Canadian Trade Minister Encouraged by Trump’s Nafta ‘Tweak’

Canada was heartened by U.S. President Donald Trump’s remark he may yet tweak his neighbor’s side of the North American Free Trade Agreement, rather than demand wholesale change, according to Trade Minister Francois-Philippe Champagne.

“I was encouraged from the comment from President Trump when he referred to tweaks to Nafta,” Champagne said on Tuesday in a Bloomberg Television interview in Sydney. “This is an agreement that is more than two decades old,” he said, and has already been amended a number of times.

“It’s also for me an acknowledgment of the breadth and depth of our relationship," Champagne said. “There’s an acknowledgment that we just don’t sell to each other, we make things together, and for me this was very encouraging because this is an agreement that has been good for the middle class.”

Trump previously threatened to withdraw from Nafta, if his partners weren’t willing to renegotiate a deal he blamed for destroying American manufacturing. Canadian Prime Minister Justin Trudeau has been pressing to maintain the two countries’ $540 billion annual trade relationship.

Still, during Trudeau’s visit to Washington this month, Trump said he planned “tweaks” for Canada’s terms under Nafta, while saying he’d focus instead on the “unfair” U.S. commercial relationship with Mexico to the south.

“I took his comment to say that we start from a very strong basis," Champagne said.

‘Very Integrated’

“If you look at the supply chain in North America it’s very much integrated,” he said. “We have been able to achieve good growth with respect to Nafta in every country.”

Mexico’s government was preparing for the potential demise of Nafta as it looked to increase ties with Asia, Kenneth Smith Ramos, director of the Nafta office at the Mexican Embassy in Washington, said last week. It made sense to renegotiate some Nafta details bilaterally, Gilles Gauthier, economic affairs minister at the Canadian embassy in Washington, has said.

Nafta has come into question as Trump takes the U.S. more broadly down a protectionist path. In one of his first acts as president, Trump pulled the U.S. out of a 12-nation Pacific trade pact that includes Canada and would knit together almost 40 percent of the global economy. He has also touted an “America First” policy that he said would protect jobs.

‘Open Mind’

Australia is now pushing the case for the TPP to go ahead without the U.S., with talks on that expected with other potential members in Chile next month. Trade Minister Steven Ciobo has said the TPP remains “absolutely” relevant even without its largest member.

Champagne said he was speaking with his Australian and New Zealand counterparts to see how to progress the case for free trade, including at the Chile meeting.

“We’re going to go there with an open mind, I mean we’re open to different initiatives that may be presented,” Champagne said. “Canada will be at any table anywhere in the world where we can progress our relationship and our position in the Asia Pacific,” he said. “We’re very much a Pacific nation.”