Published: Fri, June 08, 2018
Business | By Eloise Houston

USA muses about replacing NAFTA with bilaterals; no deal, Canada says

USA muses about replacing NAFTA with bilaterals; no deal, Canada says

In a tweet on Thursday night, Trump accused Canadian Prime Minister Justin Trudeau of being "indignant" in his protests against steep US tariffs imposed last week on steel and aluminum imports.

The two leaders offered that olive branch to Trump ahead of his arrival at the G7 summit in Quebec on Friday, where disagreements on trade will be front and centre.

A day before the G7 summit begins in the mountainous Quebec town of La Malbaie, the French leader and Mr. Trudeau held a strategy session in Ottawa aimed at confronting Mr. Trump and his protectionist trade agenda.

"And he's going to talk to them", Larry Kudlow, Trump's top economic adviser, told reporters in Washington.

While other World Trade Organisation members are also considering retaliating by targeting iconic American products - such as bourbon whiskey and Harley-Davidson motorcycles - the escalating tensions between Mexico and the U.S. may further complicate the renegotiation of the NAFTA.

But the getting more serious about the possibility.

Trump's recently announced tariffs are only the latest move signaling US departure with traditionally close allies. "We are allies. Our soldiers stand shoulder to shoulder to defend liberty and our values", Macron said.

But officials from the three countries have been unable to find consensus on several critical issues, leading to angry finger-pointing between Mr Trump and Canadian Prime Minister Justin Trudeau in recent days.

The US, Mexico and Canada are locked in a contentious renegotiation of the North American Trade Agreement.

According to the sources, Trudeau pressed Trump on how he could justify the tariffs as a "national security" issue.

The Trump administration at one point granted Canada and Mexico a last-minute reprieve from tariffs in March as negotiations to rework the North American Free Trade Agreement, known as NAFTA, continued.

"The U.S. decision to apply tariffs on aluminium and steel to all G7 partners for national security reasons has left us with no other option but to recourse to launching a formal complaint at the World Trade Organization (WTO) and to introduce safeguarding and rebalancing measures", the official said. European leaders have suggested they will stick with the Iran deal, also expressing disappointment with Trump's unilateral move.

Earlier this month, the White House announced that it would no longer exempt Canada, the European Union, and Mexico from punishing tariffs on steel and aluminum, citing national security and concerns of unfairness.

"We think that demonstrating the strength of NAFTA as a solid community as we take on the world is very much in all 3 of our advantages and we'll continue to negotiate that way".

That plan fell through when the White House insisted that he agree to including a five-year sunset clause in the deal.

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