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Retailers alarmed by report of Canada, Mexico rejecting US NAFTA proposals

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Retailers alarmed by report of Canada, Mexico rejecting US NAFTA proposals

Retailers warned of a possible "economic catastrophe" after a a report that Canada and Mexico may reject some of the proposals the U.S. has put forward in negotiations over the North American Free Trade Agreement.

CNBC reported Oct. 17 that trade negotiators from Canada and Mexico will "firmly" reject the proposals from the U.S. during the fourth round of NAFTA talks, which are scheduled to conclude Oct. 17. However, citing sources, CNBC said the two U.S. trading partners will not walk away from the 23-year-old trade deal and will continue negotiations. Still, retailers are concerned.

Hun Quach, vice president of international trade policy for the Retail Industry Leaders Association, said in an Oct. 17 news release that the U.S. "cannot abandon free trade" and warned of disruptions to supply chains.

"A collapse of the NAFTA trade agreement between the United States and our two largest trading partners would be an economic catastrophe, with massive disruptions in agriculture and manufacturing and increased costs for American consumers," Quach said. "As retailers, we strongly urge all parties to preserve the parts of NAFTA that work for American businesses and to avoid proposals that would damage the U.S. economy and hurt American families."

Jonathan Gold, vice president of supply chain and customs policy for the National Retail Federation, told S&P Global Market Intelligence that he was not surprised that Canada and Mexico responded negatively to the U.S. proposals this round, which he said included a five-year sunset provision, which would require a trade deal renewal every five years as well as more restrictive rules of origin.

"They are extremely upset," Gold said. "We are extremely concerned by those proposals as well."

Gold said he is concerned that the U.S. could withdraw at any moment from NAFTA, and he believes that Canada and Mexico will respond with their own proposals in the next round of talks.

"The administration ending NAFTA is an ongoing concern," he said. "They've gotten way from the mantra of "'do no harm.'"

Trade officials from the U.S., Canada and Mexico are scheduled to hold a press conference at 3 p.m. on Oct. 17, while U.S. Trade Representative Robert Lighthizer is slated to hold his own press briefing at 3:30 p.m. the same day.

President Donald Trump said as recently as Oct. 11 that the U.S. will terminate NAFTA if it cannot reach a deal with Canada and Mexico during negotiations. The U.S. has pushed for greater American content in NAFTA-made goods.