Foreign Affairs Minister Chrystia Freeland assured Mexico on Tuesday that Canada will not strike a bilateral deal with Washington in negotiations to revamp the 1994 North American free-trade agreement. During a panel discussion with Mexican Foreign Affairs Secretary Luis Videgaray, Ms. Freeland sought to dampen concerns that the Trump administration would seek bilateral talks with each of its NAFTA partners.
Ms. Freeland stressed that it is too early to even talk about what might be up for renegotiation since the Senate has not yet confirmed commerce secretary nominee Wilbur Ross, who will head the trade negotiations, and Robert Lighthizer, the nominee for U.S. trade representative.
"There is no negotiating process yet initiated. In fact, the United States does not even have a team in place to begin those negotiations. So let's not put the cart before the horse," she said when asked if Canada was prepared to throw Mexico under the bus to protect this country's interest from President Donald Trump's America-first trade policy.
"But we very much recognize that NAFTA is a three-country agreement, and if there were to be any negotiations, those would be three-way negotiations."At the same time, Ms. Freeland said there will be bilateral issues that Canada and the United States will want to discuss separately – something Mr. Videgaray conceded would happen when it comes to Mr. Trump's plans to build a wall to stem the flow of illegal immigrants and drug smuggling from Mexico.
"We understand that there are some issues that, by nature, are strictly bilateral to the U.S.-Canadian relationship … just as Canada acknowledges we have a bilateral relationship with the U.S. and I am sure [Ms. Freeland] would prefer to stay away from some of those aspects of that."
Mr. Videgaray said Mr. Trump's campaign rhetoric against Mexico was "very damaging." calling it "offensive" and "insulting," but added Mexican and U.S. officials are working to repair relations.
U.S. Secretary of State Rex Tillerson and Homeland Secretary John Kelly will be in Mexico City for talks on Wednesday, he said.
Mr. Videgaray said he expects formal NAFTA talks to begin in June once the U.S. Congress has been given 90 days' notice that the administration intends to reopen the 23-year-old trade pact.
When those talks get under way, former prime minister Brian Mulroney predicts "rough" negotiations, despite Mr. Trump's assurance that he only wants to tweak NAFTA as it governs trade with Canada.
Unlike Ms. Freeland, however, Mr. Mulroney said he expects much of Canada's and Mexico's negotiations will be carried out bilaterally with the United States.
"There are times when America is going to want to negotiate directly with Mexico and there are times they will want to negotiate directly with us to resolve simply some bilateral matters, but I think the broad thrust of the negotiations will remain essentially trilateral," he said.
Mr. Mulroney told the Canadian Council of Americas that Mexico will face the brunt of American demands to reform NAFTA to address its huge trade deficit with the United States, but added Canadian negotiators will also need to be adept and tough-minded in the negotiations.
Mr. Mulroney warned two key issues will be on the table that could have an impact on the Canadian economy.
"They are looking at the independent dispute mechanism with Canada and rules of origins whereas they are looking at other things with Mexico," Mr. Mulroney said in a panel discussion with Globe and Mail editor-in-chief David Walmsley. "This is not trivial for us, and we are going to have to be very vigilant and very careful and very thoughtful."
Mr. Mulroney said he is particularly concerned the Americans will want to eliminate the independent dispute mechanism panels so that U.S. courts can adjudicate trade disputes. The United States is also expected to seek to raise the amount of North American content in goods shipped duty-free.
The future of the auto sector is a key concern for Mexico given Mr. Trump's threat to impose tariffs of as much as 35 per cent on vehicles shipped to the United States from assembly plants in Mexico. Auto makers have pumped billions of dollars of investment into the country and created tens of thousands of jobs since NAFTA came into force in 1993.
Mexican officials and industry executives are concerned about the effect separate bilateral deals among the three countries – rather than a multilateral NAFTA negotiation – might have on the auto sector, said Flavio Volpe, president of the Automotive Parts Makers Association of Canada.
"There's some worry that the sentiment 'we can do this bilaterally' will damage the prospects for the auto sector, which relies on trilateral relationships and [product] flows," Mr. Volpe said after the meeting with Mr. Videgaray and Mexican Economy Minister lldefonso Guajardo.
He noted that Canadian companies have a direct stake in talks between Mexico and the United States if the negotiations turn into a series of bilateral deals instead of a tripartite agreement.
About 60 Canadian parts makers operate 120 factories in Mexico and employ about 40,000 people, he said.
Mr. Mulroney said he doubts that Mr. Trump will change his mind on building a wall between the U.S. and Mexican border, but said it is unlikely to be one that stretches along the whole of the border, because of the high costs.
Mr. Mulroney gave "high marks" to Mr. Trudeau for the way he handled Mr. Trump, who came away from the meeting with a good feeling about the Prime Minister.
"It's hard to imagine if you just step back and look at two people with less in common than Donald Trump and Justin Trudeau, but he worked at it … and President Trump told me on Saturday night that … he got along well [with Mr. Trudeau] and there is much in common."
Mr. Mulroney, who has known Mr. Trump for 25 years, said many Canadians are making a big mistake to so easily dismiss this "unorthodox" President, but noted he has an ambitious agenda that includes tax reform and massive infrastructure spending.
"If he can deliver on that in some measures I think he has a chance of rewriting not only a lot of history but going down in history big time," Mr. Mulroney said.
With files from reporter Greg Keenan