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October 23, 2018

Canada expects withdrawal of USA from NAFTA

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NAFTA withdrawalCanada is increasingly convinced that President Donald Trump will shortly declare a US withdrawal from the North American Free Trade Agreement (NAFTA). The announcement casts new doubts on the prospects for talks to modernize the trade agreement, which Trump has repeatedly criticized as unfair for the United States. The next, sixth and past, negotiation rounds are scheduled for January 23-28 in Montreal.

It is still not clear that the United States will leave NAFTA even if the president has given the necessary six-month warning. Such scenario may also face resistance in the US Congress.

The news, however, worries the markets. Wall Street ended the session with decrease, partly because of these concerns. The Canadian dollar fell to its lowest rate this year against the US currency, the Mexican peso also weakened, and the stock market reported losses.

During the fifth round of talks last November, “insurmountable differences” arose between the US and Canada on automotive and agricultural issues, as well as the braking relations in aviation sector.

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