US Said to Make Proposal That Could Kill NAFTA in 5 Years

U.S. President Donald Trump welcomes Canada’s Prime Minister Justin Trudeau before meeting about NAFTA

The United States takes in three quarters of Canadian exports, but trade relations have been strained since Trump's inauguration earlier this year. "So we'll see what happens with NAFTA", Trump said, adding that it "has to be fair to both countries".

Further, "attempts by Boeing to put tens of thousands of aerospace workers out of work across Canada is not something we look on positively".

While the ongoing renegotiations of the North American Free Trade Agreement will be the centrepiece of Trudeau's bilateral meeting later Thursday with Mexican President Enrique Pena Nieto, the Canadian government is also in Mexico to play a longer game.

"As we prepare to leave the European Union, we will seek to transition all existing European Union trade arrangements to ensure that the United Kingdom maintains the greatest amount of certainty, continuity and stability in our trade and investment relationships", a spokesman for the Department for International Trade said.

Vogel said USA and Mexican businesses still believed NAFTA talks would produce a good deal and said they would continue to lobby their governments and lawmakers to negotiate a good deal.

His comments came after Trump had previewed "a tough negotiation" over NAFTA - a quarter-century-year-old trade pact that also includes Mexico.

Trudeau later said he was optimistic that an agreement would be reached.

The US president said if there was no deal on the NAFTA, it would be terminated.

Harper says he understands the frustration: he described his annoyance at spending his 50th birthday signing a bailout package for General Motors Canada, only to see the auto giant move jobs out of the country.

Trudeau told reporters in Washington DC that he agreed with the U.S. president that that the NAFTA trade deal needed to be revamped and that any new agreement needed to "give citizens opportunities to succeed".

One of the most contentious US proposals is around so-called rules of origin for vehicles, which govern what share of a auto must be built within NAFTA countries to receive the pact's benefits.

Without NAFTA, Mexico trade experts say US products would face higher tariffs to enter Mexico, which could further skew the trade balance. Trudeau said he recognized that there were proposals in the deal that the U.S. and Canada disagreed on, but insisted that the talks had begun on Wednesday "in good faith".

Meanwhile, US Chamber of Commerce president Thomas Donohue said that several issues under discussion could scotch the entire effort.

"The comedy show is unfolding in Washington, there's no question about it", he said.

United States proposals include limiting the number of federal government contracts that Mexican and Canadian companies can win, a provision that would cause the deal to automatically expire in five years unless all three countries vote to renew, and changes in how much of a product needs to be made in North America to come under Nafta protections.

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