NAFTA without Canada? Threat is seen as a ploy

WASHINGTON – President Donald Trump’s threat to terminate a quartercentury-old, three-country trade agreement and replace it with a deal involving only Mexico sounds to analysts like nothing more than a hardnosed negotiating ploy to extract trade concessions from Canada.

But could he do it? Legally, yes. But, politically, it would be difficult.

“There will be no deal without Canada, period,” said Dan Ikenson, director of the Center for Trade Policy Studies at the Cato Institute, a think tank based in Washington.

In a celebratory Oval Office news conference, Trump announced Monday that the U.S. and Mexico struck a new trade deal that could eventually pave the way for the revision of the North American Free Trade Agreement, or NAFTA.

In the same breath, Trump said he intended to terminate NAFTA, the trade pact created by the U.S., Mexico and Canada that eliminated most tariffs among those three nations and made it easier for corporations in those three countries to move goods across the border.

Trump suggested a separate deal could be reached with Canada “if they’d like to negotiate fairly” or that the Canadians could be brought into the new deal with Mexico. But in what some viewed as a warning shot in advance of a new round of talks, Trump threatened to slap tariffs on Canadian automobiles, which he described as “the easiest thing we can do.”

On Tuesday, Canadian Foreign Minister Chrystia Freeland cut short a week-long trip to Europe and flew to Washington to restart the negotiations. Canada had been involved in the initial rounds of talks to overhaul NAFTA but has been on the sidelines since July, when the U.S. and Mexico began negotiating with each other.

She told reporters she and United States Trade Representative Robert Lighthizer had “a very good, constructive conversation” on rewriting NAFTA and will plunge “full-steam” into specific issues on Wednesday.

Trade analysts in the U.S. and Canada said Trump’s threats to terminate NAFTA seemed more like bluster intended to give the U.S. an advantage heading into those negotiations than something he might do. They stressed that Canada should be included in any new trade deal with Mexico – a view that also is popular in Congress.

If Trump were to follow through on his threat to terminate NAFTA, there is a legal mechanism that would allow him to do it. But it would not be easy, given the support the trilateral trade pact has in Congress.

President Donald Trump could probably replace NAFTA with a new deal with Mexico that excludes Canada but only if Congress is on board, analysts say.