Canada's Trudeau warns against 'tempting shortcuts' in NAFTA renegotiations

By Scott Malone

PROVIDENCE, R.I. (Reuters) - Canadian Prime Minister Justin Trudeau on Friday warned U.S. governors against "politically tempting shortcuts" as the two countries and Mexico prepare to renegotiate the 23-year-old North American Free Trade Agreement (NAFTA).

U.S. President Donald Trump has described the 1994 pact as "the worst trade deal ever" and vowed to change it to the advantage of the United States in talks due to begin later this summer.

Trump's stance on the accord has led Trudeau's government to reach out aggressively to U.S. leaders, including one-on-one meetings on Friday with Vice President Mike Pence and the governors of Kentucky, Wisconsin, Rhode Island and Iowa. The meetings are intended to emphasise the importance of the two countries' trading relationship.

"Sometimes getting it right means refusing to take the politically tempting shortcuts," Trudeau told a meeting of the U.S. National Governors Association in Providence, Rhode Island. "More trade barriers, more local-content provisions, more preferential access for homegrown players in government procurement, for example, does not help working families over the long term, or even the mid-term. Such policies kill growth."

He warned that protectionist postures run the risk of becoming "a cycle of tit-for-tat, a race to the bottom, where all sides lose."

Pence, who also spoke to the Governors Association, alluded only briefly to the NAFTA talks in his remarks, which focused on this week's healthcare reform bill proposed by Senate Republicans.

"We will modernize NAFTA for the 21st century so it is a win-win-win for all our trade partners in North America," Pence, the former governor of Indiana, told the group. "We are looking forward to bringing NAFTA into the future in a way that will equally benefit both our countries."

In a nod to the concerns about competition with foreign labour that influenced Trump's populist trade stance, Trudeau said that state and national governments needed to do more to ensure that the benefits of trade were felt by a wider slice of the population.

"We think right upfront about how to make sure that benefits that will come from trade inevitably accrue to more of the population," he said.

Trudeau also told reporters on Friday that Trump told him that he did not expect to subject Canadian steel and aluminium to face tariffs on national security grounds.

"I am optimistic that this important trade, which leads to millions of good jobs on both sides of the border, will continue," Trudeau said.

(Reporting by Scott Malone; Editing by Steve Orlofsky and Jonathan Oatis)