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Chambers of Commerce urge 'no harm' ahead of next NAFTA talks

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Chambers of Commerce urge 'no harm' ahead of next NAFTA talks

The U.S. should push to modernize the North American Free Trade Agreement while refraining from damaging existing relationships with Canada and Mexico, a group of 314 state and local chambers of commerce said in a letter to President Donald Trump on Oct. 10.

The letter, signed by chambers from all 50 states and sent on the day before the fourth round of NAFTA talks were slated to begin just outside Washington, said trade with Canada and Mexico supports 14 million American jobs, as well as $1.2 trillion in annual trade between the three countries. Modernizing it to adjust to 21st-century conditions is crucial, they said, but warned against disrupting the positive economic relationships that currently exist.

"Business leaders across the country know first-hand that trade with Canada and Mexico has created American jobs, boosted economic growth, and strengthened local economies," they wrote in the letter. "But we know we can do even more to seize the benefits of trade with our North American neighbors."

U.S. Chamber President and CEO Thomas Donohue said in a statement Oct. 10 that the U.S.-Mexican commercial relationship is too valuable for American businesses and economic growth to disrupt, comments that come after a round of trade talks in late September where Mexican officials said "differences" were encountered in negotiations.

U.S. trade officials have pushed for a narrowing of the current trade deficit with their North American trading partners, as well as for greater American content in NAFTA-produced goods, but Mexico has answered by warning that it will not agree to any restrictions on its country's trade abilities.

The letter was sent the same day Donohue delivered a speech at the U.S.-Mexico CEO Dialogue event in Mexico City on Oct.10, where he warned against terminating NAFTA, a move that Trump has proposed if demands are not met, and he challenged some of the negotiation objectives outlined by U.S. trade officials.

"We've reached a critical moment, and the Chamber has had no choice but to ring the alarm bells," Donohue said, according to a transcript of his speech. "There are several poison pill proposals still on the table that could doom the entire deal."

The so-called "poison pills" include a proposal to impose a sunset clause that would terminate the deal after five years unless all three countries agree it should continue, according to Donohue. Another is tightening the 23-year-old trade pact's rules of origin, which he said are already "extremely tough." Companies could cease trading under NAFTA if those rules were to be tightened under amendments to the deal, he said.

"If the administration issued a withdrawal order — which requires a six-month waiting period — it would not be viewed by our partners in Canada and Mexico as a negotiating tactic," Donohue said. "Instead, it would abruptly slam the door on future negotiations because those governments have made it very clear they won’t negotiate with a gun to their head."

"The United States could then reasonably expect trade retaliation, higher tariffs, broken supply chains, and potentially less cooperation on other priorities like anti-terrorism and anti-narcotics efforts," he added.

Officials from the U.S., Canada and Mexico are slated to hold the fourth round of talks surrounding NAFTA Oct. 11-15 in Arlington, Va.