Potentially contentious free trade talks underway

Aug 25, 2017, 01:25
Potentially contentious free trade talks underway

Government officials from Mexico and Canada reacted with skepticism Wednesday to remarks by President Donald Trump suggesting he didn't believe a deal to renegotiate the North American Free Trade Agreement was possible.

But Trump's speech on Tuesday night showed traders remain skittish about the future of NAFTA, and highlighted the complexity of the talks to re-negotiate the treaty with Trump looming over proceedings.

Mr Trump also said he might scrap the North American Free Trade Agreement with Mexico and Canada to jumpstart negotiations.

The United States, Canada and Mexico wrapped up their first round of talks to revamp the trade pact on Sunday, with little sign of a breakthrough coming.

Referring to the agreement as "the worst trade deal" in US history, the president had previously agreed that renegotiations would be better than terminating the trade pact, admitting that it would be "a pretty big shock to the system". And it has helped US companies pursue profitable investments, especially in Canada, by allowing investors to sue foreign governments without first pursuing legal action in the host country's court system.

Forecast-beating surveys in the eurozone's two biggest economies, France and Germany, helped pull the euro up against the dollar, which had wobbled against the yen overnight on comments from President Trump.

Both Canada and Mexico want to expand procurement obligations in NAFTA, giving their companies more opportunity to bid on major US government contracts, particularly lucrative infrastructure projects at the state and local level. Garrick Taylor, a spokesman for the Arizona Chamber of Commerce and Industry, said trade with Mexico has provided 5 million U.S.jobs and trade with Canada has created 9 million.

NDP Leader Liz Hanson said opposition members need to know the government's position on NAFTA to do their job.

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It's conceivable, but not likely in Ujczo's view, that American negotiators could use the notice to signal to their NAFTA partners that they might be flexible on expanding procurement, depending on the feedback they get from industry.

Canadian Foreign Minister Chrystia Freeland speaks in Washington at the Canadian embassy as NAFTA renegotiations were about to begin last week.

It's not the first time Trump has threatened to withdraw from NAFTA.

The loonie has rallied almost 7 percent since the start of the year, buoyed by a softer greenback and upbeat domestic economic data that prompted the Bank of Canada to raise interest rates for the first time in seven years last month.

Canada brushed off suggestions that Trump's threats would disrupt the talks.

In a joint statement issued at the end of five days of negotiations in Washington, the top trade officials from the three countries said Mexico would host the next round of talks from September 1 to 5. The internet was still an obscure idea in its infancy and Mexico's energy sector was closed off from investment from the outside world.

Videgaray, speaking on local television, sought to brush off the threat, saying Trump's comments were simply a negotiating tactic and Mexico would keep negotiating as well.