President Donald Trump’s administration today outlined a set of more specific plans for renegotiating the 23-year-old North American Free Trade Agreement with Canada and Mexico, avoiding the bellicose language Trump used on the campaign trail, but saying one of its primary goals is to reduce the U.S. overseas trade deficit.
The 18-page Summary of Objectives for the NAFTA Renegotiation meets a 30-day deadline to provide to Congress a set of specific goals for reopening the iconic trade deal that opened North American borders and helped lead to an integrated domestic auto industry that has seen parts and supplies flow freely across the borders.
But while automakers and other manufacturers have said that NAFTA helped prop up their industries by providing more access to markets, less-expensive labor and parts, Trump throughout the campaign argued along with workers that NAFTA has cost American jobs and that he would stand for it no longer.
Today’s summary — released by U.S. Trade Representative Robert Lighthizer — didn’t mention the auto industry by name and avoided threats such as those made by Trump to put in place steep tariffs against American auto companies moving or expanding operations in other North American countries. But it still made the case for renegotiating the agreement, saying, “The America that existed when NAFTA was signed is not the America that we see today.”
“Some Americans have benefited from new market access provided by the agreement. It contributed to the linking of the continent through trade, while at the same time NAFTA provided much-needed market access for American farmers and ranchers,” the summary said in its opening.
But the document went on to say, “Since the deal came into force in 1994, trade deficits have exploded, thousands of factories have closed, and millions of Americans have found themselves stranded, no longer able to utilize the skills for which they had been trained. For years, politicians promising to renegotiate the deal gave American workers hope that they would stop the bleeding. But none followed up.”
In the summary, the Trump administration said it planned to address at least one outstanding issue automakers have long argued over — currency manipulation. While Trump reneged on a campaign promise to label China a currency manipulator, using practices that can keep the cost of its vehicles down while potentially increasing those of competitors, the summary said the regnegotiated NAFTA would be expected to put in place an “appropriate mechanism” to “ensure that the NAFTA countries avoid manipulating exchange rates … to gain an unfair competitive advantage.
Noting that the nation’s trade balance with Mexico has gone from a $1.3-billion surplus in 1994 to a $64-billion deficit last year — and that “market access issues” have arisen in Canada involving dairy, grain and other products — Lighthizer said the renegotiated deal will have as a specific goal lowering the national trade deficit and “break down barriers to American exports.”
Even before Trump was elected, there were concerns about what a renegotiation — or threatened withdrawal — from NAFTA might mean to the American auto industry, with so many supplies moving back and forth across an integrated North American market. Some economists worried that a high tariff — if Trump moved to implement one — could touch off a trade war.
The summary makes no mention of such tariffs, instead calling for the new agreement to “maintain existing reciprocal duty-free market access for industrial goods and strengthen disciplines to address nontariff barriers that constrain U.S. exports to NAFTA countries.” It also talks about reducing some remaining tariff barriers on U.S. agricultural products.
Meanwhile, it seeks to take steps that could — depending on how the negotiations go — create a better playing field in terms of U.S. workers’ competition with lower-wage employees in Mexico. The summary calls for bringing labor standards into the main agreement — rather than in a side one — and requiring Mexico and Canada to “adopt and maintain” internationally recognized labor standards and have laws “governing acceptable conditions of work with respect to minimum wages, hours of work” and safety.
The summary also calls for establishing rules that ensure NAFTA countries “do not to waive or derogate from the protections afforded in their environmental laws for the purpose of encouraging trade or investment.”
Lighthizer also said the U.S. wants new chapters to the agreement on digital trade. In releasing the summary, his office said, “The negotiating objectives aim to apply the highest standards covering the broadest possible range of goods and services to ensure truly free and fair trade that supports higher-paying jobs and economic growth in the United States.”
“President Trump continues to fulfill his promise to renegotiate NAFTA to get a much better deal for all Americans,” said Lighthizer. “Too many Americans have been hurt by closed factories, exported jobs, and broken political promises. Under President Trump’s leadership, USTR will negotiate a fair deal.”
Reaction to the summary was slow to come in this afternoon, but Democrats – including those from industrial states like Michigan – had been waiting for it, having long supported a renegotiation of NAFTA but only if it balanced the playing field for workers and American union members.
“Today is D-day for some of us who have been talking about this for a long time,” said U.S. Rep. Debbie Dingell, D-Dearborn. “Now we’ve got an opportunity (to renegotiate). … We must do so in a way that puts working families first.”
Contact Todd Spangler: email@example.com. Follow him on Twitter @tsspangler.