Mexico and Canada Vow to Keep NAFTA Going With or Without US

Jerry Dias president of Canada's Unifor Union speaks to the media during the second round of NAFTA talks involving the United States Mexico and Canada in Mexico City Mexico

Mexico and Canada Vow to Keep NAFTA Going With or Without US

US Trade Representative Robert Lighthizer and Canadian Foreign Minister Chrystia Freeland arrived in Mexico City to close out the second round of talks to modernise the North American Free trade agreement yesterday along with Mexican Economy Minister Ildefonso Guajardo.

Still unresolved are a number of controversial issues, including Washington's desire for expanded use of USA -made materials in automobiles and other products and disagreements about the mechanisms for resolving trade disputes and whether steps should be taken to raise salaries for Mexican workers.

But it isn't Mexico. Canada and Mexico are not alone - all of the US's top six trading partners have a surplus over the usa, and the Trump administration seems equally determined to renegotiate trade terms, or start a trade war, with China, Germany and South Korea. As part of this renegotiation, .

"The tone is negative", said one source, who added that it's still early, he remains hopeful a deal can be reached this year, and that obstinacy is to be expected in initial bargaining.

Given Mexico's higher inflation rates, wages in that country are lower now in real terms than when NAFTA took effect, according to a report published in August by credit rating agency Moody's.

Of course, agriculture isn't the primary consideration in Trump's efforts to get a better deal with Canada and Mexico.

Mr Volpe acknowledged that Canada and Mexico will likely have to make some concessions on autos rules of origin to meet USA political demands, but these could be creatively structured.

The US administration tipped its hand ahead of NAFTA negotiations in Washington, DC. Canada is No. 3 in imports of US meal.

The rules of origin govern how much content in manufactured goods must be produced within the NAFTA zone to be exported between the three countries without paying tariffs.

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A third round of talks is scheduled for Ottawa from September 23 to September 27.

The value of United States apparel imports from Canada in 2016 totalled US$561m, of which US$543m was under the FTA (97% utilisation rate).

But the history of worldwide trade negotiations suggests not reading too much into early intransigence. Canada believes that lower labour standards in the United States and Mexico, including right to work, give those countries an unfair advantage in attracting jobs.

"If you want a quick deal, it seems worrisome that the United States hasn't yet formulated some of its key negotiating positions", says Chad Bown, a senior fellow at the Peterson Institute for International Economics, a research group.

The anti-NAFTA protesters say the competition created by the 1994 trade deal has had a severely negative impact on smaller farms.

The pronouncements of President Donald Trump's administration suggest that it sees gains to the USA only from increased exports with no benefits to Americans deriving from increased imports.

While many details remain to be worked out, the course of the Nafta talks is also likely to be directed by politics and the passions of Mr. Trump.

US negotiators proposed sanitary and phytosanitary rules to protect USA agricultural trade, a key goal of many farm groups during the talks. He said they struck up a rapport when he was the Conservative parliamentary secretary on trade and she the Liberal trade critic.

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