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Trump wants to cut NAFTA trade deficit

July 18, 2017

The US announced it will work to shrink trade deficits with Canada and Mexico in talks to renegotiate the 1994 North American Free Trade Agreement (NAFTA). President Donald Trump has called the current deal a "disaster."

Canadian PM Justin Trudeau meets US President Donald Trump
Image: Reuters/C. Barria

The Trump administration said it was seeking to reduce the US trade deficit by renegotiating the terms of NAFTA. US Trade Representative Robert Lighthizer said that when NAFTA talks begin next month, Washington will seek to lower trade barriers for produce and industrial goods while eliminating subsidies, which US officials say are unfair.

Robert Lighthizer, Trade Representative
US Trade Representative Robert Lighthizer published an 18-page report about the reforms that the Trump administration will seek to see in NAFTAImage: greatagain.gov - CC BY 4.0

"President Trump continues to fulfill his promise to renegotiate NAFTA to get a much better deal for all Americans," Lighthizer said in a statement. "Too many Americans have been hurt by closed factories, exported jobs, and broken political promises."

The Trump administration has focused on boosting domestic manufacturing while cutting trade deficits, which it sees as damaging to the economy.

President Donald Trump has retreated from his earlier threat to exit NAFTA altogether, but has described the deal as a "disaster" allegedly costing the US jobs.

New rules

While the US had a nearly $8-billion (7-billion-euro) trade surplus with Canada in 2016 it also had a $63-billion (55 billion-euro) trade deficit with Mexico in goods and services, which the Trump administration believes hurts the US. The total amount of trade between the NAFTA countries is worth more than $1.2 trillion (1 billion euros).

NAFTA's rules of origin

Lighthizer said he will seek to eliminate hurdles to US investment, prevent currency manipulation by Canada and Mexico and forge stronger rules requiring content from North America in manufactured products. In addition to thus reducing the trade deficit, the administration wants to insert a chapter on the digital economy into the deal.

The Trump administration notified Congress in May of plans to renegotiate the regional trade deal. Under the process, Congress can vote down a new agreement but not offer amendments.

Negotiations with Canada and Mexico are scheduled to begin on August 16.

ss/bk (AFP, AP, dpa)