Trump notice to Congress sets NAFTA clock ticking
The Trump administration WASHINGTON took its first formal step toward renegotiating the North American Free Trade Agreement, setting the stage for talks that could influence more than $1.2 trillion in annual trade and shake up corporate supply chains.
U.S. Trade Representative Robert Lighthizer gave official notice to Congress on Thursday of the government’s intention to renegotiate the 23-year-old accord with Canada and Mexico. Lighthizer was required to do so under a law that enables the president to fasttrack trade legislation through Congress.
Over the next 90 days, Lighthizer will consult with lawmakers on the position the U.S. will take in negotiations, which could begin as early as Aug. 16. The U.S. administration hopes to wrap up negotiations this year before a final deal is presented to Congress for approval.
“The president’s leadership on trade will permanently reverse the dangerous trajectory of American trade,” Lighthizer said Thursday. “While our economy and businesses have changed considerably, NAFTA has not. Most chapters are clearly outdated and do not reflect the most recent standards in U.S. trade agreements.”
Reworking the trade deal was a central promise of Trump’s election campaign, during which he called NAFTA a “disaster” and blamed it for costing millions of U.S. jobs and hollowing out the manufacturing sector. The administration has made reducing the trade deficit a priority, and Lighthizer suggested Thursday the U.S. will seek to lure back firms that have moved production to Mexico. The U.S. had a $62-billion trade deficit with Mexico last year.
“Sectors like manufacturing, particularly with regard to Mexico, have fallen behind,” Lighthizer said. “When we lose manufacturing facilities, we lose the thousands of good-paying jobs associated with those facilities, directly impacting middle-class Americans.”
Foreign Affairs Minister Chrystia Freeland welcomed what was a widely anticipated development, promising to consult with Canadians on the best way forward. She reiterated the government’s key message on NAFTA — that it is in fact a good deal for all parties, including the U.S., where nine million American jobs are dependent on it.
“NAFTA’s track record is one of economic growth and middle-class job creation, both here in Canada and throughout North America,” Freeland said in a statement. “We will continue to consult closely with the provinces and territories, industry, unions, civil society, think tanks, academics, indigenous peoples, women, youth and the general public.”
Her Mexican counterpart Luis Videgaray said the three countries can reshape NAFTA “under a winwin framework.”
Lighthizer noted that NAFTA has been “relatively successful” for certain sectors of the U.S. economy, such as agriculture, investment services and energy. However, he added that the agreement doesn’t do enough to address digital commerce and intellectual property, and that labour and environmental matters are treated as an “afterthought.”
The U.S. hopes to retain the existing three-way structure of the deal, Lighthizer said. “There is value in making the transition to a modernized NAFTA as seamless as possible,” he said. “We’re going to give renegotiation a good strong shot.”
Lighthizer said the administration will consider other options if trilateral talks fail. After threatening to withdraw from the agreement last month, Trump reconsidered in favour of a renegotiation but said he’ll terminate America’s involvement if talks don’t go his way.
Under its fast-track authority, the White House has to give Congress 90 days’ notice before it formally starts renegotiating a trade deal.
The president’s leadership on trade will permanently reverse the dangerous trajectory of American trade.
ROBERT LIGHTHIZER, United States Trade Representative
NAFTA’s track record is one of economic growth and middle-class job creation, both here in Canada and throughout North America.
CHRYSTIA FREELAND, Minister of Foreign Affairs