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Steel, sunset clause cloud NAFTA talks, as ministers press for deal

By David Lawder
Canada's Minister of Foreign Affairs Chrystia Freeland makes opening remarks at foreign ministers meetings from G7 countries in Toronto, Ontario, Canada April 22, 2018. REUTERS/Fred Thornhill

By David Lawder

WASHINGTON (Reuters) - Canadian Foreign Minister Chrystia Freeland on Wednesday reiterated Canada's opposition to proposed U.S. steel and aluminum tariffs due to come into force next week, as pressure mounted to seal a quick deal on updating NAFTA.

Freeland also told reporters that Canada remained against the U.S. idea of introducing a "sunset clause" that would allow one of the three North American Free Trade Agreement members to quit the pact after five years.

U.S. President Donald Trump unveiled the tariffs in March but suspended them for Canada and Mexico until May 1, citing the wish to see progress at the NAFTA talks.

"Canada's position has been clear from the outset and that is that Canada expects to have a full and permanent exemption from any quotas or tariffs," Freeland said before the latest session of high-level talks on the agreement.

Regarding the proposed sunset clause, Freeland said "our view is that this is absolutely unnecessary," noting that the trade deal already contained a withdrawal mechanism.

Stakeholders argue that putting such a clause in place would create uncertainty for investments.

Mexico's negotiators are also unhappy about having to deal with the proposed steel tariffs in parallel with the NAFTA negotiations, a Mexican source said. Also, the sunset clause continued to be a sticking point in the talks, the source added.

Although Washington is pressing for a quick deal, several major topics remain to be settled. One is the question of North American content for autos produced in the three NAFTA nations, which Freeland said would be discussed on Wednesday.

(Reporting by David Lawder and Dave Graham; Writing by David Ljunggren; Editing by James Dalgleish)