Trump Says US Will “Probably” End Up Terminating NAFTA

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Despite a subdued trilateral statement from the three nations renegotiating NAFTA and a seeming commitment to move forward with a deal, President Trump has returned to talk of killing the free trade agreement altogether.

Official renegotiations with Mexico and Canada started last Wednesday and carried on for five days, but in comments at a rally in Phoenix, Arizona Tuesday, the U.S. president said—reiterating that NAFTA is “one of the worst deals that anybody in history has ever entered into”—a new deal doesn’t look likely.

“Personally, I don’t think we can make a deal, because we have been so badly taken advantage of. They have made such great deals, both of the countries, but in particular, Mexico, that I don’t think we can make a deal,” Trump said. “So I think we’ll end up probably terminating NAFTA at some point, OK? Probably.”

Trump had said from early days that he would end the NAFTA agreement if he couldn’t get more beneficial terms for the U.S., and reminding the audience of that he added, “…but we’re going to see what happens.”

The president’s comments came after the Office of the United States Trade Representative issued a joint statement with Mexico and Canada Sunday, at the conclusion of the first round of talks, saying the scope and volume of proposals reflected a commitment from all parties to see “an ambitious outcome.”

USTR said negotiators from all sides will now continue their own domestic consultations in an effort to advance the negotiating text ahead of the second round of talks scheduled to take place in Mexico from Sept. 1-5.

“Negotiations will continue at this rapid pace, moving to Canada in late September and returning to the United States in October, with additional rounds being planned for the remainder of the year,” the USTR statement noted. “While a great deal of effort and negotiation will be required in the coming months, Canada, Mexico and the United States are committed to an accelerated and comprehensive negotiation process that will upgrade our agreement and establish 21st century standards to the benefit of our citizens.”

Ahead of the talks last week, the U.S. stressed that negotiations wouldn’t just bring about tweaks to the deal, but a much more major overhaul.

[Read more about what the U.S. has planned for NAFTA: USTR Promises NAFTA Renegotiation Won’t be Mere Tweaks but a Major Overhaul]

For one, U.S. Trade Rep Robert Lighthizer said rules of origin “must require higher NAFTA content and substantial U.S. content.”

As far as can be seen for now, the second round of talks remains set, so it’s unclear at which point President Trump would can the deal should he decide to do so.

Either way, the office of the USTR has started putting together a proposal that would let the U.S. withdraw from a corporate arbitration system that’s part of NAFTA, according to The Wall Street Journal. In other words, this move would make it voluntary for the NAFTA countries to opt into the investor-state dispute settlement system (ISDS, which functions as an alternative to domestic court systems and lets corporations sue governments if they feel the value of their foreign investments have been diminished by governmental actions), meaning, more or less, that foreign investors would have to take any disputes through the U.S. court system. It could also mean U.S. investors in Mexico and Canada wouldn’t be able to submit their grievances to ISDS either.

U.S. business groups and trade associations aren’t happy about the idea, saying ISDS is key to protecting the U.S. against theft and unfair treatment of U.S. property overseas.

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