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February 16, 2018updated 12 Apr 2021 2:25pm

US signals a withdrawal from NAFTA unlikely

The US has expressed its optimism at securing a deal for the North American Free Trade Agreement (NAFTA) – further evidence that a withdrawal from the trade pact is not on the horizon.

The US has expressed its optimism at securing a deal for the North American Free Trade Agreement (NAFTA) – further evidence that a withdrawal from the trade pact is not on the horizon.

In a public meeting this week, Trade Representative Robert Lighthizer suggested that the threat of the US submitting a formal notice of withdrawal from NAFTA “in order to get a good agreement” has receded, stating that “we’re making real headway.”

According to international trade law firm Sandler, Travis & Rosenberg, he said there are “a number of issues that we still have to work our way through” but was optimistic that securing a deal that “the vast majority of Republicans and Democrats support” is “very much in reach.”

It is one of a number of hints the Administration has dropped in recent days that withdrawing from NAFTA is not in its current plans.

On Thursday, US Treasury Secretary Steven Mnuchin said he was “cautiously hopeful” it will be able to reach a deal with Canada and Mexico on a revised NAFTA, saying it was a priority for the Trump administration. US Agriculture Secretary Sonny Perdue also recently said he expects a deal by the year’s end.

President Donald Trump has repeatedly threatened to terminate NAFTA if a new deal can’t be struck. While some progress was made in the sixth round of renegotiations last month, the US has expressed concerns over the slow progress of the talks and addressed the so-called “misunderstanding” that it is being unfair in the negotiations.

NAFTA talks must move much faster

A year ago Trump said the US has “a very outstanding trade relationship with Canada” and would only need to tweak NAFTA with respect to its northern neighbour, whereas more substantive changes would be required to remedy the “extremely unfair” state of trade with Mexico, which had a record US$71.1bn trade surplus with the US in 2016. However, those positions now appear to have been reversed.

In the 13 February meeting, Lighthizer said he felt the NAFTA talks have made progress “particularly with respect to the Mexicans”, though he did not say why. Trump, meanwhile, complained that “Canada has treated us very, very unfairly when it comes to…timber, lumber, and other things.”

Canadian officials have returned the criticism, accusing the US of being inflexible in the NAFTA talks and offering proposals that would weaken its neighbours.

Last month, the country also filed a complaint with the World Trade Organization against the US, highlighting a slew of measures relating to anti-dumping and anti-subsidy duties it says are inconsistent with America’s WTO obligations.

Canada takes US to task over “unfair” trade practices

Meanwhile, Trump is understood to have intensified his criticism of the US-Korea FTA, asserting that it has “produced nothing but losses” for the US and that “it’s incompetent that somebody could have made a deal like that.”

As a result, he said, his administration will “either negotiate a fair deal” with Korea “or we’re going to terminate” the existing agreement.

Following two days of talks earlier this month, feedback suggested there is still more work to be done in negotiating modifications and amendments to the deal – but no date has been set for further talks.

More to be done to reach a deal on US-Korea FTA

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