Canadian government 'preparing for expected US withdrawal from NAFTA'

Legislation | 11 January 2018

The Canadian government is increasingly convinced that the US is planning to pull out of the NAFTA trade pact, according to reports.

Ministers in Canada are making preparations for the likely eventuality that the US will choose to pull out of the North American Free Trade Agreement (NAFTA), according to reports.

As talks over the renegotiation of the tripartite free trade agreement continue, expectations are mounting among the Canadian and Mexican governments that the current differences of viewpoint between themselves and the US will not be able to be successfully bridged.

A Canadian government source with knowledge of the talks told Reuters: "The government is increasingly sure about this ... it is now planning for Trump to announce a withdrawal."

Thus far, five rounds of talks have been held over the renegotiation of NAFTA, which was initiated largely at the behest of US President Donald Trump, who has repeatedly described the agreement as "the worst trade deal in the history of the country", due to a perceived negative impact on the US jobs market.

The Republican president had initially suggested that he considered moving to unilaterally pull the US out of the deal - as was the case with the Trans-Pacific Partnership in January 2017 - but subsequently agreed for the US to meet with Canada and Mexico to renegotiate the deal to make it more favorable to US interests.

This effort has proven fruitless so far, with Canada and Mexico having rejected most of the US proposals for NAFTA reforms. At the culmination of the fifth round of talks, US trade representative Robert Lighthizer said he was "concerned about the lack of headway", accusing Canada or Mexico of being unwilling "to seriously engage on provisions that will lead to a rebalanced agreement".

A sixth round of talks is set to take place from January 23rd to 28th in Montreal, with the final round of negotiations to follow in March. Given the lack of progress made so far, it is becoming increasingly likely that a mutually satisfying conclusion will not be reached.