Mexican President Says He Is Optimistic About NAFTA Deal

Freeland cabinet retreat

Mexican President Says He Is Optimistic About NAFTA Deal

News that the USA might leave NAFTA caused Canadian stocks and the dollar to fall Wednesday and Canadian Foreign Affairs Minister Chrystia Freeland said the government is taking the threat seriously.

U.S. Trade Representative Robert Lighthizer called that a "broad and ill-advised attack".

"It doesn't mean we end up with a deal (this month)".

Saskatchewan's premier says he is "greatly concerned" about recent reports suggesting the United States plans to withdraw from a landmark free trade deal that has been in place for nearly a quarter of a century.

Canadian government bond prices were lower across the yield curve in sympathy with U.S. Treasuries. Progress in Montreal could stave off such a decision.

Former prime minister Stephen Harper recently criticized the Trudeau government in a memo that questioned the pursuit of progressive trade policies and the speed with which it rejected American proposals as red lines that would not be crossed.

Speaking with reporters at a cabinet retreat in London, Ont., Ms. Freeland said progress has been made on several fronts and some chapters of the deal are almost final.

"I think Canadians expect their government to defend our softwood lumber industry, to defend our workers. and that is absolutely what we are doing", she said.

The likely manifestation of that creative thinking is flexibility on the rules of origin proposals put forward by the Americans.

The Trudeau government appears to have adopted a good-cop, bad-cop strategy for saving NAFTA - coming up with some "creative" new proposals in response to unpalatable US demands while simultaneously signalling its willingness to aggressively attack what it considers unfair American trade practices.

The U.S. content requirement would decimate the Canadian vehicle industry, according to Jerry Dias, president of the Unifor trade union.

"I'm more concerned about NAFTA surviving in its current form than NAFTA blowing up", Dias said.

"Montreal is going to be a decisive round", said Wendy Cutler, a former USA trade negotiator who is now vice president at the Asia Society Policy Institute in Washington. Chuck Grassley also released a statement on Tuesday urging the administration to protect farmers by keeping the deal intact.

It's not yet clear whether Canada will make its pitch in a formal document or raise it in conversations, with the goal of updating the proposal with USA and Mexican input.

Stressing the massive size of the NAFTA market - encompassing almost 500 million consumers and a combined gross domestic product (GDP) of more than $21 trillion - Freeland said, "Canada is prepared to take the time that it takes to get it right".

Market reaction to the reports that an exit is imminent will have given Trump pause for thought.

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