U.S. President Donald Trump and Canadian Prime Minister Justin Trudeau met at the White House Wednesday to discuss the renegotiation of the North American Free Trade Agreement amid growing animosity over how to reshape the pact.
Trade experts predict the fourth round of the talks will probably stall as the U.S. aggressively pushes for controversial changes to a rule governing how cars are made.
The rule currently requires at least 62-percent of the parts of a car sold in North America come from the region to avoid import taxes. The Trump administration is calling for an 85-percent threshold, with a 50-percent requirement for U.S.-specific content.
The U.S. Chamber of Commerce Tuesday accused the Trump administration of attempting to undermine the negotiations with a “poison pill proposals.”
The Trump administration has imposed duties on Canadian Bombardier airliners and lumber exports in recent months and has criticized Canada’s wine and dairy industries. But Canadian officials deny Trump is targeting Canada, saying the aircraft and softwood differences have continued for years.
Canadian Foreign Minister Chrystia Freeland said Trudeau will try to persuade Trump to focus on Mexico, which is also participating in the talks, as a source of potential problems at the negotiations to update NAFTA.
“We are your biggest client,” is the message Freeland said Canada will bring to the table. Freeman said Canada is not the cause of lost U.S. manufacturing jobs under NAFTA, as it buys more from the U.S. than China, Britain and Japan combined.
Many U.S. manufacturing jobs have instead relocated to Mexico, where wages are far lower than those in the U.S. Mexico has lured U.S. auto plants and other manufacturers to the country, resulting in a $64 million trade surplus with the U.S. last year. Trump administration officials have promised to cut the surplus.
Mexico Foreign Minister Luis Videgaray warned that an end to NAFTA would significantly damage U.S.-Mexican relations and adversely impact bilateral cooperation in non-trade areas.
Other contentious U.S. proposals opposed by Canada, Mexico and much of the U.S. business community include a five-year sunset provision on deals, an overhaul of NAFTA’s dispute arbitration systems, revisions to intellectual property requirements and new protections for U.S. seasonal produce growers.