White House tells Congress it will renegotiate NAFTA
U.S. Trade Representative Robert Lighthizer notified Congress on Thursday that President Trump intends to renegotiate the North American Free Trade Agreement (NAFTA).
Lighthizer said the United States will rework the 23-year-old trade agreement to support higher-paying jobs here and grow the U.S. economy by improving trading opportunities with Canada and Mexico.
“USTR will now continue consultations with Congress and American stakeholders to create an agreement that advances the interests of America’s workers, farmers, ranchers, and businesses," Lighthizer wrote.
Since being confirmed last week, Lighthizer has been making the rounds on Capitol Hill to discuss the White House's trade agenda.
The announcement starts a 90-day clock meaning negotiations can begin no earlier than Aug. 16.
"We are prepared. We are ready," said Mexican Foreign Minister Luis Videgaray in response to the renegotiation announcement.
Chrystia Freeland, Canada's minister of Foreign Affairs, said “this three-month notice period has long been anticipated and is specifically a part of the U.S. domestic process.”
“We are at an important juncture that offers us an opportunity to determine how we can best align NAFTA to new realities and integrate progressive, free and fair approaches to trade and investment,” Freehand said in a statement.
In recent weeks, Trump has gone back and forth on NAFTA. At one point, he had planned to start the process to exit the three-country deal.
But after talking to Canadian and Mexican leaders decided it was best to renegotiate the agreement.
The president has called NAFTA the worst trade deal the U.S. ever signed.
In the letter to Congress, Lighthizer outlined the objectives of the negotiations, saying that “many chapters are outdated and do not reflect modern standards" especially on issues such as digital trade, which was in its infancy in the 1990s.
"The plan is to address intellectual property rights, regulatory practices, state-owned enterprises, services, customs procedures, sanitary and phytosanitary measures, labor, environment, and small and medium enterprises," the letter said.
Lighthizer's letter also said a rework would include stiffer enforcement of the three-nation trade agreement.
Several congressional Democrats were critical of the NAFTA letter, calling the contents and direction of renegotiations “vague."
“On an initial read, the notification is disappointingly vague in many areas with respect to the results the administration wants to achieve, and consultations with Congress have been rushed,” said Sen. Ron Wyden (Ore.), ranking member of the Senate Finance Committee.
USTR is required to publish comprehensive summaries of its specific goals for the renegotiation 30 days before formal negotiations can begin.
“Over the next 60 days, Ambassador Lighthizer will need to develop negotiating positions that fulfill the expectations of hardworking Americans who have heard the president’s many promises on trade as well as the standards set by Congress in the trade promotion authority law passed two years ago," Wyden said.
"I hope that he will take the opportunity to engage with Congress and a broad range of stakeholders during that time,” Wyden said.
House Democratic Leader Nancy Pelosi called the NAFTA letter "a stark contrast with the aggressive promises he [Trump] made to hard-working families during the campaign.”
“For all his rhetoric, President Trump looks to be sorely disappointing American workers on trade,” Pelosi said.
Rep. Sander Levin (D-Mich.) criticized the administration for failing to improve their approach to renegotiating NAFTA since a draft letter was sent to Capitol Hill earlier this year.
“Instead of strengthening the NAFTA renegotiation letter, the administration has rendered it meaningless,” he said.
“The administration should remember that the Constitution gives the authority over trade to the Congress, and Members must vote to approve the agreement," he said.
Republican lawmakers were quick to remind the Trump administration about the economic importance of NAFTA and the need to fully engage Congress in the process.
Senate Finance Committee Chairman Orrin Hatch (R-Utah) said “Congress and the administration must work hand-in-hand if we are to achieve the high-standard trade agreements our country needs to grow."
"Bipartisan TPA put strong procedures on the books to ensure extensive consultations and creates high-standard negotiating objectives that our trade negotiators must meet," Hatch said.
House Ways and Means Chairman Kevin Brady (R-Texas) said "there is no question that NAFTA has been tremendously successful for American workers, farmers and businesses."
"However, it is time to update and improve this 20-year-old agreement to ensure that NAFTA continues to open more markets for American manufactured goods, agricultural products and services and that it better reflects our needs in the 21st century," Brady said.
Business groups were largely supportive of the move while outlining their priorities for any renegotiated agreement.
Thomas Donohue, president and CEO of the U.S. Chamber of Commerce, has stressed in a series of recent speeches that updating the pact can’t risk the nation’s 14 millions jobs connected with the deal.
He also has urged the administration and Congress to move quickly to avoid uncertainty and has said that any new deal must include both Canada and Mexico.
“If we all do our jobs well, the result will be a stronger agreement that spurs economic growth and job creation, not just in the United States, but across North America," Donohue said.
National Association of Manufacturers (NAM) Vice President of International Economic Affairs Linda Dempsey said that it is crucial to protect the jobs of 2 million American manufacturing workers who depend on trade with Canada and Mexico.
“NAFTA renegotiations must be focused on strengthening American competitiveness and North American trade so that manufacturers can continue to expand output and create well-paying jobs," Dempsey said.
American Automotive Policy Council President Matt Blunt said the U.S. should work with Canada and Mexico on "strong and enforceable currency manipulation disciplines in trade agreements and encourage the global acceptance of vehicles built to U.S. auto safety standards.”
"This initiative presents a significant opportunity to update NAFTA in a way that will increase the export of more American vehicles and auto parts, and grow the number of high-quality and high-paying American jobs supported by such exports," Blunt said.
Still there is plenty of skepticism about the direction of new NAFTA talks.
AFL-CIO President Richard Trumka said there is "potential for progress."
"But a good outcome is far from guaranteed," Trumka said. "While the president has called NAFTA the worst trade deal in history, his administration has given conflicting signals as to its priorities, raising the prospect that some of NAFTA’s most problematic elements could remain intact."
USTR will publish a notice in the Federal Register requesting public input on the direction, focus and content of the NAFTA negotiations.