Trump backtracks on NAFTA abolition

After phone calls with Justin Trudeau and Enrique Peña Nieto...

Trump backtracks on NAFTA abolition

Picture by: CNP/SIPA USA/PA Images

There's no end in sight for the North American Free Trade Agreement (NAFTA), despite US President Donald Trump calling the pact with Canada and Mexico "a disaster" on the campaign trail.

The White House has revealed that Trump agreed not to terminate NAFTA following "pleasant and productive" phone calls with Canadian Prime Minister Justin Trudeau and Mexican President Enrique Peña Nieto.

It added that the three leaders have agreed to "proceed swiftly, according to their required internal procedures, to enable the renegotiation of the NAFTA deal to the benefit of all three countries."

Mexican President Enrique Pena Nieto at the inauguration ceremony in 2012. Picture by: Alexandre Meneghini/AP/Press Association Images

Trump said in a written statement:

"It is my privilege to bring NAFTA up to date through renegotiation. It is an honour to deal with both President Peña Nieto and Prime Minister Trudeau, and I believe that the end result will make all three countries stronger and better."

He also took to Twitter this morning to echo those words, as is his wont.

It comes hot-on-the-heels of this missive:

Signing an executive order on agriculture on Tuesday, Trump had stated that while he "loves Canada", he would put a "very big tariff on lumber" coming to the US.

He said:

"People don’t realise Canada has been very rough on the United States. Everyone thinks of Canada as being wonderful.”

While the White House statement shows something approaching harmony – for now – among the three nations on NAFTA, Canada has been quick to take umbrage with Trump's words.

Trudeau's office has released its own statement to make its position clear.

Picture by: Richard B. Levine/SIPA USA/PA Images

Noting that Trudeau and Trump agreed on the importance of a "mutually beneficial" trade relationship, it reads:

“On the issue of softwood lumber, the Prime Minister refuted the baseless allegations by the US Department of Commerce and the decision to impose unfair duties.

“The Prime Minister stressed that the Government of Canada will vigorously defend the interests of the Canadian softwood lumber industry, as we have successfully done in all past lumber disputes with the US.” The statement also says that dairy trade between the two nations "heavily favours the US".

Turning to the potential impact on Ireland from Trump's trading policies, IBEC is now encouraging the Government to protect our competitiveness in the wake of his new tax plans.

On Wednesday, his administration announced plans to cut the US corporate tax rate from 35% to 15% as part of sweeping changes aimed at encouraging American companies to keep their operations at home.

IBEC's Fergal O'Brien says we need to keep working to ensure the country secures investment:

"We've got such a good package – the talent, the ease of doing business here and the quality and the depth of what's happening in US business is already here in Ireland.

"So of course we've got to watch it. We've got to watch our own competitiveness. Ireland can do more in terms of investing in education, for example, investing in infrastructure and making sure that we continue to be a really good place for companies to come and invest."

O'Brien also moved to reassure businesses, opining that the measures could have been worse for Ireland: 

"It's probably not as significant as many people would have thought in advance. In particular from an Irish perspective, it's really positive that the US has not proceedings with plans for a border adjustment tax. That essentially would have been a levy and a tax on Irish exports into the US and I think that would have been our main concern."