April 26, 2017 / 4:59 PM / in 7 months

Trump says was 'psyched to terminate NAFTA' but reconsidered

WASHINGTON (Reuters) - President Donald Trump told Reuters on Thursday that he was “psyched” to terminate the NAFTA trade deal with Canada and Mexico, but changed his mind after their leaders asked for it to be renegotiated instead.

Canadian Prime Minister Justin Trudeau (L) walks down the West Wing colonnade with U.S. President Donald Trump at the White House in Washington, U.S., February 13, 2017. REUTERS/Kevin Lamarque

Trump said in an interview with Reuters that he will not hesitate to change course again and pull the plug on the North American Free Trade Agreement if the negotiations become “unserious.”

His comments came at the end of a long 24 hours during which Ottawa and Mexico City were whipsawed over the Trump administration’s intentions over the 23-year-old trade pact.

“You know I was really ready and psyched to terminate NAFTA,” Trump said.

He decided that it would be better to terminate the trade deal after hearing about Wisconsin farmers’ struggles with new Canadian dairy rules that were shutting out their milk protein exports.

“You saw that, you wrote about it,” Trump said. “And I said I’ve had it. I’ve had it.”

But after administration officials said a withdrawal order was being prepared, Trump said he received phone calls from Mexican President Enrique Pena Nieto and Canadian Prime Minister Justin Trudeau asking to renegotiate the pact.

“I’m not looking to hurt Canada and I’m not looking to hurt Mexico. They’re two countries I really like,” Trump said. “So they asked to renegotiate, and I said yes.”

News of the possible U.S. pullout from NAFTA rattled financial markets on Wednesday. Relative calm returned on Thursday after Trump’s comments, and the Mexican peso strengthened 0.86 percent against the U.S. dollar, while the Canadian dollar was flat versus the greenback.

Mexico, Canada and the United States form one of the world’s biggest trading blocs, and trade disruptions among them could adversely affect farm, automotive, energy and other sectors in all three countries. NAFTA removed most trade and tariff barriers between the neighbors, but Trump and other critics have blamed it for deep U.S. job cuts.

Trump campaigned for president last year on a pledge to pull out of NAFTA if he could not renegotiate better terms. The United States went from running a small goods trade surplus with Mexico in the early 1990s to a $63-billion deficit in 2016.

Asked by Reuters what would make NAFTA a fair deal, Trump said: “Open markets. Open borders for trade” and “Fairness, no government subsidies so that it makes it impossible for our people to compete.”

He added that if the NAFTA negotiations “become unserious, I will terminate.”

As Trump spoke, a new trade irritant between the United States and Canada emerged, as Boeing Co asked the U.S. Commerce Department to investigate alleged price dumping and unfair Canadian government subsidies for Bombardier Inc’s new Canadian-made CSeries jetliners.

‘GET TO WORK’

Trudeau told a news conference in Saskatchewan he had urged Trump not to withdraw from the trade pact and warned that doing so “would cause a lot of short- and medium-term pain.”

“That’s not something that either one of us would want, so we agreed that we could sit down and get to work on looking at ways to improve NAFTA,” Trudeau said.

Canada sends 75 percent of its exports to the United States. On Tuesday, Trump said he did not fear a trade war with Canada, a day after his administration moved to impose tariffs on Canadian lumber.

In Mexico City, Mexican Foreign Minister Luis Videgaray said Pena Nieto had called Trump on Wednesday and spoken with him for about 20 minutes in a conversation focused exclusively on the looming talks over NAFTA’s “renegotiation and modernization.”

Trump has accused Mexico of luring away American factories and jobs with cheap labor and other advantages enabled by NAFTA. During the presidential campaign he accused Mexico of sending rapists and criminals into the United States, and as president plans a U.S.-Mexico border wall.

One of Trump’s first major acts after becoming president in January was to pull out of the 12-nation Trans-Pacific Partnership, negotiated by his Democratic predecessor Barack Obama.

Several agriculture lobby groups in Washington were told U.S Agriculture Secretary Sonny Perdue, confirmed by the Senate on Monday, met with Trump on Wednesday evening to dissuade him from withdrawing from NAFTA.

American Soybean Association President Ron Moore said, “When you’re talking about $3 billion in soybean exports a year, any threats to withdraw from agreements and walk away from markets makes farmers extremely nervous.”

Formal NAFTA talks likely will not get started until August. The U.S. Trade Representative’s office must first send Congress a notice that starts a 90-day consultation period preceding any negotiations.

A USTR spokeswoman said the notice would not be sent until the Senate confirmed Trump’s nominee for trade representative, Robert Lighthizer.

Additional reporting by Stephen J. Adler, Jeff Mason, Steve Holland, Susan Heavey and Mohammad Zargham in Washington, Veronica Gomez and David Alire Garcia in Mexico City, David Ljunggren in Ottawa, and P.J. Huffstutter and Mark Weinraub; Writing by David Lawer and Will Dunham; Editing by Nick Zieminski and Clarence Fernandez

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