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USTR Promises NAFTA Renegotiation Won’t be “Mere Tweaks” but a “Major” Overhaul

Wednesday marked the start of the much-discussed NAFTA renegotiations, and though President Trump has so far been quiet on the Twitter front with regard to these talks, U.S. Trade Representative Robert Lighthizer took an opportunity at the start of the talks to touch on areas in the agreement the administration intends to modernize.

“First, I know we all agree that NAFTA needs updating. This is a 23-year-old agreement and our economies are very different than they were in the 1990s,” Lighthizer said in an opening statement Wednesday. “We need to modernize or create provisions which protect digital trade and services trade, e-commerce, update customs procedures, protect intellectual property, improve energy provisions, enhance transparency rules, and promote science-based agricultural trade.”

Never missing an opportunity to belabor the trade deficit point, Lighthizer said NAFTA has failed Americans.

“We cannot ignore the huge trade deficits, the lost manufacturing jobs, the businesses that have closed or moved because of incentives—intended or not—in the current agreement,” he said.

According to the USTR, the U.S. government has certified that at least 700,000 Americans have lost their jobs because of NAFTA, and as Lighthizer explained, many people think the number is “much, much bigger” than that.

“In 1993, when NAFTA was approved, the United States and Mexico experienced relatively balanced trade. However since then, we have had persistent trade deficits—in the last year totaling nearly $57 billion,” Lighthizer continued in his statement. “In recent years, we have seen some improvement in our trade balance with Canada. But over the last 10 years, our deficit in goods has exceeded $365 billion.”

Though Trump has shifted from calling for a complete withdrawal from NAFTA if the deal couldn’t be done right, to saying he’d only make “tweaks,” Lighthizer emphasized that the changes won’t likely be small ones.

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“The views of the president about NAFTA, which I completely share, are well known. I want to be clear that he is not interested in a mere tweaking of a few provisions and a couple of updated chapters,” Lighthizer said. “We feel that NAFTA has fundamentally failed many, many Americans and needs major improvement.”

For one, as Lighthizer continued, the “huge” trade deficits have got to stop and they’ll be reviewed periodically to ensure “balance and reciprocity.”

Turning to rules of origin, which has been the point keeping retailers up at night, it seems Trump may not go the way they wanted.

In a letter to Lighthizer in July, the National Retail Federation outlined what its members want to see out of the NAFTA renegotiations, emphasizing that rules of origin should not be made more burdensome than they already are.

[Read more about retailers’ hopes for NAFTA: Retailers Tell USTR What They Want From NAFTA]

On Wednesday, however, Lighthizer said, “Rules of origin, particularly on autos and auto parts, must require higher NAFTA content and substantial U.S. content. Country of origin should be verified, not ‘deemed.’”

Beyond that, Lighthizer said labor provisions should be “as strong as possible,” protections should be included to prevent currency manipulation and market disorienting practices like third-party dumping.

“These are just a few examples of key priorities for the United States—but I think they are sufficient to show that our task is a very difficult one,” Lighthizer said. “On the other hand, the stakes are higher for all of our citizens and the benefits of a good agreement can be substantial.”