Trump administration will press Canada, Mexico to reopen NAFTA

The man U.S. president-elect Donald Trump has tapped to reshape the country's trade policy will soon send a letter to Canadian and Mexican officials urging them to reopen NAFTA talks, according to a report.

Incoming U.S. administration reportedly wants to rewrite country of origin rules

'I think we should grant access to our markets to anyone who plays fair, plays by the rules and gives everybody a fair chance to compete,' would-be Commerce Secretary Wilbur Ross said. (Mike Segar/Reuters)

The man U.S. president-elect Donald Trump has tapped to reshape the country's trade policy will soon send a letter to Canadian and Mexican officials urging them to reopen NAFTA talks, according to a report.

The Globe and Mail says Wilbur Ross will want to discuss country of origin rules and the independent dispute-settlement mechanism that are key features of the 1994 free trade agreement.

Ross is under questioning on Wednesday by U.S. lawmakers at his confirmation hearing for secretary of commerce, and was asked from the outset about his views on trade with Canada and Mexico.

"NAFTA is logically the first thing for us to deal with," Ross said. "We ought to solidify relationships in the best way we can in our own territory before we go off to other jurisdictions," Ross said, referring to China, a frequent target of Trump's ire for allegedly unfair trade practices.

Ross said U.S. trading partners who play by the rules should have nothing to fear from a Trump administration, as on the whole, the U.S. is in favour of more global trade — not less.

"I think we should grant access to our markets to anyone who plays fair, plays by the rules and gives everybody a fair chance to compete," he said.

"[But] those who do not should be punished for it and punished severely."

"I am not anti-trade, I am pro trade," Ross said. "But I'm pro sensible trade — not trade that is to the disadvantage of the American worker and to the American manufacturing community."

Views on TPP

Ross's comments on NAFTA were interrupted by protesters who were shouting their opposition to the Trans Pacific Partnership — a trade pact initiated under the current administration, but one that president-elect Trump says he will pull America out of after taking office.

"That was not part of my prepared remarks," Ross quipped of the protesters who interrupted his comments, but later went on to say he has come to be in the camp that opposes the broad-ranging trade deal.

"Initially I was very favourable to TPP," he said, "but as I delved into the thousands of pages of documents I came across, I found some things that were not consistent with what had been advertised."

He specifically cited the deal as being bad for the U.S. auto sector, as in his view, loopholes in it allow manufacturers to have up to 60 per cent of a car's components can come from outside the zone, but still be able to be sold within the zone, without tariffs.

"That didn't strike me as the world's best idea," he said.

Impact on automotive sector

Mathew Wilson with the Canadian Manufacturers & Exporters, says the automotive sector is one in which import tariffs are especially problematic because of global supply chains.

"It's not quite as easy as saying, 'OK we're going to stop trading with the U.S.,' or whatever," he told CBC News in an interview. "A lot of times the companies don't even know where the products are coming from."

A car manufactured in Michigan, such as this Ford Mustang, likely contains parts from Canada, Mexico and elsewhere, which makes an import tax on it hard to enforce. (Carlos Osorio/Associated Press)

A car manufactured in Ontario is likely to have a transmission made in Michigan and interior components from Mexico, for example, he said.

"All of those goods are being sourced and being created with a mishmash of Canada and U.S. and sometimes Mexican parts in there as well," he said. That makes the prospect of a 35 per cent tax — something the president-elect has threatened to impose on some imports — virtually impossible to enforce, said Wilson.

On the subject of tariffs, Ross said they "play a role both as a negotiating tool and as a way to punish offenders who don't play by the rules, but I'm much more in favour of carrots than of sticks."

Trudeau vows to 'defend' trade benefits

Speaking in Sherbrooke, Que., on Wednesday, Canadian Prime Minister Justin Trudeau was asked about trade issues with the incoming U.S. administration.

"We've been engaged with the incoming administration over the past few weeks on a broad range of issues and we're working hard to move forward in a constructive way that's going to benefit both of our countries," Trudeau said.

"A constructive working relationship in which we engage in talks about how to move forward is exactly what we've been focused on and what we will continue to focus on when the new administration comes into place," he added.

"We're going to defend the benefits of trade and openness to Canadians."