Trump Says New Trade Deal with Canada Could Exclude Mexico

Trump: Trade deal possible with Canada, minus Mexico

I have spoken to leaders in Canada and Mexico on multiple occasions and they have constantly reiterated one point to me: They want to work with us, but they have to be able to sell any deal to Legislatures back in their home countries.

The U.S. Chamber of Commerce has warned against so-called "poison pill" proposals by the U.S., including the sunset clause.

"I highlighted to the president how we disagreed, vehemently, with Commerce's decision to bring in countervailing and anti-dumping duties against Bombardier", Trudeau told reporters following talks with US President Donald Trump.

U.S., Canadian and Mexican negotiators are meeting in Arlington, Va., this week for a fourth round to try to revise the 23-year-old agreement, which allows the tariff-free flow of vehicles and parts across the three borders. "I think it's just a bridge too far", said Wendy Cutler, the Asia Society's Washington policy director and former chief USA negotiator for the Trans-Pacific Partnership trade deal canceled by Trump.

"We'll see if we can do the kind of changes that we need", he said.

U.S. proposals include limiting the number of federal government contracts that Mexican and Canadian companies can win, a provision that would cause the deal to automatically expire in five years unless all three countries vote to renew, and changes in how much of a product needs to be made in North America to come under Nafta protections. Mexico strongly opposes such a move, which would damage its own auto industry.

It's fair to say that 2017 has been a turbulent year for Mexico, given that the new White House occupant keeps making public comments threatening North American trade relations.

The proposals call for North American content, overall, to rise to 85 percent from the current 62.5 percent. Representatives of the auto industry warned some of the US demands could raise prices for vehicles.

Many in Mexico have said that it is better to move forward without a trade agreement than to "submit to an evil agreement". The negotiations were extended on Wednesday by two days to Oct 17.

Luis Videgaray said "we have to be prepared to say no, and if necessary to get up from the table and if necessary leave the treaty".

Rules of origin will be discussed by negotiators today, Sunday and Monday, according to an agenda obtained by Bloomberg.

Finance Minister Bill Morneau, in Washington for meetings with G20 finance ministers and the International Monetary Fund, was confronted Thursday with several questions about a possible US exit from NAFTA. Trudeau said he was still optimistic about modernizing the trade deal and the Canadian Dollar has stabilized over the last few sessions, helped by a weaker greenback.

Despite their common ground, however, Canada and Mexico are also at odds on some key issues.

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