Revamp of NAFTA gets a formal launch
Trump administration yet to outline specific goals for negotiations
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.
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.