Trump Floats the Idea of a Bilateral Trade Pact with Canada

October 12, 2017 at 12:17 AM

If efforts by Canada, Mexico and the U.S. to update the North America Free Trade Agreement fail, President Donald Trump says he would “absolutely” consider a bilateral deal with Canada.

Trump’s offhand comment to a reporter comes as the three countries convene in Washington, D.C., for the fourth of six planned rounds of NAFTA talks. Negotiators have a self-imposed goal of reaching accord by the end of this year.

Negotiations so far have skirted two highly contentious issues raised by the Trump administration: the level of North American content required for cars to enjoy duty-free shipping among the countries, and a demand that the U.S. have power to unilaterally levy import tariffs on goods that don’t qualify.

The White House wants to hike the local content requirement to 85% from the current 62.5%. The move is a bid to block components imported from outside the NAFTA zone that are built into cars assembled in Mexico and Canada and then shipped duty-free under NAFTA rules to the U.S.

Trump believes tougher content standards would bring more supplier jobs to the U.S. The White House has further unveiled a new proposal that would require cars made in Canada and the U.S. to contain at least 50% U.S. content to avoid U.S. import duties.

Experts tell Reuters they doubt that either Canada or Mexico will agree to those stipulations. Trump has repeatedly threatened to abandon NAFTA if he is unsatisfied with the outcome of the trade talks.

The U.S. Chamber of Commerce, which favors the treaty, claims the Trump administration of trying to sabotage the negotiations with proposals certain to be rejected by the other two countries. Reuters notes that U.S. and Mexican company leaders have said they would prefer no deal over a bad deal.