Canada, Mex­ico vow to re­main at NAFTA ne­go­ti­at­ing ta­ble

The Globe and Mail Metro (Ontario Edition) - - Front Page - LAURA STONE MEX­ICO CITY ROBERT FIFE OTTAWA

Trudeau’s first of­fi­cial visit to meet with Pena Ni­eto comes af­ter Trump talked of killing agree­ment

Prime Min­is­ter Justin Trudeau and his Mex­i­can coun­ter­part said they won’t aban­don NAFTA ne­go­ti­a­tions be­cause of hard­line bar­gain­ing po­si­tions taken by the United States, but be­hind the scenes Cana­dian of­fi­cials said they are grow­ing in­creas­ingly doubt­ful that a deal can be struck.

Mr. Trudeau and Pres­i­dent En­rique Pena Ni­eto were asked Thurs­day at a press con­fer­ence about the Trump ad­min­is­tra­tion’s pro­posal that a sun­set clause be in­cluded in a rene­go­ti­ated NAFTA – a pro­vi­sion that would au­to­mat­i­cally ter­mi­nate the deal in five years un­less the U.S., Canada and Mex­ico agreed to keep it in place. That de­mand comes amid es­ca­lat­ing pro­tec­tion­ist rhetoric from U.S. Pres­i­dent Don­ald Trump, who threat­ened Wed­nes­day to scrap the agree­ment and pur­sue bi­lat­eral talks with Mex­ico or Canada.

“We will not be walk­ing away from the ta­ble based on pro­pos­als put for­ward,” Mr. Trudeau said, adding he is com­mit­ted to a “win­win-win” deal. “We will dis­cuss those pro­pos­als. We will counter those pro­pos­als, and we will take se­ri­ously th­ese ne­go­ti­a­tions.”

Mr. Pena Ni­eto said he did “tackle” the topic of bi­lat­eral agree­ments with Mr. Trudeau, but re­it­er­ated his de­sire for an up­dated NAFTA.

Both lead­ers said they re­main ded­i­cated to a mod­ern NAFTA agree­ment. But Mr. Pena Ni­eto also said he wouldn’t be “held hostage” by the talks.

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“It can­not be good for just one coun­try, and we can­not be held hostage from a bad sit­u­a­tion,” he said.

Mex­ico is work­ing on plans that in­clude tar­iff mea­sures and find­ing sub­sti­tute mar­kets in case NAFTA talks are un­sat­is­fac­tory, Fi­nance Sec­re­tary Jose An­to­nio Meade said on Thurs­day.

The Prime Min­is­ter’s first of­fi­cial visit to Mex­ico, where he was cel­e­brated in a lav­ish wel­com­ing cer­e­mony at the Na­tional Palace, comes af­ter U.S. Pres­i­dent Don­ald Trump told Mr. Trudeau on Wed­nes­day in a face-to-face meet­ing at the White House that he might kill NAFTA and pur­sue a sep­a­rate trade deal with ei­ther Canada or Mex­ico.

Cana­dian of­fi­cials are in­creas­ingly pes­simistic that a re­vamped North Amer­i­can free-trade agree­ment is pos­si­ble de­spite Mr. Trudeau’s best ef­forts to per­suade Mr. Trump that the 23-year-old tri­lat­eral trade deal is in Amer­ica’s eco­nomic in­ter­ests.

A high-level Cana­dian source said Mr. Trudeau’s in­ter­ven­tion with Mr. Trump in the Oval Of­fice on Wed­nes­day was pos­i­tive and that he did noth­ing to “dam­age per­sonal re­la­tions” with the mer­cu­rial Pres­i­dent.

But the source said there were no sig­nals from Mr. Trump that he is back­ing off his strong pro­tec­tion­ist stand, which has been am­pli­fied at the NAFTA bar­gain­ing ta­ble by hard­line de­mands from U.S. ne­go­tia­tors, with tough U.S. con­tent re­quire­ments for cars and trucks ex­pected as early as Fri­day.

As the fourth round of talks con­tin­ues in Ar­ling­ton, Va., the Trump ad­min­is­tra­tion de­manded a sun­set clause be in­cluded in a rene­go­ti­ated NAFTA.

