Canada and Mexico will formally oppose some of the Trump administration’s proposed revisions to the North American Free Trade Agreement Tuesday, but will not walk out on the talks, according to sources close to the negotiations.
Still, the governments’ rejection heightens the possibility that President Trump will formally pull the U.S. out of the 1993 trade deal, a threat he has made repeatedly in the past. Trump has said changes that benefit the U.S. economy must be made or the U.S. might leave the deal.
A source with knowledge of the talks told the Washington Examiner that Mexico would not go along with the U.S. administration’s proposal to include a sunset clause in NAFTA. CNBC reported Tuesday that Canada and Mexico would “firmly reject the U.S. proposals floated in the current round of NAFTA negotiations.”
A source with the Canadian government who requested anonymity downplayed the tensions. “There are disagreements, but good progress is being made and constructive dialogue continues,” the source told the Washington Examiner.
The fourth round of talks, being held in Arlington, Va., have been strained. A press conference to kick off the event was not held and the talks, scheduled to end Tuesday, were extended two days. The talks were extended to Tuesday “to allow additional time for negotiations,” according to U.S. Trade Representative Robert Lighthizer.
In addition to adding a sunset clause, the Trump administration is pushing for a change to NAFTA’s rules that would increase the percentage of an automobile’s inputs, such as parts and labor, that come from either the U.S. or Canada to have a car be deemed to be “made in America.” Today, 62.5 percent of a car has to come from the U.S. or Canada to meet this standard, but the Trump administration wants to increase that to 85 percent and more generally wants to require more production in the U.S. in order to help drive production and jobs back to America.
Today, both Canada and Mexico are home to many companies that form part of the U.S. auto industry supply chain. Changing the rules this way would severely disrupt their business.
Before meeting with Canadian Prime Minister Justin Trudeau at the White House last week Trump told reporters, “It’s possible we won’t be able to reach a deal with one or the other. And in the meantime we’ll reach a deal with one.”
