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Exclusive - Canada PM raps possible U.S. auto tariffs, says linked to NAFTA

Exclusive - Canada PM raps possible U.S. auto tariffs, says linked to NAFTA
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By Andrea Hopkins and David Ljunggren

LA MALBAIE, Quebec (Reuters) – A move by the United States to explore tariffs on auto imports is based on flimsy logic and is part of the pressure from Washington to renegotiate the NAFTA trade pact, Canadian Prime Minister Justin Trudeau said on Wednesday.

In an interview with Reuters, Trudeau said that while U.S. President Donald Trump had raised the idea of auto tariffs, there was no guarantee they will happen.

Trudeau also predicted talk of the tariffs will likely disappear if slow-moving negotiations to update the North American Free Trade Agreement – currently stuck on autos issues – are successful.

The Trump administration said on Wednesday it had launched a national security investigation into car and truck imports that could lead to new U.S. tariffs similar to those imposed on imported steel and aluminium recently. Canada rejects any idea it could be a threat to the United States.

“I am – even more than I was with steel and aluminium – trying to figure out where a possible national security connection is,” Trudeau said at the luxurious riverside hotel that will be the site of a Group of Seven leader’s summit in early June.

“Taking that a step further into autos seems to me to be on even flimsier logical grounds,” Trudeau said. “But we know that this is very much linked to ongoing negotiations around moving forward on NAFTA.”

Despite his criticism of the United States for arguing that auto imports might be a national security issue, Trudeau defended Canada’s decision to block a proposed C$1.51 billion ($1.18 billion) takeover of construction company Aecon <ARE.TO> by a Chinese state builder, also on national security grounds.

“Our intelligence and security agencies came back with a very clear recommendation that they didn’t feel the transaction should proceed for national security reasons and as we said we would, we abide by that decision,” Trudeau said, declining to elaborate on the reasoning.

Trudeau, who visited Beijing last December and raised the prospect of exploratory talks on a free trade deal, said Canada would not sign lopsided agreements.

“We don’t want trade with China any which way at any cost. We want the right kind of trade deals with China and dealing with security issues…should be and would be part of any mature relationship we try to establish with one of the world’s largest and growing economies,” he said.

Trudeau has said his government had concerns about the Aecon deal’s implications for intellectual property protections.

Aecon said it was disappointed with the government’s decision and was no longer pursuing a sale process.

PIPELINECOMMITMENT

Trudeau reiterated his government’s commitment to ensure a hotly contested Kinder Morgan Canada <KML.TO> pipeline expansion project would be built, but said little about how that could be achieved if the firm walked away as it is threatening to do unless Ottawa deals with opposition to the plan.

“We are going to make sure the pipeline gets built and we are going to do it responsibly and in a way that upholds the national interest and we’re working very hard to do just that and when we have more to say, we will say more,” he said.

The prime minister also defended his government’s efforts to cope with a swell of irregular arrivals by asylum seekers at the U.S.- Canada border, saying those who are not genuine refugees will be sent back – even if it takes years to do so.

More than 27,000 asylum seekers have walked across the Canada-U.S. border since Trump took office, some of whom have told Reuters they left the United States because of Trump’s policies and rhetoric toward immigrants.

“Crossing the border irregularly isn’t a short cut into Canada, and there is a very high likelihood that if they are not actually fleeing the kinds of things that make you a refugee — which is war, persecution, terror, violence … then they are going to be sent back home,” Trudeau said.

(Reporting by David Ljunggren and Andrea Hopkins; Editing by Amran Abocar and Alistair Bell)

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