Published: Thu, January 11, 2018
World News | By Laverne Osborne

Canada tamps down worries about US NAFTA withdrawal

Canada tamps down worries about US NAFTA withdrawal

It is more likely a "zombie NAFTA" will continue even if Trump pulls out, as such an action could be held up in the USA court system and members of congress would have to authorize the addition of new tariffs on goods from Canada.

Canadian railway, pipeline and other trade-sensitive stocks weighed on the country's main index on Wednesday as two government sources said Canada is increasingly convinced the United States plans to pull out of the North American Free Trade Agreement.

In keeping with his campaign promise, Trump forced Canada and Mexico to sit down and renegotiate the 1994 trade pact, and said if a deal could not be reached he would withdraw the United States from NAFTA.

Canada is still optimistic there could still be some sort of positive resolution to these fractious trade talks, the sources said, and will continue to pursue its aggressive outreach plans in the USA, which include meetings with US state governors and lawmakers in Washington.

Canadian officials are quick to point out in their meetings with USA politicians that America has an $86 billion trade surplus with Canada, even though the US has rising trade deficits - meaning it purchases more than it exports - with many other nations, including Mexico.

The sixth round of NAFTA negotiations are slated to begin January 23 in Montreal.

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Laura Dawson, the director of the Canada Institute at the Wilson Centre in Washington, said it should come as no surprise that Trump is prepared to use the threat of withdrawal as a negotiating tactic.

The US is expected to lead the oil & gas industry in the NAFTA bloc, with a value of $517.7 billion in 2020, followed by Canada and Mexico with expected values of $74.9 and $55.6 billion, respectively.

U.S. Trade Representative Robert Lighthizer said the WTO filing "could only lower U.S. confidence that Canada is committed to mutually beneficial trade".

Trump fell short Monday on making any firm promises that a NAFTA update could be done, although he told farmers he wanted a better deal for them during remarks to the American Farm Bureau Federation convention in Nashville, Tenn. A withdrawal notice doesn't mean Nafta would be killed - a country can give notice and then not actually leave.

"It's under negotiation as we speak", he said.

Any of them can also rescind the withdrawal during that time period.

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