US launches process of redrafting NAFTA | Business| Economy and finance news from a German perspective | DW | 18.05.2017
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Business

US launches process of redrafting NAFTA

The US government has launched the countdown to renegotiating the North American Free Trade Agreement (NAFTA), with President Donald Trump aiming to rectify what he called a bad deal for American workers.

US Trade Representative Robert Lighthizer has formally notified Congress of the Trump administration's intent to revamp the pact with Canada and Mexico, which accounts for about $1 trillion (898 billion euros) in annual trade. Talks were scheduled to begin no earlier than August 16, he said in a statement released Thursday.

During the required 90-day period, Lighthizer will consult with Congress and American stakeholders to create an agreement that "advances the interests of America's workers, farmers, ranchers, and businesses."

During his election the campaign, President Donald Trump vowed to scrap NAFTA altogether, saying it was a disaster for US workers. His repeated complaints that bad trade deals cost American jobs gained him support among working class voters, who helped lift him to the White House.

But Trump backed away from the threat to withdraw after Canadian and Mexican officials urged Washington torenegotiate and modernize rather than scrap the trade pact.

Outdated NAFTA

Signed in 1994, NAFTA is said to have boosted industry in the US, Mexico and Canada and created tight manufacturing, farming and business links throughout the region.

Still, Lighthizer said reforming the trade agreement fulfilled one of Trump's "key promises to the American people."

In the formal notification to Congress, the US trade representative said NAFTA had not kept up with changes in the economy and business over the last 25 years, including the boom in e-commerce. "Many chapters are outdated and do not reflect modern standards," he said.

The administration aims to improve "effective implementation and aggressive enforcement" of NAFTA commitments, and will introduce additional provisions to address intellectual property rights, regulation, services, labor, environment and other issues.

"The United States seeks to support higher-paying jobs in the United States and to grow the US economy by improving US opportunities under NAFTA," he said.

Commerce Secretary Wilbur Ross said in a statement that the emphasis of the negotiations should be on free and fair trade. "With this letter, we intend to notify not just Congress, but all our trading partners, that free and fair trade is the new standard for US trade deals," Ross said. "Since the signing of NAFTA, we have seen our manufacturing industry decimated, factories shuttered, and countless workers left jobless. President Trump is going to change that."

Skeptical partners 

The announcement came as Mexico's Foreign Secretary Luis Videgaray was meeting with US Secretary of State Rex Tillerson in Washington. The Mexican official said he welcomed the opportunity to update the agreement, but insisted it must remain a trilateral.

"NAFTA is a trilateral agreement and the conversations need to be trilateral in nature. This is our position," he said, arguing that continent-wide supply chains should make North America the most competitive region in the world.

Canada Foreign Affairs Minister Chrystia Freeland said many US jobs depend on NAFTA which has created growth throughout the region. "NAFTA's track record is one of economic growth and middle-class job creation, both here in Canada and throughout North America," she said in a statement.

"Nine million American jobs depend on trade and investment with Canada. Our integrated economies and supply chains support millions of jobs across the continent."

She said Ottawa also is reaching out to groups throughout the country to "determine how we can best align NAFTA to new realities and integrate progressive, free and fair approaches to trade and investment," and to ensure "that the benefits of trade are enjoyed by all Canadians."

uhe/jd (Reuters, AFP, dpa)

 

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