The Trump administration may tear up the North American free-trade agreement and negotiate separate deals with Canada and Mexico, President Donald Trump's point-man on the file says.
Commerce Secretary Wilbur Ross also warned Tuesday that Washington will be "more aggressive" in fighting back against what it believes are unfair trade practices, such as by slapping tariffs on imports.
And he took aim at British Columbia Premier Christy Clark over her move to ban U.S. coal shipments from her province's ports.
Mr. Ross laid out the administration's trade agenda at a Council of the Americas conference at the U.S. State Department in Washington.
Despite Mr. Trump's decision last month not to start the process of pulling the U.S. out of NAFTA – after a last-minute intervention by Prime Minister Justin Trudeau – Mr. Ross indicated a withdrawal from the deal is still on the table.
"We have not yet decided whether to go the trilateral route or whether to pursue two matching bilaterals," he said. "And, in fact, we don't think that's the most important question in any event. At this early stage we're focused on substance rather than form."
The shape of the deal, however, is an important question to both Canada and Mexico, which want to preserve NAFTA as a three-way pact.
Canadian International Trade Minister Francois-Philippe Champagne said Tuesday that the trading relationship is not as simple as countries selling to one another. Rather, with companies depending on supply chains across the NAFTA zone, the deal allows all three nations to work together to produce products.
"We don't just sell to each other – this is kind of a unique relationship in the world…we make things together," he told reporters following a speech at the conference. "So clearly the three parties need to be at the table, and we've been very clear on that."
If he does preserve NAFTA, Mr. Ross said, Mr. Trump told him it should be re-named "NAFFTA," with the other "f" standing for "fair."
Mr. Ross cited Canada's negotiations with the European Union as an example of why multilateral trade deals don't work. Last fall, the Wallonia region of Belgium held up the entire deal. Canada did, however, successfully close the agreement.
Mr. Ross also promised Washington will be "more aggressive in pursuing trade remedies" against other countries that the U.S. believes are cheating on trade. Rather than leaving individual companies to launch cases, Mr. Ross said, the U.S. government will instead do this itself.
"We are going to implement stricter enforcement than any recent administration," he said.
He cited the softwood dispute as an example, and warned Ms. Clark that trying to ban U.S. coal shipments will not force Washington to back down on putting tariffs on Canadian lumber.
"If any Canadian or British Columbian official wishes to present additional information, we will consider it carefully and impartially," he said. "But threats of retaliation are inappropriate and will not influence any final determinations. We continue to believe that a negotiated settlement is in the best interests of all the parties."
Mr. Ross said his goal is to get countries to agree to import more U.S. products, but did not specify how this would be done. He said the U.S. did not want to start international trade battles, but wouldn't shy away from a fight.
"We do not seek a trade war with anyone, least of all with our fellow citizens of the Americas," he said. "We intend to raise tariffs or create non-tariff barriers only in other negotiating tools fail. But other nations must understand that we will use all the tools at our disposal if necessary."
Mr. Ross said he hoped to get Mr. Trump's nominee for U.S. Trade Representative, Robert Lighthizer, confirmed this week, followed swiftly by statutory notice to Congress of the administration's intent to renegotiate NAFTA. This would trigger a 90-day countdown to the start of talks.
Mr. Champagne, for his part, told the conference Canada is working hard to diversify its trading partners – a not-so-subtle message that Ottawa has other options if the U.S.'s trade agenda proves intractable. Mr. Champagne highlighted the possibility of a free-trade deal with the Mercosur block of South American countries, as well as increased cooperation with the Pacific Alliance.
"Canada is working hard to realise an ambitious agenda of trade diversification. This includes pursuing new markets for softwood lumber," he said. "While the U.S. will always be a natural market for Canadian exports, there are lucrative opportunities for Canadian companies around the world today."
Arizona Senator John McCain dismissed the nationalist rhetoric coming out of the Trump administration, arguing that increased cooperation between the three countries' manufacturing sectors has been good for the U.S.
"When you say that when parts go to Mexico and the automobile is put together in Mexico and it comes back, that's a total loss to America – that's a myth. That's not true," he said, warning that tearing up NAFTA would cost jobs in his state.
As for Canada, Mr. McCain said, he had just one complaint – that the Oilers and the Flames are more popular in his state than the local team.
"We welcome our Canadian friends to come and spent the winter with us in Arizona," he said. "The only thing that angers me is when we have a hockey game and we play Edmonton or Calgary, there are more ... shirts from those teams than from the Arizona Coyotes."