Canadian Manufacturing

Renegotiation, not cancellation: Trump team drops hints NAFTA end not imminent

"I would hate to see us shoot ourselves in the foot by withdrawing from NAFTA," one U.S. lawmaker said as Trump's Treasury Secretary Steven Mnuchin said the administration is focused on renegotiating the agreement

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Scrapping the trade deal would likely lead to significant economic pain in all three member countries

WASHINGTON—Members of the Trump administration have dropped several hints in recent days that withdrawing from NAFTA is not in their current plans—and the latest such example came Feb. 15.

A congressional gathering heard Treasury Secretary Steven Mnuchin express some optimism about getting a deal. He based that on what he said were weekly meetings with U.S. trade czar Robert Lighthizer.

”I’m cautiously hopeful that … (he) will be renegotiating this deal,” Mnuchin told the House of Representatives’ budget committee.

”It is a major priority of ours to renegotiate the deal.”

He refused to even discuss the possibility of U.S. withdrawal from NAFTA when asked to do so. Republican lawmaker Darin LaHood pressed Mnuchin to analyze the possible consequences of withdrawal, something the Illinois congressman said would be a mistake.

”I would hate to see us shoot ourselves in the foot by withdrawing from NAFTA,” LaHood said.

”I look at those negotiations, and where we’re headed, that causes me a lot of concern.”

Again, Mnuchin reaffirmed his view that cancellation is not imminent: ”I don’t want to go through the consequences—because, again, that’s not our first priority. Our priority is to renegotiate the deal,” said the treasury secretary.

It’s the third such hint from a prominent member of the administration in recent days.

In a public meeting this week, Lighthizer said progress is being made in the renegotiation. He described the anxiety about a U.S. withdrawal as something in the past tense.

”There was a lot of anxiety at one point as to whether we would be in a position where we would have to withdraw in order to get a good agreement,” Lighthizer said, with President Donald Trump looking on.

”I think we’re making progress on NAFTA … I think we’re making real headway—in particular with respect to the Mexicans.”

Lighthizer has stated his view that negotiations have been harder with Canada. His relations with Canadian counterpart Chrystia Freeland have been bumpier, although a spokesman for the minister described their meeting Wednesday as “cordial and constructive.”

And in a closing news conference at the last round, Lighthizer described his Canadian and Mexican counterparts as friends.

Another Trump cabinet member also expressed optimism about NAFTA a few days ago. Agriculture Secretary Sonny Perdue said he expects a NAFTA deal by year’s end.

Extending the talks into 2018 would have some drawbacks: Both Scotiabank and the Bank of Canada say uncertainty over the investment situation would shave about one-fifth of one per cent from Canada’s economy by next year.

This week also provided examples of the uncertainty in Canada-U.S. trade.

The U.S. opened an investigation into possible punitive duties on certain types of Canadian pipes—following similar moves on lumber, paper, and a thwarted effort to slap duties on Bombardier airplanes.

In addition, Trump made cryptic comments about an import tax—later played down by the White House. He also appeared to nod in agreement during a meeting as a Democrat called for Buy American provisions to be added to a major infrastructure bill.

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