Trudeau turns attention to Mexico in midst of tensions over NAFTA

Former PM Harper convinced Trump not bluffing about pulling the plug on NAFTA

The study, released as NAFTA negotiators from the U.S., Canada and Mexico meet in the Washington, D.C. suburbs, found that a 35 percent tariff that would be placed on auto parts that are made in the U.S. and shipped to Canada or Mexico without the trade agreement's duty-free treatment would result in a job loss of 25,000 to 50,000 in the parts supplier industry. "If the agreement dies overnight, this is going to have an impact on the daily lives of a lot of people, because all of a sudden there's going to be a scarcity of nearly everything that we consume in Mexico-especially on foodstuffs", says the former office head for S&P's Global Ratings in Mexico City.

The negotiations are being held at the demand of Trump, who this week repeated his threat to pull the USA out of the 23-year-old accord. The question now becomes are we going to be the country that leads this shift?

Pena Nieto's term is almost up in government and with Mexico one of the countries on Trudeau's priority list for stronger relations, one goal of this visit is to forge new relationships and cement Canada's standing in the eyes of Mexicans as a trusted partner in all things, not just trade. SCAN TO WATCH Trump open to US-Canada trade deal.

Trade experts say the NAFTA talks are likely to stall in the face of aggressive USA attempts to sharply increase content requirements for autos and auto parts.

"It's possible we won't be able to make a deal and it's possible we will", he added. Both leaders are keen to see talks succeed. "Withdrawing from the agreement also risks a prolonged legal fight over whether the president can exit from the agreement without congressional consent". Speaking in Mexico on Tuesday, the president of the U.S. Chamber of Commerce, Thomas J. Donohue, said the negotiations had "reached a critical moment".




Mexico has been more assertive with Washington, talking openly about abandoning NAFTA if need be or slashing imports of USA grain.

Under current rules, at least 62% of the parts in a vehicle sold in North America must come from the region to avoid being hit with taxes at the border.

The part supplier group said Thursday that US automakers would be at a disadvantage if they face higher tariffs than their counterparts in other countries outside of North America do. "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 Trump. Under the U.S. proposal, America would require more to be made in the country and less sourced from other members of the block. "We have to be prepared for the different scenarios that could come out of this negotiation".

Americans", she said, and acknowledged that changes to the deal would "of course be opposed by entrenched Washington lobbyists and trade associations.

In a speech on the same day in Mexico City, US Chamber of Commerce president and chief executive Tom Donohue warned: "There are several poison-pill proposals still on the table that could doom the entire deal". "We have always understood that draining the swamp would be controversial in Washington".

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