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Pena Nieto, Trudeau Pledge Trade Unity as Trump Threatens NAFTA

Bloomberg logoBloomberg 6 days ago Nacha Cattan and Josh Wingrove
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The leaders of Mexico and Canada presented a united front for trade talks with Donald Trump, committing to continued trilateral negotiations after U.S. negotiators put forward a contentious proposal for a Nafta "sunset clause."

Enrique Pena Nieto and Justin Trudeau spoke Thursday night in Mexico City as the latest day of North American Free Trade Agreement talks concluded in Washington. After Trump mused Wednesday about breaking Nafta into bilateral deals, his two counterparts called for the trade deal to be preserved and modernized and praised each other for aid provided during natural disasters.

"As we move forward with renegotiations, we will continue to work toward our shared goal of a win-win-win agreement to ensure that the new provisions are fair and beneficial to all three countries involved," Trudeau said, adding he and Pena Nieto are "confident" the three countries can find a Nafta "framework" to drive economic growth.

The U.S. proposed its so-called sunset clause for Nafta on Wednesday, while so-called rules of origin -- which determine how much of a product must come from Nafta countries to receive the pact’s benefits -- are due for discussion beginning Friday. The rules of origin, particularly for autos, are among the most controversial subjects as Trump aims to repatriate manufacturing jobs from Mexico by rewriting trade rules. Trump has regularly threatened to walk away from the pact.

Canadian Prime Minister Justin Trudeau Visits Mexico As Nafta Talks Continue In Washington© Bloomberg Canadian Prime Minister Justin Trudeau Visits Mexico As Nafta Talks Continue In Washington

Trudeau, Pena Nieto

Pena Nieto, who began by thanking Trudeau for his support of earthquake recovery efforts, said the countries are working to boost bilateral ties and to improve Nafta. "Prime Minister Trudeau and myself will continue to work to reach a beneficial and positive upgrading for the three countries," Pena Nieto said, before later appearing to downplay Trump’s threats.

Read more: Trump’s Fear of Trade Gaps Isn’t Really Necessary: QuickTake Q&A

"I would not pay much attention to any statements other than that which happens at the negotiation tables," he said, adding the talks can make North America a more competitive economic region by including, for instance, e-commerce. The deal "cannot be good for just one country and we can’t be hostage to only one position," he said.

NAFTA negotiations between the United States, Canada, and Mexico begin a fourth round

Trudeau said Canada wouldn’t walk away from the negotiating table based on proposals so far.

"We are pleased to be talking about ways we can improve Nafta," Trudeau said. "We will discuss those proposals, we will counter those proposals and we will take seriously these negotiations." He also said the countries "stand firm" in a commitment to implement Paris Agreement on climate change, which Trump has pulled the U.S. out of.

Window Open

Trudeau flew to Mexico City Thursday morning directly from Washington, where he got mixed signals from Trump on Nafta. Speaking Wednesday at the White House, Trump said it’s possible that they could reach a deal and also possible talks could fail. The same day, Commerce Secretary Wilbur Ross defended some of the core controversial proposals.

Pena Nieto called Nafta "a good mechanism" that is not the "only one" to develop North America, and said Mexico doesn’t want to stake its competitiveness on having low salaries. The fourth round of talks is set to continue Friday.

"I think the window’s still very much open" to reach a deal, Robert Holleyman, a former Deputy U.S. Trade Representative under President Barack Obama, said in an interview Thursday before Trudeau and Pena Nieto spoke. Key agricultural groups and U.S. Congress members still want a deal to be reached, said Holleyman, who is now president and CEO of C&M International and a partner in law firm Crowell & Moring’s International Trade Group.

His advice to the Mexican and Canadian leaders "would be simply to continue to reaffirm that they too believe Nafta needs to be renegotiated. And all three leaders accept, and have long accepted, that these need to be modernized."

Skip ‘Spectacle’

Trudeau has downplayed the significance of Trump’s threats and has regularly put a positive spin on talks. His government’s strategy continued Thursday in Washington, when Finance Minister Bill Morneau predicted Canada-U.S. trade will endure.

“It’s important not to let the spectacle of a trade negotiation disguise what we’re trying to get to,” Morneau said Thursday during a panel discussion at the annual meetings of the International Monetary Fund and World Bank Group in Washington. “There are a huge number of jobs in the three countries that are related to this relationship we have. That is going to continue."

To contact the reporters on this story: Nacha Cattan in Mexico City at ncattan@bloomberg.net, Josh Wingrove in Washington at jwingrove4@bloomberg.net.

To contact the editors responsible for this story: Vivianne Rodrigues at vrodrigues3@bloomberg.net, Sarah McGregor at smcgregor5@bloomberg.net, Robert Jameson

©2017 Bloomberg L.P.

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