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Mexico and Canada Vow to Keep NAFTA Going With or Without US

If the U.S. is excusing itself from the table, the rest of the world is going to continue eating.

The second round of North American Free Trade Agreement talks, which went on over the Labor Day weekend appear to be wrapping up Tuesday without any major breakthroughs.

Ahead of round two NAFTA talks, which started Friday in Mexico City, Mexican economy minister Ildefonso Guajardo said Thursday that Mexico and Canada will remain in the trade agreement, regardless of what the U.S. decides to do.

[Read more about countries continuing on without the U.S.: Trade Around Trump Infographic: The U.S. May be Losing its Grip as Global Trade Leader]

“NAFTA will continue to regulate the relationship between Mexico and Canada,” Reuters reported Guajardo as saying at an event in Mexico City. He added in a separate meeting the same day, “Neither Canada nor Mexico will announce their departure [from NAFTA] because we want to keep being regulated by NAFTA.”

Also ahead of this latest round of negotiations, Ambassador Miriam Sapiro, a partner at global strategic communications firm, Finsbury, and former deputy U.S. Trade Representative, said on Bloomberg TV that Trump’s tactic of threatening to quit the trade deal is an “odd” one, as it isn’t as though the U.S. doesn’t benefit largely from NAFTA.

One of the biggest issues still on the negotiating table is rules of origin.

The U.S. has suggested setting a higher level for required U.S. inputs for finish products, which has been met with concern from both Canada and Mexico. Beyond that, canceling the agreement will pose quite a lot of challenges for the long-partnered nations.

“Over the last 20 years the three economies have gotten so integrated that it would be very hard to suddenly separate them by imposing tariffs at the border,” Sapiro said. “Imagine a tax every time you tried to export or import a component or a finished product. Imagine consumer prices going up, choices going down….this would have very serious implications in the U.S. and that’s what many people want the president to understand. It’s not just going to hurt the Mexican economy, potentially also the Canadian economy, but it’s going to hurt the U.S. economy.”

The next round of NAFTA talks are so far scheduled to take place in Ottawa later this month and experts say that round will be key in determining whether a deal can be reached this year.

As Sapiro noted, “The longer the negotiation drags on, the more impatient President Trump is likely to get, and thus the threat of termination becomes more serious.”