Adviser says USA close to Mexico-only NAFTA deal, Canada unmoved

Irving Hamilton
September 24, 2018

Mexico's incoming government will pursue a bilateral deal with Canada if talks to overhaul the North American Free Trade Agreement (Nafta) falter, said Mexican president-elect Andres Manuel Lopez Obrador.

The US is getting "very, very close" to having to move forward on its trade deal with Mexico without Canada, White House economic adviser Kevin Hassett said on Friday.

A senior White House official on Friday said he hoped Canada would agree to join the U.S. -Mexico trade deal by the end of the month, adding he thought U.S. lawmakers would support a bilateral deal with Mexico if that did not happen.

But now, we're told that Canadians want assurances that Trump's punitive tariffs on steel and aluminum will be lifted and his threat to impose further tariffs on the auto sector be withdrawn.

Despite weeks of negotiations, however, Canada and the US have not been able to reach an agreement.

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I can certainly understand the concern from the Canadians, but the negotiating table is not the place to discuss the actions of an unhinged president.

The uncompromising tone by Trump, who came to power a year ago threatening to tear up NAFTA unless major changes were made to a pact he blames for the loss of manufacturing jobs, has stoked market fears about the potential damage to three nations' highly integrated economies.

Canada has objected to the Trump administration's request to allow tariffs on Canadian auto imports, and the two nations have disagreed over how to handle future trade dispute settlements and Canada's massive dairy industry.

The Globe and Mail newspaper on Thursday reported that USA negotiators want Ottawa to agree to capping its auto exports to the United States at 1.7 million vehicles a year, something that Canadian industry sources dismissed as unacceptable. "The atmosphere continues to be constructive and we continue to work hard toward a deal which has always been Canada's objective".

The two trade leaders are due to be in NY next week for the United Nations General Assembly, but it was unclear if they would meet.

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