Canada to rejoin NAFTA talks after U.S., Mexico agree to overhaul trade pact
OTTAWA — Canada will rejoin faceto-face negotiations with the United States and Mexico on Tuesday after the two continental partners reached a deal that has raised fresh concerns about the fate of the North American Free Trade Agreement.
U.S. President Donald Trump announced Monday that his administration and Mexico agreed on a bilateral trade framework with the potential for big implications for Canada.
He insisted the U.S.-Mexican progress created the foundation for an overhaul — or perhaps the termination — of the three-country agreement.
Trump, a harsh critic of NAFTA, even mused about renaming the deal the “United States-Mexico trade agreement” to wash away the “bad connotations” linked to the 24-yearold pact.
He extended an invitation to Ottawa to join what he cast as American-Mexican negotiations.
The negotiations have stretched through the summer without Canadian officials at the table.
In doing so, he also hit Canada with a threat: if the country doesn’t become part of the new trade deal, he would enact devastating tariffs on automotive imports.
“We’ll start negotiating with Canada relatively soon, they want to negotiate very badly,” Trump said in the Oval Office, with Mexican President Enrique Pena Nieto joining by speaker phone.
“But one way or the other, we have a deal with Canada. It will either be a tariff on cars, or it will be a negotiated deal. And, frankly, a tariff on cars is a much easier way to go, but perhaps the other would be much better for Canada.”
Following Trump’s announcement, Foreign Affairs Minister Chrystia Freeland cancelled the rest of a planned weeklong diplomatic trip to Europe so she could travel to Washington to re-enter high-level talks.
She heads to the U.S. capital as
a key question hangs over the continent’s trading relationship: Is this the end of NAFTA as we know it?
NAFTA is key partnership for Canada, and doubts about its future have already created considerable economic uncertainty. Canada has been away from the NAFTA bargaining table since trilateral talks paused last spring.
“I think it is a hopeful development,” said Canadian Steel Producers Association president Joe Galimberti. “Any progress on NAFTA is good progress. If they have had a breakthrough on the automotive rules-of-origin discussion, then I think that is encouraging.”
“We’re looking forward to Canada rejoining the discussion.”
McMaster University business professor Marvin Ryder says he believes steel and aluminum tariffs against Canada and Mexico will be lifted if a new agreement between the three countries is signed.
“If we get a deal, and everyone is happy, those tariffs should go away because we will be governed by the new NAFTA deal,” he said.
“Even before it is formally ratified, in the spirit of goodwill, Trump should lift the tariffs.”
He says the big issue for Hamilton steelmakers is “bringing certainty back to the market ... With the tariffs in place, they have been losing the booking of business for 2019 and 2020.”
Observers have raised concerns that Canada’s absence from the talks could put Ottawa in a position where it might be pressured into accepting a lessappetizing deal reached between the U.S. and Mexico. Prime Minister Justin Trudeau has insisted his government will only sign a deal that’s good for Canada.
The U.S.-Mexican announcement Monday clearly showed their summertime talks not only hashed out bilateral sticking points — such as automobile rules of origin — but also went deep into trilateral issues.
Canada had been expecting the U.S. and Mexico to focus mainly on their bilateral issues, but they agreed on matters including intellectual property, digital trade, labour and financial services.
The new deal would last 16 years with reviews every six years, a senior U.S. administration official said at a briefing.