Mexico, Canada plow ahead with trade pact ratification plan despite Trump threats

MEXICO CITY/OTTAWA (Reuters) - Mexico and Canada said on Friday they would proceed with plans to ratify a new continental trade pact despite a new threat from U.S. President Donald Trump that critics say could undermine chances of the treaty coming into force.

FILE PHOTO: The flags of Canada, Mexico and the U.S. are seen on a lectern before a joint news conference on the closing of the seventh round of NAFTA talks in Mexico City, Mexico March 5, 2018. REUTERS/Edgard Garrido

Trump, whose administration has made passing the United States-Mexico-Canada (USMCA) free trade agreement a priority, unexpectedly said on Thursday he would slap tariffs on all goods coming from Mexico unless a surge of illegal immigrants ceased.

Neil Bradley, executive vice president and chief policy officer at the U.S. Chamber of Commerce, said the move undermined the relationship with Canada and Mexico.

“This is definitely a roadblock to securing passage of USMCA,” he told CNN.

Trump made his threat the same day that Vice President Mike Pence visited Ottawa and said he was pushing to get the U.S. Congress to ratify the deal this summer after both Canada and Mexico moved to start the approval process this week.

The news rocked markets and prompted a flurry of protests from Mexican and U.S. business groups.

Mexican President Andres Manuel Lopez Obrador told reporters on Friday that ratification efforts would continue.

“The opinion of the Executive is that the process of ratification of the treaty continues, that we comply with the commitments that were made and that we finish soon approving the United States-Mexico-Canada Agreement,” he said.

The Mexican and Canadian governments appeared unclear as to how serious Trump might actually be. The USMCA was agreed last year after 15 months of sometimes acrimonious negotiations marked by episodes of U.S. brinkmanship.

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“It is a little strange, to say the least, that he decides to resolve the issue of immigration using tariffs,” Mexico’s Deputy Economy Minister Luz Maria de la Mora said in an interview on Friday.

Canada and Mexico both ship more than 75 percent of all their goods exports to the United States and are heavily reliant on free trade.

“Following through on this threat would seriously jeopardize passage of USMCA, a central campaign pledge of President Trump’s and what could be a big victory for the country,” said U.S. Senate Finance Committee Chairman Chuck Grassley.

In Ottawa, Canadian Foreign Minister Chrystia Freeland declined to comment on what she described as a bilateral issue between the United States and Mexico.

“Our intention is, in so far as possible, to move in tandem with our partners,” she told reporters.

Canada moved to ratify the deal by formally presenting it to parliament on Wednesday.

Roland Paris, former foreign policy advisor to Canadian Prime Minister Justin Trudeau, said there was no reason for Ottawa to react immediately to Trump’s latest move given that Mexico was seeking clarification from Washington.

“That said, Trump’s new threats are a reminder that we will need to remain vigilant, because negotiations for him never seem to be final,” he said in an interview.

A Canadian source with direct knowledge of the situation said Ottawa was aware that Trump had not always followed through with previous threats to impose tariffs on trading partners.

(Graphic on border crossings and cross-border trade:

Additional reporting by Frank Jack Daniel in Mexico City, Chris Prentice, Susan Cornwell and Brice Makini in Washington and Kelsey Johnson and Steve Scherer in Ottawa; Editing by James Dalgleish