“Trump has long called the 1994 treaty “a bad deal” that hurts American workers. His negotiating team has set proposals that have alarmed their Canadian and Mexican counterparts on the negotiating committee.”
“Canada needs to take a tough stance to the U.S” argues Canadian International Trade Minister Francois-Philippe Champagne. “The Americans understand the rhetoric and strong message, and we need to stand up for Canadian Industry and workers.”
The clock is ticking!
Will the U.S. Pull out of NAFTA? Canada stands firm against Trump
Negotiated more than 20 years ago, the NAFTA (North American Free Trade Agreement) agreement that comprises the economies of the US, Mexico, and Canada has been one of the top news stories since Donald Trump became President of the United States. The sixth round of talks in Montreal has Canada concerned as there are signs the current antagonistic Trump administration could indeed pull the plug on NAFTA and so ending free trade between Canada, Mexico, and the United States. NAFTA was planned to simplify the flow of goods and labour between Canada, the United States, and Mexico. However, Trump has long called the 1994 treaty “a bad deal” that hurts American workers. His negotiating team has set proposals that have alarmed their Canadian and Mexican counterparts on the negotiating committee.
Among the most divisive proposals are: plans to establish rules of origin for NAFTA goods that would set minimum levels of U.S. content for autos, the end of an independent committee to resolves trade disputes, and the implementation of a sunset clause that would terminate the trade deal between the three countries if it is not renegotiated every five years. All these measures would heavily impact Canadian and Mexican industries, such as the auto parts manufacturing, agriculture, softwood lumber, and dairy production. However the U.S. is still subject to the clause that requires half a year’s notice before withdrawal from NAFTA. President Trump has maintained unequivocally that current and past NAFTA agreements are unfavourable to the U.S. costing American jobs and business, while Mexico and Canada have enjoyed positive job growth, and balance of trade surpluses to the detriment of the U.S. economy. Trump has repeatedly threatened to walk away from NAFTA unless major changes are made.
As a result of fears of a possible U.S. withdrawal from NAFTA, Canadian currency, as well as stocks of firms that rely heavily on North America’s integrated economy, have recently fallen.
Canadian Foreign Affairs Minister Chrystia Freeland recently told the press she’d be bringing some “creative” new proposals to the table at the Montreal meetings in response to U.S. inflexibility in NAFTA talks. However, Canadian Prime Minister Justin Trudeau said he remains optimistic that Canada, the United States, and Mexico can strike a “win-win-win” deal that would benefit all three countries.
Both Canada and Mexico have categorically rejected a number of U.S. demands, including American calls to scrap the independent dispute settlement process, end Canada’s system of supply management for dairy and poultry, and the hike in American and North American content requirements for automobiles.
“Canada needs to take a tough stance to the U.S” argues Canadian International Trade Minister Francois-Philippe Champagne. “The Americans understand the rhetoric and strong message, and we need to stand up for Canadian Industry and workers,” Champagne said.
He added: “We’ve been talking with Canadian stakeholders and the need for a “diversification imperative”— trying to expand Canada’s trade with Europe, Asia, and South America so that it’s less reliant on the U.S.”
In regards to Mexico, the Reuters news agency reported that Mexico will leave the NAFTA negotiating table if U.S. President Donald Trump decides to trigger a 6-month process to withdraw from the trade pact. Mexico, like Canada, has experienced a lower currency and stock market drop due to fear the U.S. may leave NAFTA.
“I think it’s indisputable that if Trump announces a U.S. withdrawal from NAFTA, well at that moment the negotiations stop,” said Raul Urteaga, head of international trade for Mexico’s agriculture ministry, reports Reuters. While a NAFTA termination letter would start the six-month exit clock ticking, the United States would not be legally bound to quit NAFTA once it expires. The Trump administration in Washington could use the move as the ultimate power play in quest to gain power over Canada and Mexico in talks to update the 24-year-old trade agreement.