“The ne­go­ti­a­tions so far, with the ex­cep­tion of the easy stuff, are not go­ing well,” said the source, who was not au­tho­rized to speak on the record. “They are not go­ing well be­cause you are ne­go­ti­at­ing a free-trade agree­ment with a pro­tec­tion­ist Don­ald Trump. It is the most pro­tec­tion­ist ad­min­is­tra­tion since the early 1930s.”

Although it is still too early to de­ter­mine, the source said it may be that Canada will end up pur­su­ing bi­lat­eral ne­go­ti­a­tions with the United States and leave Mex­ico to fend for it­self.

One Cana­dian govern­ment source said Mr. Trudeau’s Wed­nes­day meet­ing with the U.S. House ways and means com­mit­tee was in part a safety mea­sure to get leg­is­la­tors on side if Mr. Trump at­tempts to kill NAFTA. If the Pres­i­dent tried to with­draw the United States from the pact, Con­gress would have to pass leg­is­la­tion to roll back its pro­vi­sions. This could al­low leg­is­la­tors sig­nif­i­cant power in re­strain­ing the White House.

U.S. ne­go­tia­tors for­mally tabled the sun­set clause pro­posal late on Wed­nes­day dur­ing NAFTA talks in a Wash­ing­ton-area ho­tel, said a source with knowl­edge of the closed-door dis­cus­sions, speak­ing on con­di­tion of anonymity to re­veal con­fi­den­tial de­tails.

U.S. of­fi­cials have been in­for­mally float­ing such a pro­posal for months. At a Septem­ber fo­rum or­ga­nized by news web­site Politico, U.S. Com­merce Sec­re­tary Wil­bur Ross said a sun­set clause would al­low the coun­tries to eval­u­ate whether the deal was work­ing and kill it if it wasn’t.

Cana­dian and Mex­i­can of­fi­cials have pub­licly dis­par­aged the idea, which they ar­gue would make it hard for com­pa­nies to make long-term in­vest­ments be­cause they could not be guar­an­teed that their ac­cess to other NAFTA mar­kets would re­main in­tact. It could also force the three coun­tries to go through an­other con­tentious NAFTA rene­go­ti­a­tion five years from now.

Mr. Meade said on Thurs­day that the coun­try is work­ing on plans that in­clude tar­iff mea­sures and find­ing sub­sti­tute mar­kets in case NAFTA talks are un­sat­is­fac­tory.

Ex­perts say Mr. Trudeau is fac­ing in­creased pres­sure from Mex­ico to fol­low the coun­try’s hard line on keep­ing NAFTA a three­way deal.

For­mer Mex­i­can am­bas­sador to Canada Fran­cisco Suarez said that the Mex­i­can govern­ment will want to see Mr. Trudeau “clar­ify” that Canada is com­mit­ted to North Amer­ica, and he won’t drop the tri­lat­eral NAFTA to strike a bi­lat­eral trade deal with the United States.

“There’s this am­bi­gu­ity. I hope that’s clar­i­fied,” said Mr. Suarez, who was Mr. Pena Ni­eto’s en­voy to Canada from 2013 to 2016. “I think that’s some­thing the Pres­i­dent him­self will say: I think it’s im­por­tant that we clar­ify that.”

The Mex­i­can govern­ment will also be look­ing for Canada to join Mex­ico in its warn­ing to Mr. Trump that if he trig­gers the six­month no­tice pe­riod for with­drawal from NAFTA, the talks will stop. Mex­ico has said it won’t ne­go­ti­ate un­der those con­di­tions, but Mr. Trudeau has not.

“On the ba­sic ap­proach, we should be tak­ing the same po­si­tion. Be­cause Mr. Trump will try to split us.”

SEAN KILPATRICK/THE CANA­DIAN PRESS

Justin Trudeau and wife So­phie Gré­goire Trudeau, left, leave a wel­com­ing cer­e­mony with Mex­i­can Pres­i­dent En­rique Pena Ni­eto and his wife, An­gel­ica Rivera, in Mex­ico City on Thurs­day.

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