By Susan Heavey
WASHINGTON (Reuters) - President Donald Trump expressed optimism on Thursday the United States, Canada and Mexico can successfully renegotiate a trade accord he deems unfair to American interests but vowed to scrap the 23-year-old pact if a "fair deal for all" cannot be reached.
Trump, in a meeting with Argentine president Mauricio Macri, said Thursday he had planned to terminate NAFTA, but decided to hold off after speaking to the leaders of Mexico and Canada to see if deal can be made.
"Rather than terminating NAFTA, which would be a pretty big shock to the system, we will renegotiate," Trump told reporters in the Oval Office. "If I'm unable to make a fair deal for the United States ... I will terminate NAFTA."
Trump's comments came a day after the White House decided against taking immediate steps to withdraw from the North American Free Trade Agreement, a pact Trump has long condemned.
Instead of pursuing a termination order considered by some advisers, the White House said Trump told Mexican President Enrique Pena Nieto and Canadian Prime Minister Justin Trudeau by telephone that the United States would seek to quickly begin renegotiating the pact.
Earlier on Thursday, Trump wrote on Twitter he had received calls from Pena Nieto and Trudeau.
"Relationships are good-deal very possible!" Trump wrote.
In Mexico City, Mexican Foreign Minister Luis Videgaray said Wednesday's call, initiated by Pena Nieto and lasting about 20 minutes, focused exclusively on the looming talks over NAFTA's "renegotiation and modernization." Videgaray said Trump wanted to see the talks accelerated.
"I believe that all the conditions to reach a good negotiation exist, that will suit Mexico ... and that is also good for the region, for both Canada and the United States," Videgaray told local broadcaster Televisa, adding that relations between the United States and Mexico have experienced "enormous progress" during Trump's presidency.
Trump has criticized multinational trade agreements as unfair to the United States and made pulling out of the 12-nation Trans-Pacific Partnership, negotiated by his Democratic predecessor Barack Obama, one of his first major acts after becoming president in January.
In Ottawa, a Canadian source familiar with the matter said Trudeau urged Trump not to withdraw from NAFTA, saying such action would be counterproductive.
Trump repeatedly has threatened to pull out of NAFTA, which erased most tariffs between the three neighbors, if he cannot renegotiate better terms for the United States, which went from running a small goods trade surplus with Mexico in the early 1990s to a $63-billion deficit in 2016.
Mexico, Canada and the United States form one of the world's biggest trading blocs, and trade disruptions among them could cause havoc in the automotive, agricultural, energy and other sectors.
'CONCEPTUAL FLAWS'
U.S. Commerce Secretary Wilbur Ross told CNBC on Thursday that numerous "conceptual flaws" in the treaty needed to be addressed. Ross said Chinese goods dumped in Mexico are making their way into the United States.
"The rules of origin in NAFTA need some tightening," Ross said. "Rules of origin are what let material outside of NAFTA to come in and benefit from all the taxes and tariff reductions within NAFTA."
"It was a silly idea to let a lot of outside stuff in. The whole idea of a trade deal is to build a fence around participants inside and give them an advantage over the outside," Ross added. "So there's a conceptual flaw in that, one of many conceptual flaws in NAFTA."
The Mexican and Canadian currencies maintained their rebound early on Thursday after Trump's latest comments. The U.S. dollar dropped 0.3 percent against its Canadian counterpart and about 0.5 percent against the peso.
Trump's scorn toward international trade deals, part of his nationalist political message, appeals to Americans who feel such pacts have cost Americans jobs, and he has said businesses that choose to move plants outside the country would pay a price.
On Wednesday, the White House said Trump had spoken with Mexican and Canadian counterparts and agreed not to immediately move to terminate NAFTA. The announcement came hours after White House officials disclosed that Trump and his advisers had been considering an executive order to withdraw the United States from NAFTA, but there was a split among his top advisers over whether to take the step.
"The leaders agreed to proceed swiftly, according to their required internal procedures, to enable the renegotiation of the NAFTA deal to the benefit of all three countries," the White House said in a statement.
Trump long has accused Mexico of luring away American factories and jobs with cheap labor and other advantages enabled by NAFTA. On Tuesday, Trump said he did not fear a trade war with Canada even as he complained about Canadian trade practices.
His administration on Monday moved to impose tariffs on imported Canadian lumber that mostly feeds U.S. homebuilding, noting trade authorities have consistently sided with Ottawa in the long-standing dispute.
(Reporting by Susan Heavey, Mohammad Zargham and David Lawder; Additional reporting by Veronica Gomez and David Alire Garcia in Mexico City, and David Ljunggren in Ottawa; Writing by Will Dunham; Editing by Lisa Von Ahn and Nick Zieminski)
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