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NAFTA renegotiation to start in August
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NAFTA renegotiation to start in August

By Contributor on
The Trump administration took its first formal step toward renegotiating NAFTA (North America Free Trade Agreement) this week, John Boylan reports.
The Trump administration took its first formal step toward renegotiating NAFTA (North America Free Trade Agreement) this week, John Boylan reports.

This sets the stage for talks that could influence more than $1.2 trillion (€1.08tn) in annual trade and shake up corporate supply chains.

US trade representative Robert Lighthizer gave official notice to Congress on Thursday of the government’s intention to renegotiate the 23-year-old accord with Mexico and Canada. Lighthizer was required to do so under a law that enables the president to fast-track trade legislation through Congress. Over the next 90 days, Lighthizer will consult with lawmakers on the position the US will take in negotiations, which could begin as early as 16 August.

Dangerous trajectory of American trade

On Thursday, Lighthizer told reporters “the president’s leadership on trade will permanently reverse the dangerous trajectory of American trade. While our economy and business have changed considerably, NAFTA has not. Most chapters are clearly outdated and do not reflect the most recent standards in US trade agreements.”

Reworking the trade deal was a central promise of Trump’s election campaign, during which he called NAFTA a disaster and blamed it for costing millions of US jobs and hollowing out the manufacturing sector. The administration has made reducing the trade deficit a priority, and Lighthizer suggested that the US will seek to lure back firms that have moved production to Mexico. The US had a $62bn (€55.8bn) trade deficit with Mexico last year.

Agriculture

Lighthizer said NAFTA had been relatively successful for certain sectors of the US economy, such as agriculture, investment services and energy. However, he added that the agreement doesn’t do enough to address digital commerce and intellectual properties, while labour and environmental matters are treated as an afterthought.

The US hopes to retain the existing three-way structure of the deal, according to Lighthizer. He said: “There is value in making the transition to a modernised NAFTA as seamless as possible. We’re going to give renegotiation a good strong shot.”

In 2016, US dairy exported 25% of its total dairy exports to Mexico, valued at $1.22bn (€1.098bn).

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