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Mexico, Canada Fight to Preserve NAFTA, but Prepare for Possible U.S. Exit

LADB Article ID: 80440
Category/Department: Mexico
Date: 2017-10-18
By: Carlos Navarro

The Mexican government is preparing for the possibility that the North American Free Trade Agreement (NAFTA) could become the bilateral Mexico-Canada trade agreement amid growing concerns that the US could leave the trilateral accord. Representatives from the three countries met for a fourth round of discussions in Arlington, Virginia, on Oct. 12-17, but they appeared no closer to an agreement than when discussions began in August. A major stumbling block appears to be the insistence by US President Donald Trump that any revisions to NAFTA reduce the US trade deficits with Mexico and with Canada significantly. According to sources close to the negotiations, the Trump administration appears to have added other demands that have drawn strong objections from Mexico and Canada and could derail the agreement. These new US demands include several “poison pills” that are certain to be rejected by Mexico and Canada. These include a five-year sunset clause that gives the US the option of terminating its participation in NAFTA, restrictions on government procurement, a weakening of the dispute-resolution mechanism, and increased US access to the Canadian dairy market as well as restrictions on imports of Canadian softwood lumber. Canada is the world’s largest softwood lumber exporter and sends the majority of its exports to the US.

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