Why US-Mexico Trade Deal Still Must Include Canada

America’s neighbor to the north has been sidelined on NAFTA talks, amid Trump-Trudeau acrimony.

The US-Mexico trade deal is unlikely to stay a bilateral agreement, even though Canada lately is the odd man out on the talks.

The North American Free Trade Agreement (NAFTA), which President Donald Trump wants to scrap, is still on the books. For the US, only Congress can alter it. And free trade sentiment is still alive on GOP-controlled Capitol Hill.

There has been bad blood between Trump and Canadian Prime Minister Justin Trudeau over many issues. Recently Trump threatened to slap more punitive tariffs on Canada than he already has.

In recent weeks, Canada stayed out of talks on purpose, with Ottawa saying it wanted the US and Mexico to resolve their differences over American manufacturing jobs, specifically in the auto industry, migrating south of the Rio Grande. “Once the bilateral issues get resolved, Canada will be joining the talks to work on both bilateral issues and our trilateral issues,” Chrystia Freeland, Canada’s foreign minister, told reporters Friday.

For both Mexico and Canada, it is better to have a three-way pact than a two-way one, because a bilateral agreement would give the US, by far the larger nation, more clout. The Mexicans in particular have long insisted that the Canadians be a part of any new treaty, to join in as a counterweight against the Americans.

The US-Mexico deal declares that goods traded without tariffs must be made in factories that pay their workers higher wages. That could tilt the board to returning auto jobs to the higher-paying US from Mexico.

“Automakers urge the US and Mexico to quickly re-engage with Canada to continue to build on this progress,” the Alliance of Auto Manufacturers, which represents most automakers selling vehicles in the US, said in a statement.

Tags: , , ,