Canadian, U.S. and Mexican flag ronniechua/Thinkstock

Trump administration signals progress on NAFTA

Administration says talks are going well, "particularly with the Mexicans."

 by Toluse Olorunnipa, Andrew Mayeda and Josh Wingrove

The Trump administration is signaling progress on NAFTA talks, particularly with Mexico, as Republican lawmakers voice support for a trade deal President Donald Trump has threatened repeatedly to abandon.

The U.S. is making “headway” in its efforts to renegotiate the North American Free Trade agreement, Trade Representative Robert Lighthizer said on Tuesday at a meeting with the president and a bipartisan group of lawmakers at the White House. He also downplayed the likelihood of a U.S. withdrawal. Talks are going well, “particularly with the Mexicans,” he said. 

Lighthizer reserved his sharpest words for Canada at the last round of NAFTA negotiations in January. He dismissed a Canadian proposal on cars as vague and sparred with Ottawa over data describing two-way trade flows. He also criticized a trade case filed by Canada against the U.S. at the World Trade Organization as a “massive attack” on American trade law.

Less than a week later, Canadian Prime Minister Justin Trudeau, in some of his most aggressive language yet, said he’d rather walk away from NAFTA than accept a bad deal. Canada’s chief NAFTA negotiator Steve Verheul also took aim at the U.S. on Tuesday, saying there’s been “fairly limited progress overall” and that some American proposals wouldn’t even be good for the U.S., let alone the other countries. “We have seen limited U.S. flexibility even on fairly easy issues,” he said. “This is being driven to a large extent from the top, from the administration.”

NAFTA Warnings 

Trump is increasingly hearing calls for caution, including from Republicans who support NAFTA. At a speech in Ottawa on Tuesday evening, Representative Pete Sessions, the Texas Republican who chairs the House Rules Committee, urged Canada to stand firm in NAFTA talks.

“This is my message to you tonight -- Canada should not yield to a bad deal,” he said, while also warning the Canadians not to include “extraneous” subjects into talks, which he did not specify. “We are not interested in a trade deal that would put you in second place and not be fair to Canada," Sessions added.

Trump said on Tuesday that Canada had acted poorly toward farmers in Wisconsin, only to later see one of that state’s senators, Republican Ron Johnson, defend the pact. “The fact of that matter is, Mr. President, Wisconsin operates a trade surplus with both Canada and Mexico, because we not only export manufacturing products but also agricultural products. And trade works very well for Wisconsin,” he said. 

Representative Darin LaHood of Illinois, a Republican who sits on the Ways and Means Committee, said Tuesday that “pulling out of NAFTA would be a grave mistake” and that the Trump administration’s trade policy has been misguided. “In my district, trade equals jobs and economic opportunities and so I think having a protectionist mentality is not going to work,” he said.

Surprising Turn 

Kelly Craft, the U.S. ambassador to Canada appointed by Trump, said in Ottawa Tuesday evening that Trump has a clear mandate for change but that the administration didn’t want to leave Canada behind. “We want an updated NAFTA to stimulate North America to be more competitive in the global economy,” Craft said. 

Lighthizer’s warming tone on Mexico has been a surprising turn of events given that Washington initiated the NAFTA revamp last year by saying it wanted to address its gaping trade deficit with Mexico, while only seeking tweaks to the trading terms with Canada. Relations between the U.S. and Mexico were frosty when the talks started last August as Trump kept insisting Mexican President Enrique Pena Nieto’s government would pay for a southern border wall.

Mexico also appeared to be in the administration’s sights because of Trump’s goal to eliminate trade deficits. The U.S.’s second-biggest trade gap, after China, is with Mexico, with the deficit in goods expanding to $71.1 billion last year from $64.4 billion a year earlier.

Speaking at the same meeting on trade with Lighthizer and the lawmakers, Trump also struck out at Canada over trade. Canada has treated the U.S. “very unfairly” over lumber, Trump said. Lighthizer’s office said last week that the U.S. objective is to renegotiate NAFTA on a trilateral basis.

--With assistance from Eric Martin, Anna Edgerton and Greg Quinn.

To contact the reporters on this story: Toluse Olorunnipa in Washington at [email protected]; Andrew Mayeda in Washington at [email protected]; Josh Wingrove in Ottawa at [email protected]

To contact the editors responsible for this story: Brendan Murray at [email protected]

Sarah McGregor, Chris Fournier

© 2018 Bloomberg L.P

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