The Atlanta Journal-Constitution
Trump push to undo NAFTA gets underway
Renegotiating deal in hope of bringing back U.S. jobs won’t be easy.
WASHINGTON — Of all the trade deals he lambasted on the campaign trail as threats to American workers, President Donald Trump reserved particular scorn for one: the North American Free Trade Agreement.
The agreement with Mexico and Canada was “the worst trade deal in history,” candidate Trump declared. He accused NAFTA of having swollen America’s trade deficit with Mexico, pulled factories south of the border and killed jobs across the United States.
Trump promised to renegotiate the 23-year-old deal — or walk away from it. Now the time has come. Five days of talks aimed at overhauling NAFTA begin today in Washington, with negotiations to follow in Mexico and Canada.
The United States has never tried to overhaul a major trade agreement.
But it’s clear that delivering on Trump’s campaign promises will be difficult. A new version of NAFTA would require approval
from a divided Congress. And even an improved NAFTA might not deliver the payoff Trump and his supporters are hoping for: the restoration of millions of lost
manufacturing jobs.
Economists and trade analysts do see opportunities to improve NAFTA, which eliminated most barriers on trade among the United States, Canada and Mexico.
If nothing else, the pact could be updated to reflect the growth of the digital economy.
But a technocratic rewrite is unlikely to satisfy Trump supporters and NAFTA critics who want a revamped agreement to shrink America’s trade deficit and return jobs to the United States.
A more aggressive approach — demanding more made-in-America content for products that qualify for NAFTA’s duty-free status, for example — risks imperiling some benefits that Americans think the trade deal provided.
American farmers, for example, fear losing easy access to the Mexican market. Manufacturing companies have built supply chains that crisscross NAFTA borders; they worry about having investments jeopardized. And Canada and Mexico are sure to respond to any harsh American demands with their own.
Last month, the Trump administration listed its objectives for the renegotiation. Some of them will meet fierce resistance from Canadian and Mexican negotiators.
The administration has riled Canada, for example, by saying it wants to eliminate a dispute-resolution process established under NAFTA. That process lets Mexico and Canada appeal unfavorable rulings by U.S. courts and agencies in trade cases. They can appeal to five-person NAFTA panels, made up of two members from each country in the dispute and a fifth that usually alternates between them. The panels’ rulings are binding.
But the panels have a reputation for overturning U.S. trade decisions.
That is especially so in cases involving Canadian softwood timber imports to the United States — a long-standing source of conflict. America complains that Canada subsidizes its loggers, allowing them to dump cheap timber in the United States.
The United States also wants more leeway to slap tariffs on imports that are found to hurt American industry. For now, NAFTA limits America’s ability to use that power in cases involving Canada and Mexico. If America imposes taxes on their exports, would Canada and Mexico retaliate with their own tariffs?
In another attempt to ensure that any revamped pact promotes U.S. manufacturing, the Trump administration wants tougher rules requiring that goods that qualify for NAFTA benefits are actually made mostly inside the three-country free-trade bloc — and don’t include too many components from, say, China.
Manufacturers, which have built supply chains that straddle NAFTA borders, worry that a NAFTA redo will disrupt their operations.