US won’t immediately exit NAFTA deal with Canada, Mexico

Published 27.04.2017 10:09
Updated 27.04.2017 10:11
In this Feb. 28, 2017, file photo, President Donald Trump speaks on Capitol Hill in Washington, Tuesday, Feb. 28, 2017, during his address to a joint session of Congress. (AP Photo)
In this Feb. 28, 2017, file photo, President Donald Trump speaks on Capitol Hill in Washington, Tuesday, Feb. 28, 2017, during his address to a joint session of Congress. (AP Photo)

President Donald Trump on Wednesday told the leaders of NAFTA partners Canada and Mexico that the United States will not immediately move to exit the regional free trade agreement.

The announcement followed U.S. media reports that Trump was considering giving formal notice of pulling the United States out of the North American Free Trade Agreement.

In phone calls to Mexican President Enrique Pena Nieto and Canadian Prime Minister Justin Trudeau, Trump "agreed not to terminate NAFTA at this time," the White House said in a statement.

It added that "the leaders agreed to proceed swiftly, according to their required internal procedures, to enable the renegotiation of the NAFTA deal to the benefit of all three countries."

Trump campaigned for president in 2016 on a platform that included renegotiating or abandoning the trade agreement, which he claimed was "the worst trade deal maybe ever signed anywhere" in a September debate with Hillary Clinton.

NAFTA was established January 1, 1994 under then-president Bill Clinton. It removes tariffs and allows a free flow of goods between the three partners.

Trump has repeatedly derided NAFTA as a "disaster" and claimed the deal resulted in millions of lost U.S. industrial jobs, mostly to Mexico.

"It is my privilege to bring NAFTA up to date through renegotiation," Trump said, according to the White House statement. "It is an honor to deal with both President Pena Nieto and Prime Minister Trudeau, and I believe that the end result will make all three countries stronger and better."

Both conversations were "pleasant and productive," the statement said.

The U.S. trade deficit in goods and services last year with Mexico was $62 billion, but with Canada the U.S. had a surplus of $8 billion.

'Rumor' of U.S. exit from NAFTA

Two White House officials told the Politico news website on Wednesday that a draft executive order for the United States to exit NAFTA was in the final stages of review, and could be unveiled within a week or two. The New York Times had quoted a senior administration official saying Trump was likely to sign such an executive order.

But late Wednesday Commerce Secretary Wilbur Ross brushed off the reports as "rumor."

"There was a rumor today that there would be an executive order, just a rumor, and my practice is to comment on things we have actually done or are doing as opposed to commenting on rumors," Ross said.

According to The Washington Post Trump is expected to tell Congress that he intends to re-negotiate the deal, but also hold the threat of exiting the agreement to gain more concessions from Mexico and Canada.

The administration's talk of exiting NAFTA has run into opposition from several prominent Republican lawmakers, including border senators John McCain of Arizona and John Cornyn of Texas, Politico reported.

"I'd be glad to have renegotiation of some of the terms of it, because a lot of time has passed," McCain told Politico. However a withdrawal would "be disgraceful and a disaster."

Trade tension with Canada

The Trump administration has slapped tariffs in recent days on some imports of Canadian timber and threatened to retaliate against Canadian moves that harm U.S. dairy farmers. Timber and milk, however, are not covered by NAFTA.

The softwood lumber dispute between Washington and Ottawa has been ongoing for at least 35 years, with U.S. producers accusing their Canadian counterparts of exporting lumber at subsidized prices and harming U.S. businesses.

Lumber is an important component of the massive U.S. construction and home-building industry. Most U.S. homes are made with wood framing and some entirely of wood.

Earlier this week, the U.S. Commerce Department announced it was imposing tariffs of up to 24 percent on Canadian softwood lumber.

Canada's dairy sector is protected by tariffs on imports and controls on domestic production as a way to support prices for the country's farmers.

The latest dairy trade row was triggered when Canada extended those policies to apply to ultrafiltered milk, a product used in cheese production and at the center of a thriving U.S. export business.

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