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Trump renews US threat to withdraw from Nafta

Trump renews US threat to withdraw from Nafta

Trump renews US threat to withdraw from Nafta
April 27
19:42 2017

President Donald Trump on Thursday warned the US could still “terminate” its two-decade old free trade agreement with Mexico and Canada if it did not get a “fair deal” from a renegotiation of the pact, only hours after dropping a plan to pull out.

Mr Trump said he had been ready to submit a notification with withdraw from the North American Free Trade Agreement “two or three days from now” but had decided against it after speaking to his Canadian and Mexican counterparts. 

“They asked me to renegotiate and I will and I think we will be successful in the renegotiation, which frankly would be good,” Mr Trump said, conceding that pulling the US out of the pact that underpins more than $1tn in annual trade and the North American supply chains that many US companies rely on would be a “pretty big shock to system”. 

But he added: “If I’m unable to make a fair deal for the United States, meaning a fair deal for our workers and for our companies, I will terminate Nafta.” 

Mr Trump’s manoeuvres on Nafta have over the past few days highlighted how volatile economic policy making remains within a White House that is hitting the 100-day milestone facing criticism of how little it has achieved.

According to administration officials and others briefed on discussions within the White House it also points to how policy areas such as trade continue to be the subject of an often heated debate with decisions being made in a chaotic scramble. 

On one side of the debate stand the so-called business-friendly “globalist” faction associated with Mr Trump’s daughter Ivanka and influential son-in-law Jared Kushner — “Javanka” in Washington parlance — and featuring prominent members like Gary Cohn, the former Goldman Sachs executive now leading the president’s National Economic Council. On the other are economic nationalists led by senior advisor Steve Bannon and featuring other pugnacious figures such as Peter Navarro, the economist and China hawk who heads Mr Trump’s National Trade Council. 

According to people briefed on the preparations, Mr Trump’s plan to unveil an executive order on Saturday— his 100th day in office — triggering a US withdrawal from Nafta began to crystallise on Friday last week after Mr Navarro sought to take advantage of the president’s anger over a Canadian dairy dispute. 

But it collapsed amid a flurry of calls to the White House and Republicans in Congress from prominent chief executives and business groups on Wednesday.

Wilbur Ross, the US commerce secretary, and Sonny Perdue, agriculture secretary, lobbied the president to give renegotiations a chance, according to one person briefed on the discussions. They pointed to the possible job losses in farm states and others where Mr Trump drew strong support in last November’s election,

Trucks pass through border customs control in Mexico before crossing into the US © Reuters

The US Chamber of Commerce, led by its longtime president Tom Donohue, went into battle mode against Nafta withdrawal on Wednesday, lobbying “anybody who would take a phone call”, according to one person close to the discussions. 

Some prominent Republicans are also taking a stand.

“Before Nafta, trade between the US and Mexico was around $50bn. Now it stands at more than $500bn. What’s not to like?” Jeff Flake, a Republican senator from Arizona tweeted on Thursday. 

Juan Rebolledo, a former Mexican deputy foreign minister, said Wednesday’s events had been “completely mad”. “The right question is still what do they [the Trump administration] have in mind?,” he added. “They don’t know, that’s part of the problem.” 

“The signals are disquieting, especially in the last week,” says Roland Paris, Canadian Prime Minister Justin Trudeau’s former foreign policy adviser. 

“The attitude in Ottawa is one of preparedness until we we know what the actual US positions will be. Actions will speak much louder than words, especially for a president who’s been changing his positions,” he said. “It all seems pretty chaotic from the perspectives here in Ottawa.” 

Canada and Mexico have been ready to launch negotiations for some time, but the US has not engaged partly because the nomination of Robert Lighthizer as US trade representative has been held up in Congress.

Under existing US law Mr Trump needs to give Congress 90 days’ notice of any trade negotiation. But he can do so only after his USTR visits Congress. 

This week’s scramble in Washington — and recent moves against Canada on lumber and dairy products — have been read by some as an attempt to intimidate its two neighbours.

But they have also highlighted how Mr Trump’s bluster risks undermining negotiations amid what are potentially volatile domestic politics in Mexico and Canada. 

“You can’t rattle your sabre too many times without unsheathing it from the scabbard,” said Arturo Sarukhán, a former Mexican ambassador to the US. 

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