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Abu Dhabi, UAEMonday 18 June 2018

Trump unlikely to announce Nafta withdrawal in State of Union address

The US president gives his address on Tuesday, a day after the sixth round of North American Free Trade Agreement talks is set to conclude in Montreal

US President Donald Trump has left open the possibility that he’ll pull out of Nafta if discussions aren’t favourable enough to the US. AFP / Nicholas Kamm
US President Donald Trump has left open the possibility that he’ll pull out of Nafta if discussions aren’t favourable enough to the US. AFP / Nicholas Kamm

US President Donald Trump does not plan to use his first State of the Union address to announce a formal intent to withdraw from Nafta, say people familiar with the administration’s plans.

Mr Trump speaks on Tuesday, a day after the sixth round of North American Free Trade Agreement talks is set to conclude in Montreal. The latest round has shown progress, and at Davos last week, Mr Trump saw a “good chance” for a deal.

Still, the president left open the possibility that he will pull out of the 24-year-old pact if discussions are not favourable enough to the United States.

Key lobbying groups, including farm organisations and the US Chamber of Commerce, have voiced their support for Nafta, putting pressure on Mr Trump to not give the six-months’ notice necessary to quit the deal (a country is not obliged to withdraw from Nafta, even after giving formal notice to do so).

Stakeholders had privately feared that a deadlock in Montreal could lead Mr Trump to pull the trigger.

The president does not plan to use the annual speech to Congress to make such a move, said the people, who were not authorised to speak publicly as negotiations continue. The State of the Union is typically watched by tens of millions of Americans and would be a prominent venue to make good on one of Mr Trump’s signature campaign promises.

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Mr Trump’s protectionist leanings have put him at odds with the establishment side of his Republican Party. He walked away from the Trans-Pacific Partnership, a Pacific Rim trade pact, during his first week in office, and this month slapped tariffs on solar panel and washing machine imports. Mr Trump is considering similar actions on aluminium and steel imports to bolster US manufacturers.

The Montreal talks showed progress, with an agreement to close the chapter related to anti-corruption, the first such section of the agreement to be finalised since October.

People familiar with talks say they have been given private indications Mr Trump is not planning to give any notice during his speech. The US Trade Representative’s office is said to have not given any indications of Mr Trump’s State of the Union plans on the sidelines of the Nafta talks, the people said.

As recently as Thursday in Davos, Mr Trump kept a cliffhanger going on the fate of the trade agreement, which he has repeatedly assailed as a “horrible” deal for US businesses. “I may terminate Nafta, I may not,” he said in an interview with CNBC.

Nafta took effect in 1994 and includes the US, Canada and Mexico, three countries that trade $1 trillion annually in goods. Talks to modernise the accord began in August and were scheduled to at least March.

A Canadian negotiator this week said the talks, which so far have not reached agreement on dozens of contentious issues, could stretch into 2019.