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Trump to Test High-Pressure Negotiating Style as U.S.-Canada Nafta Talks Resume

President Trump this week will put his bare-knuckles negotiating strategy to a new test, as his aides resume efforts to persuade Canada to sign on to his vision for overhauling the North American Free Trade Agreement, the pact he has long branded a disaster.

Mr. Trump set the stage for talks slated to reopen on Wednesday with holiday-weekend tweets threatening Ottawa with expulsion from the bloc, which includes Mexico, and attacking two U.S. groups whose support he needs to enact a new Nafta: Congress and organized labor.

The rhetoric follows a Trump pattern that has evolved as he has sought to remake American trade policy with the same hardball tactics he used as a New York real-estate developer.

In contrast with the more-diplomatic styles of his predecessors, the president believes the U.S. should wield more frequently the clout of the world’s largest market — and threats to cut off access to it — to reach what he considers better deals for the U.S. He is also willing to use the power of the presidency, coupled with his own unpredictability, to try to push allies and lawmakers into cooperating, raising the risk he will pursue a more destructive path if they don’t.

“If we don’t make a fair deal for the U.S. after decades of abuse, Canada will be out,” Mr. Trump tweeted Saturday morning. “Congress should not interfere w/ these negotiations or I will simply terminate NAFTA entirely & we will be far better off,” he added.

One of Mr. Trump’s complaints about Nafta is his assertion that it has encouraged U.S. manufacturers to shift production and jobs south of the border — and a central part of his strategy for redesigning the pact is winning support from American unions for the changes he makes.

But the head of the country’s largest union on Sunday suggested Mr. Trump’s threat to cut out Canada would undo that effort. “Our economies are integrated, the three countries in North America,” Richard Trumka, president of the AFL-CIO, told Fox News. “It’s pretty hard to see how that would work without having Canada in the deal.”

Mr. Trumka, whose group represents 12.5 million workers, also expressed skepticism about the agreement Mr. Trump had announced earlier in the week with Mexico, and criticized the president’s other policies affecting organized labor.

Mr. Trump shot back on Twitter Monday morning, writing that Mr. Trumka “represented his union poorly on television this weekend. Some of the things he said were so against the working men and women of our country, and the success of the U.S. itself, that it is easy to see why unions are doing so poorly…”

Mr. Trump followed up with another tweet saying: “The U.S. has tremendous upside potential as we go about fixing some of the worst Trade Deals ever made by any country in the world. Big progress being made!”

Trump supporters say his style has succeeded in drawing trading partners to the negotiating table. In addition to the Nafta negotiations, the U.S. in late July launched new trade talks with Europe, and, as part of that process the European Union on Monday moved to start talks on increasing U.S. beef imports to the bloc. Also on Monday, the Trump administration published details of a recently renegotiated free-trade deal with South Korea.

But critics say Mr. Trump’s approach could also backfire, especially when it comes time to win support for new trade agreements on Capitol Hill. The president’s warning against congressional interference drew a rebuke from Oregon Sen. Ron Wyden, the top Democrat on the Senate Finance Committee overseeing trade policy.

“He doesn’t even have the power to follow through on his empty threats,” Mr. Wyden said on Monday. “The president needs to take a look at the Constitution — it gives Congress authority over trade. The president cannot pull America out of Nafta without Congress’s permission.”

A spokeswoman for Utah Republican Sen. Orrin Hatch, who chairs the finance committee, on Monday said he “continues to think a renegotiated Nafta should be trilateral,” adding that “Congressional approval will be key to the success of a modernized trade agreement.”

The three Nafta nations have spent the past year trying to renegotiate the pact after Mr. Trump early in his presidency threatened to pull the U.S. out of the quarter-century-old bloc. The U.S. and Mexico came to terms on revisions on Aug. 27, and Mr. Trump’s trade team spent the rest of last week trying to reach a similar agreement with Canada. After those talks ended without agreement on Friday, Mr. Trump sent a notice to Congress saying he would be willing to replace Nafta with a Mexico-only bilateral deal, though Canada remained welcome to join if a deal could be reached soon.

The two sides said they would resume negotiations in Washington on Wednesday. One sticking point involves a Trump administration demand to remove a Nafta provision that allows member states to challenge trade penalties imposed by the others. Others involve U.S. demands for increased access to the Canadian dairy market, and Canada’s desire to maintain current protections for Canada’s cultural sector, a person familiar with the talks said.

Mr. Trump’s Nafta threats come as Canadian Prime Minister Justin Trudeau faces a tenuous domestic political situation, with a hotly contested election looming next year.

Mr. Trudeau’s Liberal government was dealt a setback last week after an appeals court temporarily quashed plans to proceed with a 4.5 billion Canadian dollar ($3.45 billion) pipeline project because of a failure to properly consult affected indigenous groups on environmental impact.

Mr. Trudeau also faces trouble at home over immigration policies, because of an influx of people crossing into Canada by foot from the U.S.

Nearly 75% of Canadian exports are U.S. bound, or the equivalent of 20% of the country’s economic output. As such, some analysts warn, the Canadian economy has the most to lose from Nafta’s demise.

In preparation for the talks resuming on Wednesday, an official said Mr. Trudeau spoke in recent days with domestic labor leaders and with former Prime Minister Brian Mulroney, who helped craft Nafta in the early 1990s and Nafta’s predecessor, the U.S.-Canada free-trade pact.

Canada is also counting on its 18-month effort to lobby U.S. lawmakers and stakeholders at the federal, state and municipal level will bear fruit, with louder calls from across America for Canada to be part of any revised Nafta. Among other things, the lobbying efforts have pointed out how nearly three-dozen U.S. states count Canada as their biggest export market.

Canadian trade experts said over the weekend that Canadian firms should consider the possibility that U.S.-Canada talks fail, and Mr. Trump pursues American withdrawal from Nafta at the end of September. Under this scenario, Nafta would only be in effect until April.

“Although this scenario still might seem remote in light of the political challenges to securing congressional cooperation for Mr. Trump’s plan, it would be prudent for businesses on both sides of the Canada-U.S. border which rely heavily upon the benefits of Nafta to plan for Nafta’s demise,” said Peter Glossop, a partner at the Osler Hoskin & Harcourt law firm in Toronto who specializes in trade and investment law.
Source: Dow Jones

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