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Adios, Three Amigos: Obama heads to last summit with Canada, Mexico

[June 27, 2016] By Roberta Rampton and David Ljunggren

WASHINGTON/OTTAWA (Reuters) - President Barack Obama will meet with leaders of Canada and Mexico on Wednesday for his final "Three Amigos" summit, a meeting that may signal how keen the North American partners are to tout trade at a time of rising protectionist sentiment.

The Ottawa summit comes on the heels of Britain voting to leave the European Union after more than 40 years. It also falls ahead of a U.S. presidential election on Nov. 8 where presumptive Republican candidate Donald Trump has made stagnant wages and U.S. manufacturing job losses focal points of his insurgent campaign.

The Brexit vote is bound to be an important theme for Obama's meetings with Mexican President Enrique Pena Nieto and Canada's Prime Minister Justin Trudeau.

Canada had negotiated a trade deal with the EU that is slated to take effect next year. The Brexit could delay ratification, and hurt Canada's commodity-driven economy.

The referendum results are also a setback to talks on a U.S.-EU trade deal. Mexico, which has a trade deal with the EU, has already prepared a draft proposal for one with the United Kingdom.

At the summit, leaders will also look at how best to foster trade with each other, said Mexico's Finance Minister Luis Videgaray.

"One of the important issues, without doubt, is how to give a fresh impulse and greater value to North American integration," Videgaray said.

All three are part of the Trans-Pacific Partnership, the 12-nation trade deal that Obama had cast as an update of the North American Free Trade Agreement. He wants to finalize the TPP as part of his economic legacy in Asia.

The TPP has become a target of both the left and the right in the U.S. election, and Congress has been unenthusiastic about ratifying it thus far.

LAST CHANCE WITH OBAMA

The United States is the top export market for both Canada and Mexico. In 2015, U.S. trade with Canada totaled $663 billion and Mexico $584 billion.

But even in Canada, only one in four people say the 22-year-old NAFTA deal is good for the country, a poll released on Monday found.

The long-running Canada-U.S. battle over softwood lumber seems more likely than not to resume as early as October.

Given all the controversy over trade, the leaders may decide to try to focus their summit talking points on other topics.

"I expect them to try and stay away from it," said Carlo Dade, director of the Canada West Foundation's Center for Trade and Investment Policy.

For Trudeau and Pena Nieto, the summit is one last chance to make progress on lingering agenda items before Obama leaves the White House next January.

The leaders are expected to discuss climate change and clean energy cooperation, areas of mutual interest and themes that may be central in Obama's address to the Canadian Parliament later on Wednesday.

The three nations also plan to unveil a plan to fight heroin production.

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President Barack Obama speaks about Brexit at the Global Entrepreneurship Summit at Stanford University in Palo Alto, California, June 24, 2016. REUTERS/Kevin Lamarque

TRUMP QUESTION INEVITABLE

At a joint press conference, the leaders are likely to field questions about the upcoming U.S. election and its implications for both Canada and Mexico.

It will also be Obama's first chance on an international stage to promote his recent endorsement of Democratic candidate Hillary Clinton, his former secretary of state.

In March, Pena Nieto roundly condemned Trump, who has promised to build a wall on the U.S. border with Mexico to keep out illegal immigrants and drugs, and has complained about what he calls unfair trade. Mexico also named a new ambassador to aggressively promote its contributions to the U.S. economy.

So far, Trump has been mostly silent on Canada. "That doesn't mean Canadians don't feel the sting" of his protectionist ideas, said Chris Sands, director of the Center for Canadian Studies at Johns Hopkins University's School of Advanced International Studies.

Trudeau is likely to tread carefully so as to not endanger relations with a potential president.

"It's unlikely there will be any formal discussion of Trump, who of course is the elephant in the room. In some ways it's better if there isn't," said one official involved in the summit.

"The message the leaders will be sending is eloquent enough - the three nations are closely integrated and cooperate well and that's how the relationship should work," the official said, speaking on condition of anonymity.

On trade, Pena Nieto and Trudeau are also cognizant that talk is cheap on the campaign trail.

"I have to tell my Canadian friends this often - it doesn't mean it will be the agenda once you get to the White House," said David Wilkins, the U.S. ambassador to Canada from 2005 to 2009 during the George W. Bush administration.

Obama provides a good case in point. In his 2008 campaign, he demonized NAFTA, but once in office he began working on the TPP, a deal he has said would fix his concerns about NAFTA.

"There's very much a 'Keep calm and carry on' approach and we're going to ignore some of the domestic politicking and see what happens when it happens," said a Canadian source familiar with the summit talks.

(Additional reporting by Ana Isabel Martinez and Simon Gardner in Mexico City; Editing by Mary Milliken)

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