Trudeau, Pena Nieto reaffirm commitment to NAFTA after meeting

Britain's Prime Minster Theresa May leaves 10 Downing Street in London

The leaders of Canada and Mexico stuck to their upbeat view on the future of the North American Free Trade Agreement on Thursday, despite US President Donald Trump's threats to axe it.

U.S. President Donald Trump said on Wednesday he would be open to bilateral trade pacts with Mexico or Canada if a deal can not be reached to substantially revise NAFTA.

However, two people briefed on the talks said the USA proposal stops short of labor unions' call for "melted and poured" North American steel, which would have precluded the use of raw steel from elsewhere that has been rolled or otherwise processed on the continent.

"We are all much worse off with a bad agreement than with no (NAFTA)", said Guillermo Vogel, who co-chaired the Mexico City event and is a vice president at Tenaris, a steel company.

The list would be greatly expanded under the US proposal to cover a vast and complex web of automotive components, essentially eliminating the concept of "deemed originating", under which parts not listed get a free pass to tariff-free NAFTA access, no matter their origin.

Some observers have suggested such a clause would be a "poison pill" that could kill the talks.

Those proposals include removing dispute resolution mechanisms, limiting trade in fresh produce and introducing minimum quotas for USA parts in autos.

Trudeau also said he appreciated Mexico's support in wanting to add a proviso on gender equality into a new NAFTA deal.

Without NAFTA, Mexico trade experts say USA products would face higher tariffs to enter Mexico, which could further skew the trade balance.

U.S. Commerce Secretary Wilbur Ross has vowed to close "loopholes" in the parts list that he says allow too many cheap auto parts from Asia and other regions to enter the United States.

The North American content stipulation would mean parts are manufactured in North America.

Their comments come after the United States introduced a proposal this week for a sunset clause, which would end NAFTA after five years unless the three countries agreed to renew it. "Starting to play with a non-market economy would be bad for us".

We take this process seriously and diligently, and we will take into account proposals that are put on the table; we will continue to work responsibly, because that is our approach as Canadians and because we know that there is a way and the opportunity to create success for the citizens of the three countries, said the northern ruler.

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