[CTC] Trump threatens to use termination clause in NAFTA talks

Wed Aug 30 06:09:02 PDT 2017

 Trump comments and responses in a number of articles below…

https://www.politicopro.com/trade/story/2017/08/trump-threatens-to-use-termination-clause-in-nafta-talks-161160 <https://www.politicopro.com/trade/story/2017/08/trump-threatens-to-use-termination-clause-in-nafta-talks-161160>

Trump threatens to use termination clause in NAFTA talks
By DOUG PALMER <https://www.politicopro.com/staff/doug-palmer>

08/28/2017 05:54 PM EDT

Updated 08/28/2017 08:06 PM EDT
President Donald Trump said Monday he might have to use the threat of withdrawing from NAFTA to get Canada and Mexico to agree to U.S. demands for revisions to the pact.

"I believe you will probably have to at least start the termination process before a fair deal can be arrived at," Trump told reporters during a joint press conference with the president of Finland, who is visiting the White House. "Because it's been a one-side deal for Canada and for Mexico. ... It's been unfair for too long."

Trump made the comments as the United States, Canada and Mexico are preparing for the second round of talks on renegotiating NAFTA, starting this Friday in Mexico City. It was the second time <https://www.politicopro.com/trade/story/2017/08/trumps-threat-of-nafta-withdrawal-loses-its-edge-161011> in recent weeks Trump has referred to the possibility of terminating the agreement. But this time, he seemed to suggest using it as a prod to sway Mexico and Canada on the terms for remaking the free trade deal.

NAFTA has a specific provision known as Article 2205 that allows any party to withdraw from the agreement six months after notifying the other two countries in writing that it intends to do so. Some trade experts argue <https://www.politicopro.com/tipsheets/morning-trade/2017/08/a-legal-look-at-a-nafta-termination-timeline-024384> that Trump would need congressional approval to terminate the agreement since the U.S. Constitution gives Congress jurisdiction over trade.

During the first round of talks, Canada and Mexico balked <https://www.politicopro.com/agriculture/story/2017/08/red-lines-ooze-from-first-round-nafta-clashes-160922> at an American concept for revising NAFTA's automotive trade rules, to require that a higher percentage of auto parts be made in the United States in order for cars and trucks to qualify for reduced duties under the pact. That would jeopardize jobs in Canada and Mexico and disrupt supply chains built up over the last two decades.

Trump reiterated that Mexico was being "very difficult" in the talks, but that that was understandable because they have had a "sweetheart deal" under the original pact. He also repeated his belief that Mexico would eventually pay for a border wall to keep illegal drugs and undocumented immigrants out of the U.S.

"We need the wall. It's imperative. We may fund it through the United States, but ultimately Mexico will pay for the wall," Trump said, adding he hoped that it is not necessary to force a government shutdown next month in order to get Congress to appropriate funds to begin construction.

Separately, a Mexican Economy Ministry spokesman indicated that U.S. Trade Representative Robert Lighthizer, Canadian Foreign Minister Chrystia Freeland and Mexican Economy Minister Ildefonso Guajardo may not play a major role during the second round of NAFTA talks.

There is no plan for the three officials to make opening statements, as they did for the first round in Washington earlier this month, the spokesman said.

A USTR official said Lighthizer would go to Mexico City for the end of the second round. A Canadian government official said he expected Freeland would also attend the end of the round.

http://www.huffingtonpost.ca/2017/08/27/nafta-talks-trump-says-canada-and-mexico-are-being-very-difficult_a_23187154/ <http://www.huffingtonpost.ca/2017/08/27/nafta-talks-trump-says-canada-and-mexico-are-being-very-difficult_a_23187154/>

NAFTA Talks: Trump Says Canada And Mexico Are Being 'Very Difficult'
"Both being very difficult, may have to terminate?" the president wrote.
 08/27/2017 13:40 EDT | Updated 26 minutes ago
WASHINGTON — U.S. President Donald Trump again suggested the North American Free Trade Agreement be terminated, tweeting Sunday that both Canada and Mexico are being "very difficult," but observers and political leaders didn't appear to take the threat too seriously.

