Canada's Trudeau set to ask Trump to rethink US 'poison pill proposals' for revising Nafta trade deal

Canadian Prime Minister Justin Trudeau will meet with President Donald Trump and trade-focused US lawmakers on the North American Free Trade Agreement (Nafta) for a fourth round of talks.
Canadian Prime Minister Justin Trudeau will meet with President Donald Trump and trade-focused US lawmakers on the North American Free Trade Agreement (Nafta) for a fourth round of talks.PHOTO: REUTERS

WASHINGTON (REUTERS) - Contentious new US demands are set to hit Nafta negotiating tables on Wednesday (Oct 11), threatening to push modernisation talks toward collapse as Canadian Prime Minister Justin Trudeau again tries to remind US President Donald Trump of the trade pact's merits.

Mr Trudeau will meet with Mr Trump and trade-focused US lawmakers on the North American Free Trade Agreement (Nafta) while hundreds of negotiators, government officials and lobbyists from Canada, Mexico and the United States descend on a hotel in Arlington, Virginia, for a fourth round of talks.

The Canadian leader's visit comes amid increasing acrimony over Nafta renegotiations, with Mr Trump making fresh threats to terminate the 23-year-old agreement and the US Chamber of Commerce on Tuesday accusing Mr Trump's administration of trying to sabotage the talks with "poison pill proposals".

Mexican Foreign Minister Luis Videgaray warned that an end to Nafta would mark a breaking point in US-Mexican relations and affect bilateral cooperation in non-trade areas.

The Nafta talks are likely to stall in the face of aggressive US demands to sharply increase content requirements for autos and auto parts, trade experts say.

The Washington round promises to be difficult, with US Trade Representative Robert Lighthizer announcing early on Wednesday that talks would be extended by two days to Oct 17.

Mr Lighthizer also said the three nations have ended their negotiations regarding competition.

People briefed on the US proposals said that the North American content threshold for automotives would rise to 85 per cent from the current 62.5 per cent, with a 50 per cent US-specific content requirement.

"These will be met with widespread opposition from Canada and Mexico. I think it's just a bridge too far," said Ms Wendy Cutler, the Asia Society's Washington policy director and former chief US negotiator for the Trans-Pacific Partnership trade deal cancelled by Mr Trump.

Other contentious US proposals opposed by Canada, Mexico and US business interests include a five-year sunset provision, radical changes to Nafta's dispute arbitration systems, changes to intellectual property provisions and new protections for US seasonal produce growers.

In his meeting with Mr Trump, Mr Trudeau is expected to remind the president that Canada is the United States' biggest export customer, with largely balanced two-way goods and services trade, and is not the cause of US manufacturing jobs lost under Nafta, Canadian officials said.

Mexico has that distinction, with far lower wages that have lured US auto plants and other manufacturers across its northern border, resulting in a US$64 billion (S$86.77 billion) trade surplus with the United States last year that Trump administration officials have vowed to slash.

Mr Trudeau in April urged Mr Trump not to withdraw from Nafta due to the pain it would cause on both sides of the border.