Trump administration launches NAFTA renegotiations to ‘modernize’ trade deal by year’s end

Trump administration launches NAFTA renegotiations to ‘modernize’ trade deal by year’s end
President Donald Trump’s newly appointed US trade representative has formally notified Congress of the administration’s intent to begin renegotiations of NAFTA, the 23-year-old trilateral trade agreement between the US, Canada and Mexico.

On Thursday, US Trade Representative Robert Lighthizer sent a letter to lawmakers, giving Congress a 90-day consultation period before renegotiations are initiated on the North American Free Trade Agreement (NAFTA).

During the required consultation period, Lighthizer said he would consult with "Congress and American stakeholders to create an agreement that advances the interests of America’s workers, farmers, ranchers and businesses,” according to a statement

The United States seeks to support higher-paying jobs in the United States and to grow the US economy by improving US opportunities under NAFTA,” Lighthizer wrote. “In particular, we note that NAFTA was negotiated 25 years ago, and while our economy and businesses have changed considerably over that period, NAFTA has not. Many chapters are outdated and do not reflect modern standards.

Lighthizer said the reason for the renegotiations was to “modernize” the trade deal to address provisions on intellectual property rights, regulatory practices, rules for state-owned enterprises, customs procedures, food safety standards and labor and environmental standards. He also cited digital trade, describing it as “in its infancy when NAFTA was enacted.

The negotiations could begin as early as August 16. Lighthizer told reporters that he hopes negotiations will be completed by the end of 2017, according to Reuters.

Lighthizer was appointed US trade representative Monday.

On Thursday, Mexican Foreign Secretary Luis Videgaray met with Secretary of State Rex Tillerson to discuss US-Mexico relations. At the joint news conference, Videgaray told reporters that the Mexican government welcomes NAFTA renegotiations, which he said will “make our trade agreement better – better for the people of Mexico, the people of the US, and the people of Canada.

We understand that this is a 25-year-old agreement, when it was negotiated. The world has changed, we’ve learned a lot, and we can make it better. We can make this a negotiation that is good for the three parties involved, certainly, under a win-win framework,” Videgaray said, according to the State Department transcript

However, the Mexican foreign secretary said that the new trade deal must preserve the existing trilateral structure to ensure a fair deal.

The agreement is trilateral and should continue to be a trilateral platform. Why? Because this is what allows us to maximize the competitive potential of the region that should be the most competitive one in the world, North America,” Videgaray said. “We believe the framework of a trilateral agreement is the most suitable and the most convenient for the peoples of Mexico, Canada and the United States.

Canadian Foreign Minister Chrystia Freeland said that NAFTA has a track record of “economic growth and middle-class job creation” on both sides of the border and that 9 million American jobs depend on trade and investment with Canada.

We are at an important juncture that offers us an opportunity to determine how we can best align NAFTA to new realities – and integrate progressive, free and fair approaches to trade and investment,” Freeland said, according to a statement Thursday. 

In February, the Congressional Research Service released a report on NAFTA, which found the trade agreement “did not cause the huge job losses feared by the critics or the large economic gains predicted by supporters.” 

The net overall effect of NAFTA on the US economy appears to have been relatively modest, primarily because trade with Canada and Mexico accounts for a small percentage of US GDP. However, there were worker and firm adjustment costs as the three countries adjusted to more open trade and investment," the report continued.

Trump made NAFTA a key issue during the election, calling it the “worst deal in US history,” and promising to “tear it up” if he could not renegotiate the agreement.

In April, Trump spoke with both President Peña Nieto of Mexico and Prime Minister Trudeau of Canada and agreed to renegotiate rather than terminate the deal, saying that “the end result will make all three countries stronger and better.

However, the next day Trump tweeted that he would still terminate the agreement “if we do not reach a fair deal for all.

NAFTA was signed by former President George H. W. Bush in 1992 and came into effect in 1994. The agreement eliminated many of the tariffs on trade between the US, Canada and Mexico.