Quebec Premier Philippe Couillard brushed aside Trump's comment.

"I think what we have to recognize is that the negotiations are going forward. You will not hear me react to his daily tweets or statements. I don't think that would be very productive," Couillard said as he arrived in Charlottetown for the annual meeting of New England governors and eastern premiers.

Couillard says the American governors he's meeting with are eager to modernize and improve NAFTA.

"When we talk to governors, when business people talk to each other, the feeling is quite good and quite positive. Everybody recognizes that trade is beneficial for both Canada and the U.S.A."

Trump has already threatened earlier this year to end NAFTA. At the time Foreign Affairs Minister Chrystia Freeland's office said "heated rhetoric" is common in trade negotiations, her officials had little to add in response to Trump's Sunday tweet.

Sunday's tweet was the first time though that Trump has complained about Canada's role in the talks, which began earlier this month between Canada, the U.S. and Mexico.

You will not hear me react to his daily tweets or statements.Quebec Premier Philippe Couillard
Sui Sui, an economics professor at Ryerson University's Ted Rogers School of Management, said she doesn't take Trump's comments too seriously either, because these kind of talks "should be hard."

"This is a pretty normal trade negotiation: each party fights (for) the best interests of their own country," she said. "The Canadian government is just doing their job, same as the Mexican government."

Robert Holleyman, former deputy trade czar under Barack Obama, also doesn't expect Trump to follow through with his threat to withdraw the U.S. from the trade deal. In a Twitter post on Sunday morning, Holleyman cited agricultural interests and dissent from Congress as barriers to the president's plan.

"Mark my words. He will not pull out of NAFTA," he wrote.

Trade economist Dan Trefler, professor at the University of Toronto and senior research fellow at the Canadian Institute for Advanced Research, agrees that Trump's Twitter rhetoric is unlikely to translate to action. For one thing, the president is unlikely to receive the congressional approval he would need to act on a major trade agreement. "Congress has been more involved in these trade negotiations than it's ever been involved in any previous trade negotiation," Trefler says.

And while withdrawing from NAFTA would appeal to parts of Trump's base — people who work in manufacturing jobs in states like Michigan and Wisconsin, for instance — Trefler says it would alienate Trump's many supporters in the farm belt.

Echoing Couillard, Trefler said that focusing on Trump's inflammatory Twitter posts can detract from the things his administration is doing. "It's easy for him to make these kinds of statements, because they play to the image," he says.

"Trump has only one audience, and that's the electorate."

By Maija Kappler in Toronto, with files from Kevin Bissett in Charlottetown

https://www.reuters.com/article/us-trade-nafta-mexico-planb-idUSKCN1B92MA <https://www.reuters.com/article/us-trade-nafta-mexico-planb-idUSKCN1B92MA>

Mexico dusts-off 'Plan B' as Trump revs up threats to kill NAFTA
Ana Isabel Martinez <https://www.reuters.com/journalists/ana-isabel-martinez> and Lizbeth Diaz <https://www.reuters.com/journalists/lizbeth-diaz>
4 MIN READ
·          
MEXICO CITY (Reuters) - Mexico sees a serious risk the United States will withdraw from NAFTA and is preparing a plan for that eventuality, Economy Minister Ildefonso Guajardo said on Tuesday, calling talks to renegotiate the deal a “roller coaster.”

U.S. President Donald Trump has threatened three times in the past week to abandon the North American Free Trade Agreement, revisiting his view that the United States would probably have to start the process of exiting the accord to reach a fair deal for his country.

Trump has vowed to get a better deal for American workers, and the lively rhetoric on both sides precedes a second round of talks starting on Friday in Mexico City to renegotiate the 1994 accord binding the United States, Mexico and Canada.

“This is not going to be easy,” Guajardo said at a meeting with senators in Mexico City. “The start of the talks is like a roller coaster.”

The need for a back-up plan in case Trump shreds the deal underpinning a trillion dollars in annual trade in North America has been a long-standing position of Guajardo, who travels to Washington on Tuesday with foreign minister Luis Videgaray to meet senior White House and trade officials.

“We are also analyzing a scenario with no NAFTA,” Guajardo said.

