Could NAFTA End Up Being a US-Canada Bilateral Trade Deal?

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NAFTA

Though a recent study said ending the North American Free Trade Agreement could cost the U.S. up to 50,000 jobs in the auto parts industry alone, President Trump still seems to be very cavalier about whether the renegotiations will end in a deal or no deal.

In a meeting with Canadian Prime Minister Justin Trudeau ahead of the fourth round of NAFTA talks this week, Trump’s response to a question from the press asking “Is NAFTA dead?” was: “We’ll see what happens.”

The president continued on to say that it’s possible that the U.S., Canada and Mexico would be able to make a deal and it’s possible that they wouldn’t.

“We’ll see if we can do the kind of change that we need,” Trump said from the Oval Office. “We have to protect our workers, and in all fairness, the prime minister wants to protect Canada and his people also, so we’ll see what happens with NAFTA. But I’ve been opposed to NAFTA for a long time in terms of the fairness of NAFTA. I said we’ll renegotiate and I mean, I think Justin understands this, if we can’t make a deal it will be terminated and it will be fine, they’re going to do well, we’re going to do well. Maybe that won’t be necessary but it has to be fair for both sides.”

When asked whether he would entertain a bilateral deal with Canada if it couldn’t come to an agreement with Mexico, Trump said, “Sure… It’s possible we won’t be able to reach a deal with one or the other, in the mean time we’ll make a deal with one.”

A Canada-U.S. bilateral trade deal isn’t a wildly unlikely scenario at this state as Mexico has been opposed to the U.S. wanting to increase the percentage of U.S. made components going into cars, and negotiations surrounding that have reportedly held up forward progress.

Mexico’s foreign minister Luis Videgaray has already warned that an expunged NAFTA would damage relations between the U.S. and Mexico, hurting cooperation on issues like drug trafficking and stopping illegal immigration.

Renegotiations have intensified so much this week that the talks, which were originally slated to take place Oct. 11-15, have been extended two days to Oct. 17.

U.S. Chamber of Commerce president and CEO Thomas J. Donohue said to a gathering of business leaders in Mexico City this week, “We’ve reached a critical moment, and the Chamber has had no choice but to ring the alarm bells…Let me be forceful and direct. There are several poison pill proposals still on the table that could doom the entire deal.”

Donohue’s speech was in part to assure Mexican business leaders of a commitment to economic partnership between the U.S. and Mexico—at least with the U.S. private sector.

“No matter what happens, the U.S. business community isn’t going anywhere,” he said. “The U.S.-Mexican commercial relationship is far too valuable to American businesses, workers, and economic growth for us to retreat or turn inward.”

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