The Trump Administration has passed a second milestone on the road to renegotiating the North American Free Trade Agreement.
On Monday, the United States Trade Representative issued a document outlining the president’s goals for the NAFTA renegotiation, which includes both a nod to some Trans-Pacific Partnership provisions as well as evidence of Trump’s America First trade stance.
The plan also signals the Administration’s intention to begin negotiations in 30 days and it follow’s USTR Robert Lighthizer requisite 90-notice in May.
Though the document highlights some positive attributes of the 23-year-old agreement, it also points to ways in which the White House feels NAFTA has been a detriment. “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,” it says.
President Trump has consistently railed against what he sees as unfair trade deals that create trade deficits with other countries so it’s no surprise that that removing barriers to U.S. exports is a chief concern addressed here. One objective for starting a NAFTA renegotiation is to “ensure that the United States obtains more open, equitable, secure, and reciprocal market access, and that our trade agreement with our two largest export markets is effectively implemented and enforced,” the 17-page document states.
Other objectives will look familiar to those who follow trade.
Though Trump pulled the U.S. from the 12-nation TPP trade deal after calling it “a potential disaster for our country,” trade watchers see parallels between some proposed NAFTA provisions and that defunct deal. The similarities center around points related to labor like the freedom for workers to unionize and the prohibition to trade goods made by forced labor as well as language that safeguards the environment and endangered species.
The document also outlines provisions to protect against currency manipulation, ideas that are less applicable to NAFTA countries than to others with which the U.S. could seek bilateral agreements using similar language.
[Read about how Trump’s trade stance is affecting relations around the world: At G20 It’s the World Versus Donald Trump—And the US Could be Days Away From a Trade War]
While the outline is much less incendiary than it might have been, multiple sources have pointed to sections that might give Mexico and Canada pause. One such provision is the Administration’s call to remove the Chapter 19 dispute settlement mechanism, which currently allows Mexico and Canada to dispute any duties imposed by the U.S.
While he allowed there might be area to update the provision, Canada’s ambassador to the United States David MacNaughton said it’s “critical” to have a way for the countries to handle disputes.
Congressional and Industry Reaction
Though the list of objectives received some criticism from lawmakers who said it was too vague, others came out in support as well.
In a statement on his website, Democratic Congressman Tim Ryan of Ohio said the president is “not qualified” to broker a deal that would help American workers. He adds, the proposed NAFTA renegotiation document is “filled with vague overtures making it unclear what will be demanded on key issues, whether improvements for working people could be in the offering or whether the worst aspects of the TPP will be added making NAFTA even more damaging.”
Though Republican Senator Orrin Hatch of Utah came out in support of the Administration’s efforts, he suggested the objectives were just a starting point that will be developed further. He further noted that a NAFTA update needs to go further, adding “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.”
Since talk of a NAFTA renegotiation began, the apparel industry and others have been waiting to learn what the tenor of these talks would be, as the president has been everything from confrontational to conciliatory on the subject. At times Trump had threatened to cancel NAFTA altogether, prompting a similarly heated response from Mexico. But the president had also offered a softer stance, saying he’s just looking for tweaks to the agreement.
Ultimately, the proposed changes are more than tweaks but far from the sweeping changes that prompted fears in Mexico and a record drop in the value of the peso after Trump’s election.
Overall, the American Apparel & Footwear Association is pleased with the direction set forth in the blueprint. “The Administration’s emphasis that changes to the agreement be implemented ‘seamlessly’ is especially encouraging, as is the emphasis on intellectual property protection and streamlining commerce between the three nations,” the group said in a statement.
The Retail Industry Leaders Association released its own statement in support for an update that would boost both importers and exports and help make the U.S. more competitive in the global market. “Additionally, an updated agreement will spur billions in new investment in infrastructure across our nation’s retail supply chain and create thousands of good-paying jobs.”