Prime Minister Justin Trudeau arrived in Washington on Tuesday as U.S. President Donald Trump created yet another wave of uncertainty about the fate of free-trade, and NAFTA negotiators hunkered down for another tense round of talks.
Mr. Trump mused publicly again about pulling out of the North American free-trade agreement, setting the stage for an unpredictable week in Washington.
With a January deadline to strike a deal, Mr. Trudeau is visiting Washington and Mexico City this week to meet the leaders of the two other NAFTA countries. His trip comes as the fourth round of talks begins in Arlington, Va., on Wednesday, for which the United States is said to be preparing tough proposals on the automobile and dairy industries.
Discussions on rules of origin, which set out how much North American and U.S. content should be in vehicles to qualify for duty-free status at the borders, are scheduled to take up three days of the talks, according to a schedule obtained by The Globe and Mail. On Wednesday, Reuters reported that the North American content threshold for automotives would rise to 85 per cent from the current 62.5 per cent, with a 50 per cent U.S.-specific content requirement, according to people briefed on the negotiations.
The talks were to last for five days, but have been extended by two days, the Prime Minister's Office said, owing to the scheduling conflicts of Foreign Affairs Minister Chrystia Freeland and her two counterparts, who will now meet next Tuesday.
At a summit celebrating female business leaders in Washington on Tuesday night, Mr. Trudeau said he looks for areas of agreement when dealing with the mercurial U.S. President, and believes both countries can benefit from a modernized NAFTA.
"You look for things where you find common ground and you look for ways to work together to improve the outcomes not just for your own country, but for both your countries," Mr. Trudeau told interviewer Pattie Sellers at the Fortune Most Powerful Women Summit at the National Portrait Gallery.
"Canada and the United States are tremendously intertwined. And when one does well, the other does well, and when we both do well together, I think we're unstoppable."
He also talked about the importance of adding a gender chapter to NAFTA, which will be discussed at this round of talks.
Mr. Trudeau is set to meet with Mr. Trump in the Oval Office on Wednesday, but he is not taking his message to the President only.
Mr. Trudeau will also address bipartisan members of the House of Representatives Ways and Means committee on Capitol Hill to make Canada's case about the importance of the trade deal. The committee has jurisdiction over all taxation and tariffs and is responsible for implementing any changes to NAFTA.
Meanwhile, U.S. corporate leaders are becoming increasingly alarmed by the Trump administration's protectionist demands and threats to withdraw from the pact. A letter to Mr. Trump from 310 chambers of commerce across the country on Tuesday implored the President to "do no harm" to NAFTA.
And Thomas Donohue, president and CEO of the U.S. Chamber of Commerce, the biggest business lobby in the United States, vowed to "fight like hell" to protect NAFTA against the "misguided forces of protectionism."
"The existential threat to the North American free-trade agreement is a threat to our partnership, our shared economic vibrancy, and clearly the national security and safety of all three nations," he said in an uncommonly blunt speech to a business audience in Mexico City. "There are several poison-pill proposals still on the table that could doom the entire deal."
Mexican foreign affairs minister Luis Videgaray said on Tuesday that an end to NAFTA would be a breaking point in U.S.-Mexican relations and affect bilateral co-operation in other areas.
A few hours before Mr. Trudeau's arrival, Mr. Trump repeated his threat to trigger NAFTA's withdrawal provisions in an interview with Forbes published on Tuesday.
"I happen to think that NAFTA will have to be terminated if we're going to make it good. Otherwise, I believe you can't negotiate a good deal," the magazine quoted him as saying.
Under NAFTA's Article 2205, any country can pull out of the deal with six months' notice. Triggering the article does not mean automatic withdrawal, and Mr. Trump has repeatedly mused about starting the six-month countdown as a way to put pressure on his negotiating partners.
Mr. Trump also crowed in the interview about pulling the United States out of the 11-country Trans-Pacific Partnership in January.
"It would have been a disaster. It's a great honour to have – I consider that a great accomplishment, stopping that. And there are many people that agree with me," he said.
Mr. Trump even offhandedly asked Pittsburgh Penguins co-owner Ron Burkle on Tuesday to renegotiate NAFTA – adding a surreal layer to the deal-making.
"How about negotiating some of our horrible trade deals," Mr. Trump asked Mr. Burkle during a White House visit from the Stanley Cup champions.
The White House insisted on Tuesday that Mr. Trump wanted to continue negotiating.
In addition to NAFTA, Mr. Trudeau and Mr. Trump are expected to discuss the dispute over Canadian plane maker Bombardier's C Series jets and the gridlocked talks over softwood lumber, sources with knowledge of the planned discussions said.
On Thursday, Mr. Trudeau will make his first first official visit to Mexico to talk trade with President Enrique Pena Nieto.
With reports from Greg Keenan, The Canadian Press and Reuters