U.S. warns of changes to NAFTA
As talks begin, trade official says he will seek major revisions. His counterparts aim to keep parts intact.
WASHINGTON — Negotiations to revise the North American Free Trade Agreement began Wednesday on shaky ground, as President Trump’s top trade official insisted he would seek major changes to address fundamental problems with the 23-year-old pact, while Canadian and Mexican officials lauded NAFTA’s substantial benefits to the region and emphasized the importance of protecting those gains.
The contrasting opening statements from U.S. Trade Representative Robert Lighthizer and his counterparts from Canada and Mexico portend the tough bargaining ahead as the three parties, in Washington, began the first of what is expected to be several rounds of talks to renegotiate the landmark free-trade agreement.
Lighthizer acknowledged that many Americans, particularly in farming and those living in border communities, have benefited from NAFTA and that it was crucial to uphold their interests.
The Trump administration has come under significant pressure from farm groups and lawmakers who worry that the president’s harsh stance on trade, and NAFTA in particular, could lead to severe consequences for U.S. businesses that export billions of dollars’ worth of corn, soybeans and other agricultural goods.
But Lighthizer said that “for countless Americans, this agreement has failed.” He blamed NAFTA for the U.S. trade deficit with Mexico, particularly in the auto sector, the closure or relocation of domestic businesses and the loss of at least
700,000 American jobs.
Trump has called NAFTA a “disaster” and talked even of terminating it, but more recently he has backed away from threats to impose blanket tariffs on Mexican goods or to walk away from the agreement. On trade more generally, Trump has yet to match his rhetoric with concrete action, but Lighthizer on Wednesday indicated that Trump was the first U.S. president to initiate renegotiations of an existing freetrade pact and that NAFTA probably would serve as a model for future deals.
“I want to be clear,” Lighthizer said in a Washington hotel amid trade delegations and journalists. Neither Trump nor he is “interested in a mere tweaking of a few provisions and a couple of updated chapters,” Lighthizer warned. “We feel that NAFTA has fundamentally failed many, many Americans and needs major improvement.”
Lighthizer briefly restated some of the administration’s previously outlined top trade objectives: morebalanced trade; a higher percentage of North American parts and “substantial” U.S. content in goods that qualify for duty-free trade; stronger rights to impose trade sanctions under American laws; protections against currency manipulation; and reciprocity in government procurement.
Seated next to Lighthizer was John Melle, an assistant U.S. trade representative who will be leading negotiations for the U.S. in the NAFTA talks, and the USTR’s general counsel, Stephen Vaughn.
At separate tables were trade officials from Canada and Mexico. Chrystia Freeland, Canada’s Minister of Foreign Affairs, speaking in English, French and Spanish, highlighted the broader cooperative relations among the three countries and the economic fruits that NAFTA has yielded for Canada as well as the U.S.
Freeland said Canada does not see trade surpluses or deficits as the primary measure of whether bilateral trade relations are working — in contrast to Trump, who repeatedly has talked about the U.S. trade imbalance as the key data point to reverse in order to bolster American manufacturing and industrial jobs.
She said that U.S.-Canada trade was fairly balanced, with the U.S. actually having a small surplus when services are taken into account. Canada’s objectives, she noted, include modernizing NAFTA and using the negotiations to cut red tape and improve standards on labor and the environment, which were side agreements in the original pact.
“And of course we’re going to seek to uphold the existing elements in NAFTA that are key to our national interests,” she said.
Although Freeland did not mention it, one of those top interests is to preserve a dispute-resolution mechanism in NAFTA that the Trump administration wants to scrap to strengthen its ability to impose duties on goods that are dumped or subsidized by governments. She summed up Canada’s aim as “bolstering what works and improving what can be made better.”
Mexico’s secretary of economy, Ildefonso Guajardo Villarreal, spoke briefly and took a broader, albeit somewhat defensive, posture that pushed back against Trump’s economic nationalist leanings.
He argued that the 1993 agreement was about more than just breaking down tariffs and increasing trade. It was about “shaping a common vision of North America,” he said.
“Mexico believes that NAFTA has been a strong success for all parties,” Guajardo said, and he reminded Lighthizer what he himself said at a congressional hearing recently — that an important U.S. objective in the talks was to “first of all, do no harm.”
“For a deal to be successful, it has to work for all parties involved. Otherwise it’s not a deal,” Guajardo said.
The first round of talks will run through Sunday. Negotiations are set to continue next month in Mexico.