Trump Warns of NAFTA Treaty Termination

NAFTA Round One: Gordon Johnson Weighs In On Free Trade's Effects On Steel, Manufacturing

NAFTA erased most trade barriers separating the U.S., Canada and Mexico and fostered a rapid rise in commerce and closer diplomatic ties among the three countries.

Trudeau's response Wednesday afternoon was to stay the course. "I personally don't think you can make a deal without a termination, but we're going to see what happens". The leaders of Canada and Mexico have indicated their willingness to work with the Trump administration, and although vague on the exact terms that he will be seeking in a renegotiated NAFTA, Trump has threatened to withdraw from it if negotiations fail. "We're not going to get rattled by this".

Canada's main stock index turned slightly higher in early trade on Wednesday, helped by gains in financial shares led by Royal Bank of Canada after the country's biggest lender reported a rise in third-quarter profit.

Gary Blundell, program manager for the Canadian Arctic Resources Committee, said he's hoping that whatever Canada is pushing for might include something to protect the Porcupine caribou herd and the Arctic National Wildlife Refuge that the herd relies on.

Trump said Tuesday night. We have to give notice, and after the notice is given, you have to wait a long time.

Mexico's foreign minister also shrugged off the Trump tirade as par for the course, initially tweeting that Mexico would remain at the table, calm and firm in Mexico's national interest.

Trump's remarks may be a negotiating tactic, a way of sending a message to Mexico that it should not push back too hard against positions taken by the U.S.in the negotiations.

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Most economists say NAFTA has had only a modest net effect on U.S.jobs because expanded commerce with Canada and Mexico has also created jobs and because trade represents a relatively small part of the US economy.

Trump's comments came ahead of the second round of NAFTA negotiations, which are scheduled to run from September 1-5 in Mexico City. The team features eight staffers, including "two former trade officials, two senior PMO officials, an ambassador, a writer, a cabinet minister". The antagonistic political climate, where the USA wants to win big and Canada and Mexico do not want to lose, severely constrains the set of amendments that all parties can agree upon.

"It really puts the screws to everyone at the table to get something done quickly", said Hoback.

Indeed, he questions whether NAFTA is the best place to resolve the issue. This has caused understandable concern for producers, but if the USA maintains the right priorities in these negotiations, the agriculture industry can benefit from an updated agreement.

The threats highlight the added dimension, however, of renegotiating a trade agreement with a disillusioned partner: you might end up having to decide on a deal that disproportionately favours your counterpart or even leaves you worse off.

Juan Pablo CastaƱon, president of Mexico's Business Coordinating Council, a coalition of business groups, recently predicted that there was a 90 percent chance of success.

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