Trump Calls Trudeau `Great Friend' as Nafta Tension Remain High

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Business groups are raising alarms about the Trump administration's proposals to update the North American Free Trade Agreement (NAFTA) as the fourth round of talks started on Wednesday.

U.S. President Donald Trump says NAFTA, originally signed in 1994, has been a disaster for the United States and has frequently threatened to scrap it unless major changes are made.

US President Trump has warned that tough talks lie ahead on the future of NAFTA, indicating that the US could withdraw.

"My optimism toward NAFTA, toward a renegotiation, isn't based on personality or reading political tea leaves", Trudeau said following his talks with Trump.

"There's a path to be optimistic here and, you know, maybe he'll come around", Morneau said, an apparent reference to Trump.

Enrique Peña Nieto, Mexico's president, has also called for the modernization of the 23-year-old deal. "We have to protect our workers, and in all fairness, the prime minister wants to protect Canada and his people also".

Making a revised NAFTA deal will require flexibility from all those involved in the deal, Meyer says.

U.S. President Donald Trump said on Wednesday he would be open to bilateral trade pacts with Mexico or Canada if a deal can not be reached to substantially revise NAFTA. Both leaders are keen to see talks succeed.

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If the deal falls apart, the United States, Canada and Mexico would go back to a system of low tariffs on imports.

A new study has warned that the United States auto-parts industry could lose up to 50,000 jobs if the trade pact is terminated, and companies must pay higher tariffs to ship products to Mexico and Canada.

"If every marriage had a five-year sunset clause on it, I think our divorce rate would be a heck of a lot higher", Canada's ambassador to Washington David MacNaughton said last month.

U.S. Chamber of Commerce CEO Thomas Donohue, speaking in Mexico City on Tuesday, pledged to fight "like hell" to defend Nafta if Trump tries to pull out.

Trump has made revamping the pact and reducing USA trade deficits a core pillar of his election campaign, but has not set out exactly what changes he would like to make.

In an e-mail, Mr Curtis S. Chin, a former United States ambassador to the Asian Development Bank and a senior fellow with the Milken Institute, a non-partisan economic think-tank, wrote: "With Nafta now more than 20 years old, it could well use some revisiting and updating". USA negotiators have countered with a proposal that would effectively grant the other countries less access, people familiar with the talks say.

Under current rules, at least 62% of the parts in a auto sold in North America must come from the region to avoid being hit with taxes at the border. After Donohue made his comments supporting the Nafta, Emily Davis, spokeswoman for the Office of the US Trade Representative, reiterated the administration's position.

"If the required content to hit the threshold for a NAFTA vehicle is too high, people may say, 'Look, it's just too hard, it's too high, so we'll just ship the vehicles in, '" Magna International Inc.

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