Trump Administration Outlines NAFTA Renegotiation Goals

The office of U.S. Trade Representative (USTR) Robert Lighthizer published on July 17 a list of goals for the renegotiation of North American Free Trade Agreement (NAFTA), keeping on the most aggressive possible timeline for re-entering negotiations with Canada and Mexico.  Using “fast-track” authority, the Trump Administration previously informed Congress on May 18 that it would be renegotiating the terms of the trade deal and collected public feedback on specific goals for negotiation.  Negotiations are expected to begin between the NAFTA nations on or around August 16, 2017.

The goals published by USTR focus on eliminating bilateral trade deficits and continuing the expansion of access to NAFTA markets for U.S. agriculture and industrial exporters. Negotiators will also be tasked with strengthening rules-of-origin language in a new trade agreement that would encourage the sourcing of U.S. goods, as well as adding provisions to NAFTA to modernize the trade of services and govern trade in digital goods, which were not addressed in the 1994 agreement.  Further, the Administration proposes modernizing the dispute settlement provisions in NAFTA to bring the agreement in closer alignment with the dispute settlement language in more recent free trade agreements.  The published goals also assert that no country should manipulate currency exchange rates in order to gain an unfair competitive advantage, a provision which may be more contentious in possible future trade negotiations with South Korea and China than in the renegotiation of NAFTA.

While the renegotiation document is relatively vague on specific deliverables, the listed priorities would include many of the NAFTA improvements that were negotiated as part of the Trans-Pacific Partnership and would provide needed modernization for an agreement over 20 years old.  Since NAFTA was originally implemented in 1994, growth in trade between the NAFTA partner countries has tripled to over $1 trillion in 2016.  The U.S. Chamber of Commerce estimates that 14 million American jobs depend on trade with Canada and Mexico.

The renegotiation of NAFTA is an opportunity for the U.S. to continue modernizing and harmonizing its trade practices to ensure a strong American economy and the free flow of goods and services along global supply chains.  TIA staff is closely monitoring all developments related to these negotiations and will report to members on the critical issues that impact their businesses and their customers.  For more information, please contact Will Sehestedt at [email protected] or (703) 299-5713.