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Trump seeks major overhaul of NAFTA as talks begin

U.S. chief trade negotiator says NAFTA has cost U.S. at least 700,000 jobs.

by Andrew Mayeda, Eric Martin and Theophilos Argitis

President Donald Trump isn’t looking for a “mere tweaking” of the North American Free Trade Agreement, and will be seeking a major overhaul to a deal he believes has failed Americans, Trump’s top trade official said as talks began with Mexico and Canada to revamp the accord.

“He is not interested in a mere tweaking of a few provisions and an updating of a couple chapters,” U.S. Trade Representative Robert Lighthizer said Wednesday in Washington. “We feel that NAFTA has fundamentally failed many Americans and needs major improvements.” 

NAFTA has cost the U.S. at least 700,000 jobs since the deal came into effect in 1994, Lighthizer said. The U.S. will seek improvements in a number of areas, including tighter rules-of-origin that dictate local-content requirements, stronger labor standards and guards against currency manipulation.

The Trump administration’s tough tone contrasts with expectations among some experts that the U.S. might merely seek to modernize NAFTA along the lines of the Trans-Pacific Partnership, an accord with Asia-Pacific nations that Trump withdrew from during his first week in office. After agreeing on ways to modernize NAFTA, Lighthizer said the “tough work” will begin of delivering a better deal for American farmers, businesses, workers and families.

The start of talks Wednesday marks Trump’s first major step toward fulfilling his pledge to level the playing field for American workers and companies. While his administration has launched investigations into unfair trade practices and expanded export markets for certain U.S. products such as beef in China, it is just now delving into what could prove a drawn-out process to revamp a longstanding free-trade agreement.

Speaking alongside Lighthizer, Mexican Economy Minister Ildefonso Guajardo said NAFTA has been a “strong success for all parties,” and he cautioned against “tearing apart” the parts of the accord that have worked. He also reiterated that Mexico is looking for a deal in its own national interest.

Three-Way Success 

“To be successful, it has to work for all parties involved, otherwise it’s not a deal,” Guajardo said in his statement kick-starting the trilateral talks in Washington. 

Canada’s Foreign Minister Chrystia Freeland reiterated the country’s position that the trade agreement needs modernizing, but said fundamentally it has benefited all three countries. The success of the pact shouldn’t be viewed through the lens of trade gaps or surpluses, Freeland said, while noting at the same time Canada’s trade is largely balanced with the U.S. 

The opening remarks underscored the differences between the three countries: while the U.S. is focused on protecting American workers and improving its trade balance, Mexico and Canada emphasized the need to preserve the broad gains of trade to all three nations. 

Commerce Secretary Wilbur Ross has said he wants negotiations to wrap up by early next year before Mexico’s July presidential election and midterm congressional elections in the U.S. further politicize discussions. That may be a challenge, considering that historically it has taken years for presidents to negotiate and implement trade deals.

This week’s first round of talks, which are scheduled to wrap up on Sunday, will provide important clues on the timing, as a contentious beginning could set the stage for tough discussions to come. If for example the Trump administration doubles down on a push to shrink its trade deficit by insisting on a “Made in America” clause that would favor U.S. manufacturing, Canada and Mexico could put

To contact the reporters on this story: Andrew Mayeda in Washington at [email protected]; Eric Martin in Mexico City at [email protected]; Theophilos Argitis in Ottawa at [email protected]

To contact the editors responsible for this story: Sarah McGregor at [email protected]

Randall Woods

© 2017 Bloomberg L.P

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