Renegotiate NAFTA, Errrr Modernize.
U.S. Trade Representative Robert Lighthizer gave official notice to Congress on Thursday of the government’s intention to renegotiate the North American Free Trade Agreement, the 23-year-old accord with Mexico and Canada. Lighthizer was required to do so under a law that enables the president to fast-track trade legislation through Congress. Over the next 90 days, Lighthizer will consult with lawmakers on the position the U.S. will take in negotiations, which could begin as early as Aug. 16.
“The president’s leadership on trade will permanently reverse the dangerous trajectory of American trade,” Lighthizer told reporters Thursday on a conference call. “While our economy and businesses have changed considerably, NAFTA has not. Most chapters are clearly outdated and do not reflect the most recent standards in U.S. trade agreements.”
Revising NAFTA was a central issue of Trump’s election campaign. He called NAFTA a “disaster” and blamed it for costing millions of U.S. jobs and hollowing out the manufacturing sector. The administration has made reducing the trade deficit a priority, and Lighthizer suggested the U.S. will seek to lure back firms that have moved production to Mexico. The U.S. had a $62-billion trade deficit with Mexico last year.
“Sectors like manufacturing, particularly with regard to Mexico, have fallen behind,” Lighthizer said. “When we lose manufacturing facilities, we lose the thousands of good-paying jobs associated with those facilities, directly impacting middle-class Americans.”
Lighthizer noted the trade agreement has been “relatively successful” for certain sectors of the U.S. economy, such as agriculture, investment services and energy. However, he added that the agreement doesn’t do enough to address digital commerce and intellectual property, and labor and environmental matters are treated as an “afterthought.”
Lighthizer said USTR will publish its negotiation objectives at least 30 days before formal talks begin, and he hopes to conclude negotiations this year.
Under its fast-track authority, the White House has to give Congress 90 days’ notice before it formally starts renegotiating a trade deal. During that time, the administration must meet with members of the House Ways and Means and Senate Finance Committees, with a view toward coming up with the principles the U.S. will adopt during the negotiations.
Other issues expected to come up in NAFTA talks include so-called rules of origin, which dictate the amount of North American-made parts that must be used in assembled products such as cars. The U.S. has also indicated it would like to overhaul the process under which foreign companies can be challenged in court by the state, and strengthen the ability of government contracts to give preference to U.S. companies.