Re­vamp of NAFTA gets a for­mal launch

Trump ad­min­is­tra­tion yet to out­line spe­cific goals for ne­go­ti­a­tions

The Washington Post - - ECONOMY & BUSINESS - BY ANA SWAN­SON ana.swan­son@washpost.com More at wash­ing­ton­post.com/ wonkblog

The Trump ad­min­is­tra­tion on Thurs­day for­mally no­ti­fied Congress of its in­tent to rene­go­ti­ate the North Amer­i­can Free Trade Agree­ment, a step for­ward on a cam­paign prom­ise that was widely pop­u­lar among vot­ers but has un­set­tled the U.S. com­pa­nies that have con­structed their busi­nesses around the trade deal’s pro­vi­sions.

The no­ti­fi­ca­tion starts the clock on a 90-day pe­riod in which Congress will con­sult with the ad­min­is­tra­tion about its goals. Ne­go­ti­a­tions with Canada and Mex­ico will be­gin as soon as Aug. 16, the ad­min­is­tra­tion said.

The state­ment, sent from U.S. Trade Rep­re­sen­ta­tive Robert E. Lighthizer to con­gres­sional lead­ers Thurs­day morn­ing, of­fered few, if any, de­tails on what specif­i­cally the ad­min­is­tra­tion hoped to change.

It also did not in­clude the type of harsh rhetoric Pres­i­dent Trump has used to de­scribe NAFTA and the trade prac­tices of Canada and Mex­ico in the past. On the cam­paign trail and in of­fice, Trump de­rided NAFTA as a “hor­ri­ble deal for the United States,” “the worst trade deal maybe ever” and “a de­fec­tive agree­ment.”

In a call with re­porters Thurs­day morn­ing, Lighthizer stressed that the ad­min­is­tra­tion hopes to im­prove and up­date the deal rather than scrap it al­to­gether.

“I would note that many of these ne­go­ti­a­tions will be bi­lat­eral and many of the is­sues are bi­lat­eral, but our hope is that we will end up with a struc­ture that is sim­i­lar to what we have now,” he said. “If that proves to be im­pos­si­ble, we will move in an­other di­rec­tion.”

Lighthizer, who is the ad­min­is­tra­tion’s main trade ne­go­tia­tor and whose con­fir­ma­tion process dragged on un­til last week, said that the pact had been suc­cess­ful for some in­dus­tries, such as agri­cul­ture, but that for others, such as man­u­fac­tur­ing, it had not.

“We should build on what has worked in NAFTA but change and im­prove what has not,” he said.

Trump’s cam­paign ar­gu­ments against NAFTA were pop­u­lar with vot­ers, but busi­nesses and some con­gress­men have ex­pressed reser­va­tions about the plan to rene­go­ti­ate, fear­ing that mis­steps from the ad­min­is­tra­tion could lead to un­in­tended con­se­quences and im­pair valu­able ex­port mar­kets.

Economists gen­er­ally agree that NAFTA has ben­e­fited the U.S. econ­omy over­all by in­creas­ing trade. Yet like all trade deals, its ben­e­fits have been broadly dis­trib­uted over the U.S. pop­u­la­tion, while its neg­a­tive con­se­quences have been felt sharply by a smaller group of peo­ple who have lost their jobs as in­dus­tries have re­or­ga­nized through­out North Amer­ica.

In his re­marks Thurs­day morn­ing, Lighthizer noted that the deal was ne­go­ti­ated more than 23 years ago and was in need of up­dates. NAFTA does not con­tain reg­u­la­tions per­tain­ing to In­ter­net com­merce, and it lacks the tougher en­vi­ron­men­tal stan­dards and in­tel­lec­tual-prop­erty pro­tec­tions of more re­cent trade deals.

Yet trade ex­perts point out that dig­i­tal, en­vi­ron­men­tal and in­tel­lec­tual-prop­erty pro­vi­sions were all in­cor­po­rated in the aban­doned Trans-Pa­cific Part­ner­ship, a 12-na­tion trade deal ne­go­ti­ated by the Obama ad­min­is­tra­tion that in­cluded the United States, Canada and Mex­ico and was seen by many busi­nesses and trade ex­perts as a kind of “NAFTA 2.0.”

It re­mains to be seen whether many of the ad­min­is­tra­tion’s goals for rene­go­ti­at­ing NAFTA are drawn from pro­vi­sions in the TPP.

The roughly one-page let­ter Lighthizer sent to mem­bers of Congress on Thurs­day con­tained few de­tails about the ad­min­is­tra­tion’s plans. An ear­lier eight­page draft of the let­ter, leaked to the pub­lic in late March, out­lined the ad­min­is­tra­tion’s plans in slightly more spe­cific terms.

The U.S. trade rep­re­sen­ta­tive is re­quired by Congress to pub­lish more-de­tailed ob­jec­tives at least 30 days be­fore for­mal ne­go­ti­a­tions be­gin.

The draft let­ter in­di­cated a much more con­ven­tional ap­proach to ne­go­ti­a­tion than many had ex­pected, given Trump’s fiery rhetoric about trade deals on the cam­paign trail.

JOHN MOORE/GETTY IM­AGES

Freight trucks snake from Mex­ico into Cal­i­for­nia last week as they are in­spected at a port of en­try in San Diego. Talks with Canada and Mex­ico to rene­go­ti­ate the North Amer­i­can Free Trade Agree­ment will be­gin as soon as Au­gust, the Trump ad­min­is­tra­tion said.

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