Published: Wed, January 25, 2017
Markets | By Lucia Cruz

Canada should distance itself from Mexico in NAFTA talks: Former US ambassador

Canada should distance itself from Mexico in NAFTA talks: Former US ambassador

President Donald Trump isn't wasting any time getting down to business, and sources say he already plans to withdraw from the Trans-Pacific Partnership trade deal on Monday. He signed an executive order Monday that pulled the us out of the Trans-Pacific Partnership, a deal that former President Barack Obama put together to focus the economy on Asia and other Pacific nations. No trade deal is flawless and there's always give and take in reciprocity agreements.

The retreat comes hours after Trump told reporters in Washington that he will soon meet separately with both Trudeau and Mexican President Enrique Pena Nieto to begin renegotiating the North American Free Trade Agreement (NAFTA) and addressing ongoing border issues with the Mexico.

An updated NAFTA could improve labour standards, better protect the environment, and allow Canada to renegotiate the requirement forcing it to sell a certain amount of oil to the US, said American and Canadian trade lawyer, Mark Warner. Stephen Schwarzman, who leads the president's Strategic and Policy Forum, said the new administration had an "unusually positive" view of Canada.

"What I don't hear when I hear politicians talking about bringing manufacturing jobs back to the cost to society", he said. The pact created one of the world's largest free trading zones, reducing or eliminating tariffs on a wide range of products and facilitating trade between the three nations.

"We shouldn't be mesmerized by NAFTA into thinking we have a parallel interest in negotiating with the United States". The envoy also suggested Canada might at some point focus on bilateral relations with the United States rather than including Mexico in all the NAFTA talks.

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"The new administration is suggesting a reversal in trade policy of a magnitude that hasn't been seen in decades, possibly since the 1920s", said Hoyt Bleakley, an associate professor of economics at the University of MI. Despite his repeated threats to build a border wall between their two countries, Trump praised his Mexican counterpart on Sunday when he discussed the NAFTA talks.

Dan Mahaffee, an analyst with the Center for the Study of the Presidency and Congress, told Xinhua that negotiations could center on the desire of Trump and some others in the Republican Party (GOP) to consider some kind of import tax or border adjustment.

"He reiterated his pledge on Sunday, saying, "We're going to start renegotiating, having to do with NAFTA".

The danger, he told reporters on Sunday, is that Canada could suffer collateral damage from US measures aimed at Mexico.

"For the US and Canada to exclude Mexico - that would likely be a substantial upheaval to many companies' supply chains", says Scott Lincicome, a trade attorney at the law firm White & Case.

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