Donald Trump admits he backed down on Nafta after calls from Canada and Mexico's leaders

The US could still leave the trade pact if he doesn't get his way, the President suggested

Andrew Griffin
Thursday 27 April 2017 12:13
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Donald Trump has revealed he backed down on pledges to scrap the North American Free Trade Agreement (Nafta) after calls from the leaders of Canada and Mexico.

He said that he had received calls from the two countries' leaders asking him to "renegotiate Nafta rather than terminate". His disclosures came a day after he told leaders of the two countries that he wouldn't end the trade pact, and just days after the White House said that the President was considering quitting it entirely.

The free trade agreement may still be terminated if "we do not reach a fair deal for all", he posted on Twitter.

He claimed that the relationship between the three countries was "good". It comes just two days after a series of rambling and confused attacks on Canada over its policy on milk.

He attacked Canada's decision to reduce the price of some milk products, writing on Twitter that "Canada has made business for our dairy farmers in Wisconsin and other border states very difficult". He went on to warn "We will not stand for this. Watch!"

Mexico's foreign minister appeared to agree with Mr Trump that the country was improving its relationship with the President.

Relations between the United States and Mexico have seen "enormous progress" during the first months of the administration of U.S. President Donald Trump, Mexican Foreign Minister Luis Videgaray said.

"We have generated a respectful dynamic through dialogue ... we've advanced enormously in the correct direction," Videgaray told local broadcaster Televisa in an interview.

The cancellation of Nafta had been a central part of Mr Trump's election campaign, and he regularly criticised Hillary Clinton for having approved of it. The deal was signed in the early 1990s, since when the United States has gone from running a small trade surplus with Mexico to a $63 billion deficit in 2016.

But the President said he had changed his mind since speaking to the leaders of the other countries which are party to the agreement, Mexico and Canada. Nevertheless, other members of his administration echoed his threat that he could still pull out if the US didn't get more favourable terms.

The three North American countries form one of the world's biggest trading blocs, and disruption could wreak havoc in the auto, agricultural and other industries.

The Mexican and Canadian currencies maintained their rebound early on Thursday after Trump's latest comments. The U.S. dollar dropped nearly 0.3 per cent against its Canadian counterpart and about 1 per cent against the peso.

U.S. Commerce Secretary Wilbur Ross told CNBC on Thursday that numerous "conceptual flaws" in the treaty needed to be addressed.

"Nafta needs tightening," Ross said, adding that more should be done to ensure that participants in the bloc have a trade advantage over other countries.

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