US: trade deficits key to rene­go­ti­at­ing NAFTA

China Daily (USA) - - ACROSS AMERICA -

WASH­ING­TON — The United States on Mon­day launched the first salvo in the rene­go­ti­a­tion of the 23-yearold North Amer­i­can Free Trade Agree­ment (NAFTA), say­ing its top pri­or­ity for the talks was shrink­ing the US trade deficit with Canada and Mex­ico.

In a much-an­tic­i­pated doc­u­ment sent to law­mak­ers, US Trade Rep­re­sen­ta­tive Robert Lighthizer said he would seek to re­duce the trade im­bal­ance by im­prov­ing ac­cess for US goods ex­ported to Canada and Mex­ico un­der the three-na­tion pact.

For the first time in a US trade deal, the ad­min­is­tra­tion also said it wants “ap­pro­pri­ate” pro­vi­sions to de­ter cur­rency ma­nip­u­la­tion by trad­ing part­ners. The move ap­peared aimed at fu­ture trade deals rather than specif­i­cally at Canada and Mex­ico, which are not con­sid­ered cur­rency ma­nip­u­la­tors.

The 17-page doc­u­ment as­serted that no coun­try should ma­nip­u­late its cur­rency ex­change rate to gain an un­fair com­pet­i­tive ad­van­tage, an of­ten-cited com­plaint about China in past years.

Shortly be­fore the re­lease of the doc­u­ment, Pres­i­dent Don­ald Trump lashed out against trade deals and un­fair trade prac­tices, say­ing he would take more le­gal and reg­u­la­tory steps dur­ing the next six months to pro­tect Amer­i­can man­u­fac­tur­ers.

Cana­dian Min­is­ter of For­eign Af­fairs Chrys­tia Free­land said the US list was “part of its in­ter­nal process” al­though a source fa­mil­iar with Cana­dian govern­ment think­ing said the doc­u­ment was “not earth shat­ter­ing.”

Trade ex­perts have ar­gued that shrink­ing the yawn­ing US trade deficit will not be achieved by re­vis­ing trade deals but rather by boost­ing US sav­ings.

“The first bul­let point shows their pre­oc­cu­pa­tion with bi­lat­eral trade deficits, and that’s un­for­tu­nate,” said Chad Brown, a se­nior fel­low and trade ex­pert at the Peter­son In­sti­tute for In­ter­na­tional Eco­nomics. “There’s not much that trade pol­icy and trade agree­ments can do to change those. That’s more of a macroe­co­nomic is­sue.”

Among the pri­or­i­ties, Lighthizer said the ad­min­is­tra­tion would seek to elim­i­nate a trade dis­pute mech­a­nism that has largely pro­hib­ited the United States from pur­su­ing an­tidump­ing and anti-sub­sidy cases against Cana­dian and Mex­i­can firms.

There was no men­tion of ac­tive dis­putes be­tween the United States and Canada over soft­wood lum­ber and dairy prod­ucts, but the doc­u­ment tar­geted a range of agri­cul­tural non-tar­iff bar­ri­ers, in­clud­ing sub­si­dies and un­fair pric­ing struc­tures, that are cur­rently at the heart of those stand­offs.

NAFTA has quadru­pled trade among the three coun­tries, sur­pass­ing $1 tril­lion in 2015, but the U.S. trade deficit with Mex­ico ex­ceeded $63 bil­lion last year.

The first bul­let point shows their pre­oc­cu­pa­tion with bi­lat­eral trade deficits . . . ” Chad Brown, se­nior fel­low, Peter­son In­sti­tute

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