Trump Administration Formally Launches NAFTA Renegotiation

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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 American companies that have built their industries 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 begin as soon as Aug. 16, the administration said.

In a press call Thursday morning, United States Trade Representative Robert Lighthizer stressed that the administration hopes to renegotiate the deal, rather than scrapping it altogether and instead negotiating new bilateral deals with Canada and Mexico.

“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, the administration’s main trade negotiator whose confirmation process dragged on until last week, said that the pact had been successful for some industries, like agriculture. But for others, like manufacturing, it had not.

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

Lighthizer’s statements Thursday morning offered few if any details on what specifically the administration hoped to change.

The trade representative’s statements also did not include the type of harsh rhetoric the president has used to describe NAFTA. Lighthizer focused on an effort to improve and update the deal, and he did not directly criticize the trade policies of either Mexico or Canada.

On the campaign trail and in office, President Donald Trump derided NAFTA as a “horrible deal for the United States,” “the worst trade deal maybe ever,” and “a defective agreement.”

The arguments were popular with voters, but businesses and some congressmen have expressed more 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 reorganized around the North American continent.

Tom Donahue, the president of the U.S. Chamber of Commerce, said the group welcomed the opportunity to modernize NAFTA for the 21st Century. “If we all do our jobs well, the result will be a stronger agreement that spurs economic growth and job creation, not just in the United States, but across North America,” he said.

In recent speeches, Donahue had argued that 14 million American jobs depend on trade with Canada and Mexico, and that the first objective of the administration should be to “do no harm.”

“Congress and the Administration must work hand-in-hand if we are to achieve the high-standard trade agreements our country needs to grow,” Sen. Orrin Hatch, R-Utah, said in a statement. “I’m confident that through close consultation we can chart a course that not only strengthens this vital trade pact but also preserves our strong economic partnerships with Canada and Mexico.”

In his remarks Thursday morning, Lighthizer noted that the deal was negotiated over 23 years ago and was in need of updates. NAFTA does not contain regulations pertaining to e-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 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 ultimately drawn from provisions in the TPP. Trump heavily criticized the TPP during the campaign, and signed a presidential memo to formally withdraw the United States from the deal as one of his first actions in office.

Business leaders are still watching closely for more information on the administration’s primary goals in negotiation.

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

The USTR 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.

That letter called for restricting federal procurement to U.S. suppliers, reexamining an often criticized legal process that settles disputes between investors and governments, and renegotiating NAFTA’s rules of origin, which determine how much raw material from outside North American can be included in goods that qualify for the favorable terms of the trade pact.

(c) 2017, The Washington Post · Ana Swanson  

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