Trump official says US not actively working to withdraw from NAFTA

U.S. Trade Representative Robert Lighthizer said Tuesday that the Trump administration isn’t actively pursuing a withdrawal from the North American Free Trade Agreement (NAFTA), despite President Trump’s repeated threats to pull out of the pact.

Lighthizer said the goal is to complete an update of the 23-year-old agreement between the U.S., Mexico and Canada despite Trump’s threats, which have injected a sense of gloom into the latest round of talks. 

“There is no active process for withdrawing,” Lighthizer told reporters. 

There is no economic analysis as to what may happen should the deal fall apart, though Lighthizer said “my guess is all three countries would do just fine.”

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Those questioning the White House’s approach to the trade talks, including business and agriculture groups, have said leaving NAFTA would cause serious damage to the U.S. economy given integration between the three countries.

The latest round of negotiations highlighted the significant gaps remaining among the three North American trading partners. Discussions are also now expected to stretch beyond the current aim for year’s end and into 2018. 

Lighthizer said he has seen no sign that Mexico and Canada are ready to make the major changes needed to update the pact.

“Frankly, I am surprised and disappointed by the resistance to change from our negotiating partners on both fronts,” he said during a press conference on Tuesday.

He argued that Mexican and Canadian trade negotiators are refusing to accept provisions they have agreed to in the past, including portions of the Trans-Pacific Partnership (TPP) agreement.

Trump announced shortly after taking office in January that he would withdraw the U.S. from the TPP, a deal between the U.S. and 11 other Asia-Pacific nations.

“In certain cases, partners who agree to TPP have actually rejected its text here,” he said.

But uncertainty reigned at the end of the talks, with a gloom dominating the negotiations with Mexico and Canada this time around after U.S. trade officials proposed several provisions that both countries considered nonstarters.

Lighthizer said he had hoped to have cleared chapters on digital trade and telecommunications, among others topics, but talks came to a near halt after the U.S. introduced several contentious provisions, including a sunset clause and a so-called rules-of-origin proposal.

“As difficult as this has been, we have seen no indication that our partners are willing to make any changes that will result in a rebalancing and a reduction in these huge trade deficits,” he said. “Now I understand that after many years of one-sided benefits, their companies have become reliant on special preferences and not just comparative advantage. Countries are reluctant to give up unfair advantage.”

Lighthizer said the U.S. is focused on lowering its trade deficit as part of what he called a more market-oriented agreement that would grow the manufacturing sector as part of any trade negotiation.

Despite the pessimism, Lighthizer said he expects an eventual agreement to attract both business and labor groups as well as a healthy majority of congressional Republicans and Democrats — a tall order for any legislation, despite the trade agreement.

The trade representative argued “the day will come” when business and labor groups get on board, despite it sounding like an impossible task.

“If we do that it’s a whole new ballgame going forward and I think there are ways to do that if we have something balanced,” he said.

The fifth round of talks is scheduled for Nov. 17-21 in Mexico City.

In the interim, the nations will take stock in the outcome of this latest round of discussions. 

Negotiators had hoped to complete the agreement before the end of the year — a deadline that had already deemed nearly impossible to meet — to avoid any interference with next year’s elections in the United States and Mexico.

But Lighthizer said that it wasn’t a hard target and it was agreed by the negotiators to push into next year.