North American Free Trade Agreement with Europe Needed, Says Ex-Mexican Diplomat

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Is North American-EU trade deal next step?

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MONTREAL - Canadian and U.S. efforts to strike free trade deals with Europe must eventually be harmonized into a North American agreement involving Mexico, a former Mexican diplomat said Wednesday.

"I know this creates a lot of heartburn in...Washington, but eventually that has to be the step forward," Arturo Sarukhan told an economic conference in Montreal.

The former ambassador to the United States said that a continental trade deal is needed to synchronize rules between the European Union and the NAFTA countries -- Canada, United States and Mexico.

Failing to bind together three parallel trade processes will cause disruptions to North American supply chains and trade with Europe, he said.

That could hurt the automotive and aerospace industries, for example, because European and North American companies operate on both continents.

"Just imagine what will happen about access to market, exports, rules of origin if you've got three separate parallel treaties (with Europe) instead of one that encompasses the three partners," Sarukhan said in an interview.

"It doesn't make sense."

Sarukhan acknowledged that moving to this next step won't happen quickly because of U.S. concerns that it would slow down its own impending negotiations. But he sees no philosophical opposition from Canada or the United States.

"I think it's more an issue of process and timing than substance," he added.

Mexico has already concluded a free trade agreement with Europe.

Canada has been negotiating an agreement with the European Union for several years while the United States is set to launch its effort this summer, putting pressure on the Canadian government to get a deal with the EU done soon.

A U.S. deal with Europe could have implications for global trade since together they account for nearly half the world economy and 30 per cent of global trade.

Canadian and U.S. officials said those deals remain the top priority.

"I think it's a little bit putting the cart before the horse," said David Cary Jacobson, the U. …