A White House official said Monday that Canada’s consent was not needed to approve the trade deal that President Trump announced with Mexico earlier in the day, even though the administration argued that the deal would “supplant” the North American Free Trade Agreement between the U.S., Canada, and Mexico. Canada didn’t appear to agree.
The agreement announced Monday alters, among other changes, the “rules of origin” in NAFTA for what portion of a car has to be made in North America in order for it to be duty-free, setting the rate at 75 percent, up from NAFTA’s 62.5 percent, among other changes. Administration officials contend that this would be a separate bilateral trade deal between the U.S. and Mexico, and therefore would not necessitate the approval of a third party.
[Related: Mike Pence says trade deal begins ‘new chapter’ with Mexico]
“Ideally, we will have the Canadians involved,” a senior administration official told reporters. “If we don’t have the Canadians involved, then we will notify (Congress) that we have a bilateral agreement that Canada is welcome to join. We think that satisfies our requirements and the requirements of the (NAFTA) statute.”
This puts the administration into uncharted legal territory. While the U.S. struck trade deals with both Canada and Mexico individually before NAFTA , that 1993 deal was commonly understood to replace those earlier ones. Monday’s announcement involves trade matters that primarily involve U.S. and Mexico, not Canada, but allowing the deal to stand would create a precedent for subsequent two-way deals excluding one of the three trade partners, a process that would chip away at NAFTA’s provisions.
In a statement Monday, Canada appeared to indicate that it did believe its consent was required. “We are in regular contact with our negotiating partners, and we will continue to work toward a modernized NAFTA,” Adam Austen, a spokesman for Foreign Minister Chrystia Freeland, told Reuters. “We will only sign a new NAFTA that is good for Canada and good for the middle class. Canada’s signature is required.”
Mexican President Enrique Pena Nieto was clearly wary of the possible conflict. He pushed several times during a joint press conference with Trump for Canada to be included in the trade deal anyway. “It is our wish, Mr. President, that now Canada will also be able to be incorporated in all this,” he said. “And I assume that they going to carry out negotiations of the sensitive bilateral issues between Mexico — rather, between Canada and the United States.”
Trump was unmoved, however, saying: “As far Canada is concerned, we haven’t started with Canada yet. We wanted to do Mexico and see if that was possible to do.”
