Nafta talks hit contentious phase as Canadian PM fights for trade pact

[WASHINGTON] Contentious new US demands are set to hit Nafta negotiating tables on Wednesday, threatening to push modernization 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 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.

"We're going to be talking about Nafta and the fact it has led to great opportunities for our citizens," Mr Trudeau said on Tuesday night in conciliatory remarks at a Fortune magazine dinner honoring women, where he sat next to Ivanka Trump.

He added that he would "look for areas of agreement" with President Trump to improve outcomes for both countries.

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 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 completed their negotiations regarding company competition policy, reaching agreement on a chapter that provides goes beyond previous US trade deals to ensure "certain rights and transparency under each nation's competition laws." People briefed on the new US proposals to be presented this week said that USTR is seeking to sharply lift North American content threshold for autos and auto parts 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 Wendy Cutler, the Asia Society's Washington policy director and former chief US negotiator for the Trans-Pacific Partnership trade deal canceled 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 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.

REUTERS