Canada Would Rather Have No Nafta Than a Bad Deal, Trudeau Says

Canadian Prime Minister Justin Trudeau has a message for Donald Trump on Nafta: Canada would rather see a trade deal die altogether than accept certain hardline demands.

Trudeau said he believed a win-win-win deal was still possible in ongoing North American Free Trade Agreement talks. U.S. Trade Representative Robert Lighthizer met his Canadian Foreign Minister Chrystia Freeland earlier Tuesday in Washington to discuss the trade pact.

“No Nafta is better than a bad deal, and we’ve made that very clear to the president,” Trudeau said Tuesday in Toronto in an interview with Bloomberg’s Stephanie Flanders, ahead of the Group of Seven summit that Canada will host next week. “We are not going to move ahead just for the sake of moving ahead.”

A deal that could be a political win for Trump, Trudeau and Mexican President Enrique Pena Nieto is possible, the Canadian prime minister said. “The uncertainty related to what’s going to happen to Nafta is there, and is a factor, but quite frankly you can’t get around geography.”

The Canadian leader also downplayed the impact a Nafta collapse would have. Whether Nafta survives, or whether Canada and the U.S. fall back on a mothballed bilateral deal, or whether they fall back on standard tariff rates, Trudeau said “the interconnectedness between the Canadian and U.S. economies is not going to change any time soon.”

‘Negotiating Tactic’

Time is running out to reach a Nafta deal that could pass the current U.S. Congress and avoid upcoming metals tariffs. A U.S. exemption for Canada and Mexico from steel and aluminum levies is set to expire Friday morning. U.S. House Speaker Paul Ryan also has suggested a Nafta deal is needed around then to pass this Congress. Adding to pressure is a Mexican election on July 1 that could usher in populist Andres Manuel Lopez Obrador as president, and the new threat of auto tariffs, which would hurt Canada and Mexico.

Threats of auto tariffs seem like more of a “negotiating tactic” than anything else, Trudeau said. He said the U.S. president’s unpredictability “doesn’t push us to be willing to accept a bad deal for Canada, because quite frankly that’s simply not something we’re going to do.”

Trudeau demurred when pressed if a deal could be reached in the next week or so. “We’re going to continue to engage with all levels of the U.S. administration,” he said.