In an interview published earlier on Tuesday in Mexican business daily El Economista, Guajardo said “there is a risk, and it’s high” that the Trump administration abandons NAFTA.

Responding to Guajardo’s comments, Canadian Prime Minister Justin Trudeau said his government would continue to work “seriously” to improve NAFTA.

Earlier this month, Guajardo told Reuters a “Plan B” meant being prepared to replace items such as the billions of dollars in grain Mexico imports from the United States annually.

To that end, and to seek openings in more markets, Mexico is hosting trade talks with Brazil this week. Trade officials are also discussing a possible replacement for the Trans-Pacific Partnership trade pact that Trump ditched after taking office.

Overlapping with the NAFTA talks, Mexico will participate in separate trade meetings with Australia and New Zealand in Peru, and President Enrique Pena Nieto travels to China this weekend.

Still, attempts to diversify trade will not be easy. Some 80 percent of all Mexican exports go to the United States, and economies such as Brazil and China often compete with Mexico.

Guajardo also suggested World Trade Organization tariffs that would kick in if NAFTA crumbled would be more favorable for Mexico, a view held by many Mexican experts who think trade with the United States would survive the demise of the 1994 deal.

”I don’t think it’s going to make that much of a difference in terms of the trading relationship, said Andres Rozental, a former Mexican deputy foreign minister. “If we have to go to WTO tariffs, for us it’s fairly straightforward.”

Guajardo’s and Videgaray’s trip to Washington was announced after Trump not only threatened to pull out of the trade deal, but again said that Mexico would end up paying for the wall he wants to build between the two countries.

Mexico has refused point blank to pay for a wall. In January, after similar comments led Mexico to scrap a summit with Trump, the two sides agreed not to talk in public about it.

https://www.ft.com/content/bc3e1090-e0be-3a7d-b604-2034217e0aca <https://www.ft.com/content/bc3e1090-e0be-3a7d-b604-2034217e0aca>

Mexican ministers head to Washington after Trump’s Nafta threats

2 HOURS AGO by: Jude Webber

Mexico’s foreign and economy ministers head to Washington on August 29-30 ahead of this week’s start of the second round of negotiations on modernising the North American Free Trade Agreement, and after yet more threats from Donald Trump that he could pull the US out of the pact.

Foreign Minister Luis Videgaray will hold meetings with his US counterpart Rex Tillerson and National Security Adviser, HR McMaster in what the foreign ministry said was a previously scheduled event. “Various issues on the bilateral agenda, and recent developments regarding them” are on the agenda, the two Mexican ministries said in a statement, giving no details.

Ildefonso Guajardo, Mexico’s economy minister, and Mr Videgaray will meet Wilbur Ross, trade secretary as well as the US Trade Representative, Robert Lighthizer and Jared Kushner, Mr Trump’s son-in-law and adviser for discussions on “specific issues of the trade relationship between both countries”, the statement said.

The US president has repeated his scepticism in recent days that the Nafta renegotiation, which began earlier this month, can be pulled off successfully, and tweeted at the weekend that Mexico and Canada were both being “very difficult”.

Mexico has shrugged off such talk as negotiating bluster, and the peso – which at the start of the year plunged sharply on Mr Trump’s dire predictions – has held steady. But Mexico acknowledges that reaching a deal with such a mercurial partner is far from assured and may not be possible. Mr Guajardo told a plenary session of the ruling PRI party on Tuesday that Mexico is hopeful and is bringing constructive proposals to the table, but will not accept a revamped Nafta at any price.

Negotiators from the three countries gather in Mexico City for talks from September 1 to 5. According to Mr Guajardo in an interview with El Economista newspaper, Mexico hopes to make progress so that at the third round of talks, to be held in Canada, deals on some non-confrontational issues may be reached. Issues where the three sides remain wide apart, like rules of origin – the amount of a component that must be made regionally to qualify for duty-free access – will be left for later. The three sides have anyway yet to agree a common text to work from.

Mr Videgaray, a former finance minister, will also meet the head of the Inter-American Development Bank, Luis Alberto Moreno while in Washington.

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