Brian Mulroney says U.S. plans to renegotiate the North American free-trade agreement are shaping up to be more than a tweak.
The former Progressive Conservative prime minister made the comments after briefing the Liberal cabinet committee on Canada-U.S. relations on Parliament Hill.
Canadian officials were elated in February when, after meeting with Prime Minister Justin Trudeau at the White House, U.S. President Donald Trump said his administration would be "tweaking" the North American free-trade agreement as it related to Canada.
The language was much softer than Mr. Trump's rhetoric on the campaign trail, where he frequently referred to NAFTA as a disaster and the worst trade deal ever signed by the U.S.
However, Mr. Mulroney noted Thursday that last week's draft eight-page letter from acting U.S. Trade Representative Stephen Vaughn outlining more than 40 U.S. negotiating objectives appeared to go further than what Mr. Trump had suggested in February.
"I think so," Mr. Mulroney responded when asked if the U.S. is now seeking more than a tweak to NAFTA.
"I think they're going to be very challenging," he said of the coming negotiations. The White House has not yet provided Congress with the formal 90-day notice required before launching trade talks.
Mr. Mulroney told reporters that it is still not clear what the Trump administration will propose, but listed issues like "rules of origin," that determine how much of a product is made in the U.S., North America or outside of NAFTA, will be key, as will talks over a mechanism for resolving trade disputes.
"I don't know [what Canada might be asked to give up] because we don't know really what their demands are yet," he said. "And the question is, what will they have to give up, too?"
Mr. Mulroney's government reached the Canada-U.S. free-trade agreement, which came into effect on Jan. 1, 1989. His PC government won a second majority mandate in the 1988 election campaign, which focused heavily on the free-trade debate.
The FTA was superseded by NAFTA, which took effect in 1994 and added Mexico to the agreement.
Since Mr. Trump's election win, Liberal officials have reached out to a wide range of current and former politicians to help in a joint effort to persuade the new administration of the merits of free and open trade with Canada.
Mr. Mulroney has been relied on heavily because he has a personal friendship with Mr. Trump and some of the President's senior colleagues, including Commerce Secretary Wilbur Ross.
Canada's Ambassador to the U.S., David MacNaughton, also attended Thursday's meeting and said later that he expects the Americans will back away from imposing a border tax.
In addition to the expected renegotiation of NAFTA, the Trump administration and Republican leaders in Congress are working on a tax-reform package that could have a significant impact on the Canadian economy.
One proposal under discussion is a border tax on imports, which is supported by some American business leaders but strongly opposed by other sectors of the economy that rely heavily on imports.
"I don't think it's going to happen," Mr. MacNaughton said. "Because it would actually be worse for them than it would be for anyone else, so I don't think normally Americans do things that will punish their own economy and I think the evidence would suggest that a border-adjustment tax would be bad for the American economy and would cost them jobs and cost consumers a lot more money for their products. I think it's a bad idea, and I think they'll come to the same realization."
Mr. MacNaughton said he has met with provincial cabinets across the country and praised the fact that politicians of all stripes are working together to make the same case with the Americans on trade.
"I'm really pleased, the degree to which Canadians have pulled together to try and help on what we see as not a partisan issue but one where all Canadians are being extraordinary supportive," he said.
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