Trump administration outlines negotiating priorities for NAFTA

The United States on Monday said reducing its trade deficits is a top priority for revamping the North American Free Trade Agreement (NAFTA) with Canada and Mexico.

The Trump administration sent Congress its required NAFTA objectives saying the aim is to
improve market access for U.S. manufacturing, agriculture and services in the three-nation deal.

{mosads}U.S. Trade Representative Robert Lighthizer said an updated agreement will include a digital economy chapter and will fold labor and environment obligations, which have remained outside the main agreement, into a final deal.

Lighthizer said the U.S. will work to eliminate “unfair subsidies, market-distorting practices by state-owned enterprises” and will improve intellectual property protections.

“Too many Americans have been hurt by closed factories, exported jobs and broken political promises,” Lighthizer said in a statement. “Under President Trump’s leadership, USTR will negotiate a fair deal.”

Talks are expected to start in about a month. 

Trump has called NAFTA the “worst deal ever” and has threatened to leave the agreement.

The combined goods and services trade deficit with Mexico was $55.6 billion in 2016. The U.S. deficit in goods was $63.2 billion last year, while the services surplus for the U.S. was $7.6 billion in 2016. 

The U.S. has a $12.5 billion goods and services surplus with Canada.

Lighthizer said that there are market access issues with Canada in dairy, wine, grain and other products — “barriers that the current agreement is unequipped to address.”

The U.S. goods trade deficit with Canada was $12.1 billion in 2016 while the U.S. services trade surplus was $24.6 billion last year.

Separately the Trump administration is examining the reasons why the U.S. had trade deficits with certain countries.

The release got mixed reviews on Capitol Hill with both parties expecting to see the objectives expand as talks intensify into the fall. 

House Ways and Means Committee Chairman Kevin Brady (R-Texas) said “these objectives set an ambitious standard for improving NAFTA and make clear that the United States is seeking strong, enforceable rules that go beyond any agreement ever negotiated.”

But he maintained that an updated agreement can’t remove trade benefits U.S. businesses already enjoy. 

Senate Finance Committee Chairman Orrin Hatch (R-Utah) said he expected that the objectives laid out on Monday will be “further developed as the negotiations proceed.”

“However, if we are to truly modernize NAFTA and establish the most advantageous rules for selling American goods and services around the globe, future negotiating objectives must include stronger protections for intellectual property rights, upgraded rules and enforcement procedures for American exporters and investors and improved regulatory practices that treat American goods and services fairly,” Hatch said. 

But Democrats were less impressed with the scope of the the 17-page outline sent to Congress. 

Ways and Means Committee ranking member Richard Neal (D-Mass.) said the summary of objectives “raises more questions than it answers.”

“In certain areas, there continues to be a complete lack of clarity or specificity, suggesting the administration may not even know what it wants in a new NAFTA,” Neal said.

“And in other areas, the objectives reveal an approach to trade negotiations that looks like the same, conventional approach taken in previous trade agreements — suggesting that the “new” NAFTA might not be new at all,” he said. 

Rep. Sander Levin (D-Mich.), who has played a pivotal role in trade during his tenure on Capitol Hill, said Mexico’s low wages and lack of workers’ rights have hurt the U.S. economy and nothing looks to change under Trump. 

“That has been the harmful effect of NAFTA for both workers in Mexico and surely in the U.S., costing many, many, American jobs,” Levin said.

“There is nothing in the summary that assures in these vital aspects that a new NAFTA will be different than the old, and statements from USTR have undermined the certainty of real change.”

Senate Finance Committee ranking member Ron Wyden (D-Ore.), who has called for a full renegotiation of NAFTA, said the summary falls short in two respects.

Wyden said the priorities are “hopelessly vague both in explaining how the administration’s specific objectives will benefit the United States on key topics ranging from intellectual property rights and investment, to currency manipulation and government procurement.”

Then he said the documents suggests that the administration will offer up “watered down versions of TPP proposals.”

“It is surprising that in key areas the Trump administration is seeking outcomes that were achieved in the TPP [Trans-Pacific Partnership], which the president said was a bad agreement,” Wyden said.

“Before sitting down with Canada and Mexico, I expect the Administration to update this summary, shine some daylight on its negotiations, and set the bar high for American workers, businesses and farmers, as it promised it would.”