WASHINGTON: President Donald Trump is “seriously contemplating” making separate trade deals with Canada and Mexico in place of the two-decade-old North American Free Trade Agreement, and has broached the idea with Ottawa, a White House official said Tuesday.
“He prefers bilateral negotiations and he is looking at two such different countries,” Trump economic adviser Larry Kudlow said on Fox News.
Canadian and Mexican officials, however, said they remained focused on a three-nation trade deal to revise the 1994 trade pact.
“It is out of the question for now” to conclude a bilateral agreement between Canada and the United States, the senior Canadian official said.
The official downplayed, but did not deny, an earlier a comment that Ottawa was “not ruling out” a separate trade deal with the United States to replace NAFTA.
“We have not reached a point where a request has been made for a bilateral agreement... and we remain strongly focused on a trilateral renegotiation of NAFTA.”
Mexico Economy Minister Ildefonso Guajardo said NAFTA had been “highly beneficial” and attracted foreign investors seeking access to the North American market.
“We believe that the agreement would lose value were it to stop being what it is today and we want it to continue to be: a trilateral integration of the continent,” he said.
Word of the possible change in strategy comes as Washington faces unified opposition from Group of Seven economies, who have vowed to retaliate against Trump’s steel and aluminum tariffs.
Mexico on Tuesday released a more detailed list of specific US products facing retaliatory import duties, including a host of steel products, pork, fruits, cheese and bourbon.
Kudlow said he was awaiting a reaction from top Canadian officials to whom he had relayed the idea on Monday.
“I’m waiting to hear what their reaction is going to be frankly. I spoke yesterday to one of their top people, right next to the prime minister. He will probably get back to me sometime today,” he told Fox News.
He said he hoped the response would come “as soon as possible and move the whole process forward.”
Kudlow noted that talks to revamp NAFTA had “dragged on” so separate deals “might be able to happen more rapidly.”
Trump “is seriously contemplating a shift in the NAFTA negotiations ... (and) he asked me to convey this,” he said, adding that the president “believed bilateral is always better. He hates large treaties.”
Trump on Friday had publicly floated the idea of having individual agreements to replace NAFTA, which he again called “a terrible deal.”
The Canadian official noted that Trump had raised this bilateral alternative last year when Prime Minister Justin Trudeau visited the White House.
Trump initially threatened to pull out of the three-nation pact. Talks to revise and modernize the deal have been underway since August 2017 but snagged on US demands to increase US content in duty-free NAFTA autos as well as a five-year sunset clause.
Negotiations are now suspended due to the coming elections in Mexico and the United States.
The Canadian official said there were currently no plans for another round of NAFTA talks but officials “remain in touch by telephone and email.”
Kudlow said Trump “will not withdraw from NAFTA. He will try a different approach.”
“The important thought is he may be moving quickly toward these bilateral discussions instead of as a whole,” Kudlow said, but noted it is not clear how soon that would happen.
The NAFTA talks are just one facet of Trump’s confrontational, multi-front trade policy, which includes imposing steep tariffs on steel and aluminum coming from chief US allies — Canada, Mexico and the European Union — which has prompted sharp retaliation.