Trump’s abrupt shifts on NAFTA blindside allies Canada, Mexico

Mexican President Enrique Peña Nieto and most of his government were miles away from Mexico City on Wednesday, sitting on a grandstand under the hot midday sun, watching an aviation demonstration at a military base, when the news started to filter through.

In cellphone messages and traded remarks, they learned that President Donald Trump planned within days to sign an order triggering U.S. withdrawal from NAFTA, the trilateral agreement that has regulated trade in North America for decades.

At about the same time in Washington, Canadian Ambassador David MacNaughton was learning the same thing. Though taken aback by the timing, he was not quite as astounded that the U.S. president would make such a move with no warning.

“I’ve learned not to be surprised by very much these days,” MacNaughton later reflected.

On Thursday, a second bombshell exploded. Trump, in an Oval Office interview with The Washington Post, served notice that he may terminate a bilateral trade agreement with South Korea, another major U.S. ally and trading partner. “It’s a horrible deal,” he said.

A senior Mexican official said that what Mexico saw as Trump’s suggestion that Peña Nieto “called to beg him – ‘Please do not, blah, blah, blah,’ ” was false. “I know that my president never said that,” insisted the official, who spoke on the condition of anonymity about the fraught diplomatic relationship.

“He will always have to say whatever he wants to say,” the official said of Trump. “We’ve already gotten too familiar with him and his narratives and his spin. . . . No matter how much you strategize and plan and talk to your counterparts . . . there’s always the pending cloud of the tweet. Nobody should get particularly comfortable, particularly at the government level.”

Mexico maintains that it is, if anything, more eager than the United States to proceed with NAFTA renegotiations. Under Mexican law, sitting officials must resign their positions six months before an election in which they plan to run. Midyear elections in 2018 mean that at least some of the current government’s negotiators will be stepping down before the end of this year.

The U.S. side should have the same interest in completing a renegotiation before Peña Nieto ends his term, said Larry Rubin, a businessman and president of the American Society of Mexico. “Since nobody knows who will be the next president – it could be someone on the left or someone on the right – the best bet for the Trump administration is to have negotiations completed before then,” Rubin said.

MacNaughton, the Canadian ambassador, said Canada by and large was pleased with how things had progressed. “We’ve established a very constructive working relationship,” he said.

But “it’s fair to say” that the rhetoric of recent days “is alarming to Canadians,” MacNaughton said. “It does have an impact, and it’s not a good impact. I understand everybody has got to get elected, but the reality is that this kind of anti-trade rhetoric can be very damaging, particularly when you think about Canada” as a major job creator in the United States.

Despite Trump’s claim Thursday that Canada has a “massive” trade surplus with the United States, figures recently released by the Office of the U.S. Trade Representative indicate a $12 billion Canadian deficit in combined goods and services.

Trudeau has moved to diversify Canada’s export markets, and this week he sent a high-level mission to China to discuss lumber exports and a free-trade agreement.

In a news conference Thursday, Trudeau took the high road on U.S. relations, talking of “tremendous opportunities” and “mutual benefit.”

At the same time, however, he said that Canada would respond to any unilateral U.S. action and was looking at “a broad range of options and paths available to us” should NAFTA renegotiation fail.

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