(Reuters) - U.S. President-elect Donald Trump’s nominee for commerce secretary has indicated that a formal letter to start negotiations on NAFTA will be sent to Canada and Mexico within days of Trump’s inauguration, the Globe and Mail reported.
Trump has promised to scrap entirely or re-negotiate the North America Free Trade Agreement (NAFTA), the free trade accord between Mexico, the United States and Canada.
Wilbur Ross has informed Canada that rules of origin and independent dispute tribunals will be central to the talks, the Globe and Mail said, citing Canadian officials.
Canada sends 75 percent of its exports to the United States and could suffer badly if Trump follows through on promises to renegotiate NAFTA or impose an import tax.
Trump’s trade team indicates the trade focus will largely be aimed at Mexico, the Globe and Mail reported, citing a senior government official.
Trump has threatened to tear up the trade agreement that underpins Mexico’s export model if he cannot renegotiate its terms in his favor, battering the peso currency and fueling uncertainty over foreign investment.
Mexico is particularly exposed to any economic shock because it sends about 80 percent of its exports to the United States and has long depended on its neighbor for about half of its foreign direct investment.
Trump, who has also threatened to slap hefty tariffs or taxes on Mexican-made goods, is due to take office on Friday.
Country of origin rules govern how much foreign material a product can contain and still qualify for duty-free shipping.
Reporting by Arathy S Nair in Bengaluru; Editing by Martina D'Couto