Concerns are mounting that a renegotiated North American Free Trade Agreement (NAFTA) will not be reached after President Donald Trump said the trilateral deal will be terminated if a new one cannot be struck.
The stark assessment came as Trump met with Canada’s Prime Minister Justin Trudeau and Mexico’s Prime Minister Enrique Pena Nieto earlier this week as the fourth round of talks got underway in Washington.
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Trudeau, who may have been looking for reassurances from Trump over the importance of trade with Canada, told a press conference at the Oval Office of the “incredibly close relationship” the two countries share.
“We have a good partnership, and there’s always ways to improve it – always issues we need to talk through. And that’s why having an ongoing, constructive relationship between the President and the Prime Minister is really important.”
However, when asked if he believes NAFTA is dead, Trump responded: “It’s possible we won’t be able to make a deal, and it’s possible that we will. We have a great personal relationship, and we have a relationship now as two countries, I think, that’s as close as ever.”
The President previously suggested the trade agreement might only need some small tweaks, telling the press conference on Wednesday (11 October): “We’ll see if we can do the kind of changes that we need. We have to protect our workers and, in all fairness, the Prime Minister [Trudeau] 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 think Justin understands this: If we can’t make a deal, it’ll be terminated and that will be fine. They’re going to do well; we’re going to do well, but maybe that won’t be necessary. But it has to be fair to both countries.”
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By GlobalDataTrump admitted the negotiations will be “tough” but said a decision will be made “over the next fairly short period of time.”
Asked if he would seek a deal with each individual country should NAFTA negotiations not work out, Trump said he would.
Speaking to reporters at a roundtable discussion with civil society leaders in Mexico City this week, Trudeau is understood to have said that despite the unpredictability of the negotiating process and some surprising decisions made by the US administration, Canada would remain at the table, according to CBC News.
“We will continue to take seriously the work we do and we will not be walking away from the table based on proposals put forward,” Trudeau said. “We will discuss those proposals, we will counter those proposals, and we will take seriously these negotiations.”
Meanwhile, Pena Nieto said what was important was happening at the negotiating table and that everything else was “speculation.”
Data released by the Bureau of Transportation this week showed monthly freight flows between the US and its NAFTA partners plunged 10% month-on-month in July, but rose 6.5% from a year earlier.
NAFTA trade flows fell 10% in July
NAFTA came into effect on 1 January 1994 with the aim of eliminating barriers to trade and investment among the US, Canada and Mexico.
Since then it has helped encourage a regional textile and apparel supply chain among its members. The US typically exports yarns and fabrics to Mexico, where they are cut and sewn into apparel (taking advantage of the country’s lower labour costs); with the finished garments then shipped back to the US and Canada for consumption.
On completion of the third round of negotiations in late September, significant progress was hailed in several areas, but concerns remained that the three partners won’t be able to conclude negotiations by the end of the year.
NAFTA renegotiations continue but concerns remain
