U.S. is running out of time to rewrite NAFTA
WASHINGTON — President Donald Trump’s team is running out of time to rewrite a trade pact with Canada and Mexico, and America’s top trade official says the countries are still far apart.
The impasse over the North American Free Trade Agreement comes as the U.S. is confronting China and sparring with its allies over U.S. tariffs on imported steel and aluminum.
“The NAFTA countries are nowhere near close to a deal,” U.S. Trade Rep. Robert Lighthizer said Thursday. Lighthizer cited “gaping differences” on issues ranging from farm trade to labor standards to intellectual property protections.
“We of course will continue to engage in negotiations, and I look forward to working with my counterparts to secure the best possible deal for American farmers, ranchers, workers and businesses,” Lighthizer said.
If negotiators can’t agree on a revamped North American Free Trade Agreement soon — House Speaker Paul Ryan set an informal Thursday deadline — the talks could drag into 2019. Or Trump could carry out his threat to abandon the agreement he’s labeled a job-killing “disaster” and throw commerce among the three NAFTA countries into disarray.
“The window is closing rapidly,” said Dan Ujczo, a trade lawyer at Dickinson Wright in Columbus, Ohio.
NAFTA is hardly the only urgent item on the administration’s trade agenda. Trump was expected to meet Thursday with China’s Vice Premier Liu He to try to avert a trade war. Liu will also meet with a U.S. team led by Treasury Secretary Steven Mnuchin.
The U.S. and China, locked in a conflict over Beijing’s demand that American companies turn over technology to gain access to the Chinese market, have threatened to slap tariffs on $50 billion of each other’s goods. And Trump has asked Lighthizer to find an additional $100 billion in Chinese products to tax.
The prospect of a trade war between the world’s two biggest economies has unnerved global financial markets and alarmed major companies.
“The stakes are too high for these talks to fail,” said Christine McDaniel, a senior research fellow at George Mason University’s Mercatus Center. “The U.S. economy, its firms, its workers, and its people all depend on being able to buy and sell with their counterparts at home and across the globe every day.”
Talking to reporters Thursday, Trump downplayed the prospect of a successful negotiation with Beijing:
“Will that be successful?” the president asked. “I tend to doubt it.”
Trade sanctions could disrupt business between the countries and potentially threaten jobs. Consumers would be hurt by higher prices for imported products that are hit by tariffs.
In the meantime, Japan, a staunch U.S. ally, is threatening to go to the World Trade Organization to protest Trump’s tariffs on imported steel and aluminum. The president imposed the tariffs in March, arguing that reliance on imported metals posed a threat to America’s national security. He exempted the European Union, Canada and Mexico — but not Japan — until June 1.
The steel and aluminum tariffs have antagonized traditional American allies. Those counties want permanent exemptions from the tariffs. Or they want them withdrawn altogether. Donald Tusk, president of the European Council, tweeted Monday of the United States that “with friends like that who needs enemies.”
NAFTA has long been a focus of Trump’s ire. But achieving a NAFTA do-over to the president’s satisfaction has always seemed a longshot. When it took effect in 1994, NAFTA ended most trade barriers among the U.S., Canada and Mexico. Trade surged within the NAFTA bloc. American farmers who export corn and other products benefited from the deal.
But many U.S. manufacturers, notably automakers, moved production to Mexico to capitalize on low labor costs, and shipped their products back to the United States. The influx of imports swelled America’s trade deficit with Mexico, which amounted to $69 billion last year.