minimum quotas for USA parts in autos.

"There's been huge investments in Canada, the USA and Mexico, that are long-term assets", said Don Walker, chief executive officer of Magna International Inc. a Canada-based parts maker with more than 25,000 employees in the U.S.

Videgaray said leaving NAFTA would increase tariffs by an average of about 3.5% for the 44% of Mexican exports that use NAFTA trade preferences. The Trump administration has imposed hefty duties on Bombardier's C-Series jetliner. Trudeau said he recognized that there were proposals in the deal that the United States and Canada disagreed on, but insisted that the talks had begun on Wednesday "in good faith". The talks are scheduled to conclude October 16.

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Trudeau told reporters in Washington DC that he agreed with the United States president that that the NAFTA trade deal needed to be revamped and that any new agreement needed to "give citizens opportunities to succeed".

Job losses could be as much as 24,000 if renegotiations lead to requirements for content from North American and specifically the United States, according to the study. In addition, officials said they are preparing for the possibility of ending the NAFTA and moving USA $1 trillion in annual trade.

Trump has threatened to scrap the 1994 pact unless changes are made to address issues such as a $64 billion deficit with Mexico.

IMF Economic Counsellor Maurice Obstfeld warned Tuesday that all three NAFTA countries faced economic consequences if the outcome of the talks ended up disrupting trade relations.

U.S. Chamber of Commerce CEO Thomas Donohue, speaking in Mexico City on Tuesday, pledged to fight "like hell" to defend Nafta if Trump tries to pull out.

He cited in particular a provision to allow the agreement to expire in five years unless all parties agreed to extend it. "In these trying and complicated times, we must double down on these relationships, not drive them apart", he warned. "This clause would achieve the opposite effect".

Today, Prime Minister Trudeau arrives in Mexico for meetings with President Enrique Pena Nieto.

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