U.S. to rene­go­ti­ate NAFTA

Lethbridge Herald - - BUSINESS ✦ AGRICULTURE - Paul Wise­man

Mak­ing good on a cam­paign prom­ise, the Trump ad­min­is­tra­tion for­mally told Congress Thurs­day that it in­tends to rene­go­ti­ate the North Amer­i­can Free Trade Agree­ment with Canada and Mex­ico.

U.S. Trade Rep. Robert Lighthizer sent a let­ter to con­gres­sional lead­ers Thurs­day, start­ing 90 days of con­sul­ta­tions with law­mak­ers over how to re­vamp the pact. Talks with Canada and Mex­ico can be­gin af­ter that.

The two-page let­ter of­fered few de­tails about what changes the ad­min­is­tra­tion would seek in the 23-year-old pact that Pres­i­dent Don­ald Trump has called “a disas­ter.” Lighthizer told re­porters that any new deal should do a bet­ter job of pro­tect­ing U.S. fac­tory work­ers and should be up­dated to re­flect new tech­nolo­gies.

Last month, White House aides spread word that Trump was ready to pull out of NAFTA. Within hours, the pres­i­dent re­versed course and said that he’d seek a bet­ter deal first.

“We are go­ing to give rene­go­ti­a­tion a good strong shot,” Lighthizer said. He re­fused to say whether leav­ing NAFTA re­mained an op­tion.

The trade agree­ment has been a light­ning rod for crit­i­cism since it was be­ing ne­go­ti­ated in the early 1990s. Dur­ing the 1992 pres­i­den­tial cam­paign, in­de­pen­dent can­di­date Ross Perot fa­mously pre­dicted a “gi­ant sucking sound” as NAFTA pulled U.S. fac­tory jobs south of the bor­der into Mex­ico. Cam­paign­ing last year, Trump vowed to rene­go­ti­ate NAFTA and pull out of it he couldn’t get a bet­ter deal.

NAFTA took ef­fect in 1994 and trig­gered a big in­crease in trade among the three coun­tries. Amer­i­can farm­ers have mostly ben­e­fited from the re­duc­tion in trade bar­ri­ers. But the pact did en­cour­age Amer­i­can man­u­fac­tur­ers to re­lo­cate some op­er­a­tions to Mex­ico to take ad­van­tage of cheaper labour there; so crit­ics blame NAFTA for wip­ing out U.S. fac­tory jobs.

“Since the sign­ing of NAFTA, we have seen our man­u­fac­tur­ing in­dus­try dec­i­mated, fac­to­ries shut­tered, and count­less work­ers left job­less,” Com­merce Sec­re­tary Wil­bur Ross said in a state­ment. “Pres­i­dent Trump is go­ing to change that.”

In March, the ad­min­is­tra­tion cir­cu­lated an eight-page draft let­ter on NAFTA that dis­ap­pointed crit­ics by ap­pear­ing to keep much of the ex­ist­ing trade agree­ment in place.

Thurs­day’s let­ter had fewer specifics. Lori Wal­lach, di­rec­tor of Pub­lic Cit­i­zen’s Global Trade Watch, called it “markedly vague.” House Demo­cratic leader Nancy Pelosi com­plained that “the pres­i­dent’s vague NAFTA let­ter is a stark con­trast with the ag­gres­sive prom­ises he made to hard-work­ing fam­i­lies dur­ing the cam­paign.”

But Repub­li­can con­gres­sional lead­ers promised to work with the ad­min­is­tra­tion to craft a bet­ter deal.

“We look for­ward to work­ing with the ad­min­is­tra­tion to strengthen the agree­ment in a seam­less way and en­sure that we re­tain the cur­rent ben­e­fits for Amer­i­can work­ers, farm­ers and busi­nesses,” said Texas Repub­li­can Rep. Kevin Brady, chair­man of the House Ways and Means Com­mit­tee.

Mex­ico and Canada sig­nalled that they wel­comed the op­por­tu­nity to mod­ern­ize the agree­ment.

Gary Huf­bauer, se­nior fel­low at the Peter­son In­sti­tute, said the United States could seek mod­est “tech­no­cratic” changes, in­clud­ing pro­vi­sions to up­date NAFTA to re­flect tech­nolo­gies that have emerged since the orig­i­nal agree­ment was ne­go­ti­ated. Or it could take a more ag­gres­sive ap­proach, putting pres­sure on Mex­ico to re­duce the trade gap, per­haps by drop­ping a value-added tax Mex­ico slaps on goods com­ing across the bor­der.

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