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NAFTA talks resume amid US-Canada aircraft dispute

Delphine TOUITOU
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Canadian Prime Minister Justin Trudeau (C) meets with members of the House Committee on Ways and Means, including Committee Chairman Kevin Brady (L), Republican of Texas, and Ranking Member Richard Neal (R), Democrat of Massachusetts, about the NAFTA renegotiations on Capitol Hill in Washington, DC, on October 11, 2017

Canadian Prime Minister Justin Trudeau (C) meets with members of the House Committee on Ways and Means, including Committee Chairman Kevin Brady (L), Republican of Texas, and Ranking Member Richard Neal (R), Democrat of Massachusetts, about the NAFTA renegotiations on Capitol Hill in Washington, DC, on October 11, 2017 (AFP Photo/SAUL LOEB)

Washington (AFP) - A fourth round of talks to revamp a landmark North American trade pact begin Wednesday amid inflamed tensions between Washington and Ottawa over a trade dispute involving Bombardier aircraft.

Canadian Prime Minister Justin Trudeau will meet US President Donald Trump at the White House in the afternoon, with negotiations on the North American Free Trade Agreement underway nearby in the Washington suburb of Arlington, Virginia.

Trudeau's visit comes as US officials are seeking to impose retaliatory import duties on imports of certain Bombardier aircraft, claiming the Canadian government has unfairly subsidized them.

Ottawa in turn has threatened to cancel an order for 18 Boeing F/A-18 Super Hornet fighter jets.

US Trade Representative Robert Lighthizer announced that talks had been extended by 48 hours and would conclude on Tuesday with a press event held jointly with Mexican Economy Minister Ildefonso Guajardo Villarreal and Canadian Foreign Minister Chrystia Freeland.

"Thus far, we have made good progress, and I look forward to several days of hard work," Lighthizer said in a statement.

The United States takes in three quarters of Canadian exports. But trade relations have been strained since Trump's inauguration earlier this year.

The American president has repeatedly threatened to scrap NAFTA, which established a free-trade zone between the Canada, the United States and Mexico in 1994.

With a nationalist economic agenda, Trump has denounced the agreement as a job destroyer and a "disaster" for the United States, vowing to reverse offshoring by renegotiating the treaty.

- 'Poison pills' -

In an interview with Forbes magazine published Tuesday, Trump said he preferred bilateral trade agreements.

"I happen to think that NAFTA will have to be terminated if we're going to make it good," he told the magazine.

The talks to revise NAFTA began in mid-August. Three previous rounds have taken place with no major breakthroughs announced.

Following the most recent round in Ottawa last month, negotiators said they had made progress on subjects such as telecommunications, competition policy, digital trade, regulation and customs and trade facilitation.

Negotiators have completed talks on NAFTA provisions relating to small and medium enterprises as well as competition, Lighthizer's office said.

The updated provisions on competition will allow for more "procedural fairness" in the enforcement of competition law, the statement said.

A major sticking point has been $64 billion US trade deficit with Mexico, which Washington wants to reduce or eliminate.

IMF Economic Counsellor Maurice Obstfeld warned Tuesday that all three NAFTA countries faced economic consequences if the outcome of the talks ended up disrupting trade relations.

Meanwhile, US Chamber of Commerce president Thomas Donohue said that several issues under discussion could scotch the entire effort.

"There are several poison pill proposals still on the table that could doom the entire deal," he said in a speech delivered in Mexico, citing in particular a provision to allow the agreement to expire in five years unless all parties agreed to extend it.

"We all know that certainty and stability are crucial to successful trade relationships—and necessary to foster a pro-investment environment that drives economic growth and job creation. This clause would achieve the opposite effect."

Following his visit to Washington, Trudeau is due to travel to Mexico, where he will meet with President Enrique Pena Nieto.