Trump threatens to dump NAFTA while Trudeau presses for changes - The Buffalo News

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Trump threatens to dump NAFTA while Trudeau presses for changes

WASHINGTON – President Trump Wednesday continued to threaten to abandon the North American Free Trade Agreement --even as Canadian Prime Minister Justin Trudeau stressed that changes could improve it and as lawmakers such as Rep. Tom Reed of Corning pushed for provisions that would benefit farmers in New York State.

Trump and Trudeau met at the White House. The president once again made clear that he's not very concerned about withdrawing from the deal -- even though business leaders warned that doing so could disrupt supply lines and boost consumer prices in the United States.

"I think Justin understands that if we can’t make a deal, it’ll be terminated, and that’ll be fine,” Trump said, with the prime minister at his side. “They’re going to do well, we’re going to do well. But maybe that won’t be necessary. But it has to be fair to both countries.”

Later, at a news conference on the roof of the Canadian Embassy, Trudeau said he remains guardedly optimistic that the United States, Canada and Mexico can strike a mutually beneficial agreement to improve the quarter-century-old trade deal.

"I continue to believe in NAFTA," Trudeau said. "I continue to believe that a continent working together in complementary ways is better for its citizens, it's better for economic growth and allows us to compete on a stronger footing with the global economy."

Trump and Trudeau met as negotiators for the three NAFTA countries gathered for the fourth time in hopes of modernizing the deal by year's end.

Negotiators face a host of demands for change from the Trump administration, which contends that the deal resulted in the loss of U.S. manufacturing jobs.

The administration wants any new agreement to be subject to approval in all three countries every few years, thinking such a regimen would force trade officials to renegotiate provisions that aren't working.

In addition, the administration wants to dramatically boost the "rules of origin" provisions affecting the auto industry. Under the Trump proposal, 85 percent of every vehicle would have to be made in one of the three countries for the auto to qualify for tariff-free status, up from 62.5 percent under the original agreement.

"We have to protect our workers, and in all fairness, the prime minister wants to protect Canada and his people also," Trump said. "So we’ll see what happens with NAFTA. But I’ve been opposed to NAFTA for a long time in terms of the fairness of NAFTA. I said we’ll renegotiate."

That left Trudeau, at his news conference, answering questions as to whether Canada would be willing to revert to a one-on-one trade deal with the United States, leaving out Mexico, which U.S. manufacturers have relied on for cheap labor.

Stressing that the United States sells more to Canada than it does to China, Japan and the United Kingdom combined -- while the U.S. has a trade deficit with Mexico -- Trudeau seemed open to that sort of U.S.-Canadian trade deal if NAFTA fell apart.

"We are ready for anything," Trudeau said. "We will continue to work diligently to protect Canadian industries, to stand up for jobs and look for opportunities for Canadian businesses."

Trump and Trudeau met after the Canadian leader sat down for 45 minutes with the House Ways and Means Committee, which oversees trade issues.

That gave Reed, a Republican from Corning, the chance to tell Trudeau any renegotiated trade deal needs to treat New York's dairy and wine industries more fairly.

Trudeau's meeting with lawmakers was private.

Afterward, Reed said he was able to raise the dairy and wine issues with Trudeau. Reed said Trudeau was amenable to changes that could help New York farmers and wineries.

"He recognizes that that's one of the fundamental issues being updated," Reed said.

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New York dairy farmers complain the Canadian dairy industry operates like a cartel that increasingly shuts them out of the market to the north. Reed noted that much U.S.-made wine being brought into Canada is subject to a tax -- whereas Canadian wine brought into the United States isn't.

Reed wants those issues addressed in negotiations to update the deal.

"I think we end up coming up with a better agreement, a more modern agreement," Reed said.

Rep. Brian Higgins, a Buffalo Democrat, never got a chance to speak during the meeting with Trudeau, but said afterward he is also hoping for improvements.

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Higgins said he favors the provision that Trump is pushing that would force the deal to be reconsidered every few years.

He said he's hoping a new NAFTA would improve the movement of commerce at the U.S.-Canadian border -- while also strengthening provisions on labor rights and the environment.

He also agrees with Trump trying to strike a hard bargain.

Noting that America's economy is the world's largest and one that any nation would like to trade with, Higgins said: "I think that we have tremendous leverage that we don't take advantage of."

While Higgins routinely votes against trade agreements -- arguing they are often too broad, too vague and skewed against the American worker -- he acknowledged the Buffalo area would likely suffer if the United States did not have a trade agreement with Canada.

"I think there would be consequences, most of which would be negative," he said.

Business leaders worry particularly about the auto industry, given that NAFTA led to the creation of a production chain in which vehicles often move across the borders several times before they are completed. Upending that supply chain would increase auto prices by an average of about $1,000, the Boston Consulting Group said in a report this summer.

The U.S. Chamber of Commerce and 310 local chambers -- including the Buffalo-Niagara Partnership -- wrote to Trump Tuesday to stress the deal's benefits.

The AFL-CIO is backing some of the changes Trump is pushing -- including an end to a provision that allows companies to sue governments that impose laws aimed at protecting labor rights and the environment under NAFTA.

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