The Trump administration on Monday indicated that it will seek to tweak rather than gut the North American Free Trade Agreement as it announced its priorities for renegotiating the deal with Mexico and Canada.
The U.S. Trade Representative's Office said the administration would focus on adding a digital economy chapter; eliminating "unfair subsidies," a thinly veiled reference to Canadian dairy, poultry and timber policies; prohibiting duties on digital products such as music and electronic books; and establishing uniform rules to protect intellectual property, among other goals.
The announcement was light on details, however, with several objectives being notably ambiguous. On the issue of country-of-origin labeling rules — for example, what constitutes "made in America," a major concern of business and labor groups — the administration vowed to "update and strengthen the rules, as necessary" to ensure the trade deal's benefits go to products "genuinely made in the United States and North America." However, since Canada and Mexico are both in North America, it is not clear what changes, if any, the administration is seeking.
In a few areas, the administration presented some surprises. Regarding trade dispute settlement between corporations and nations, another key concern of NAFTA stakeholders, the administration called for all hearings to be made open to the public, a switch from the current practice that allows them to be closed. Critics have argued that the tribunals that mediate the disputes are too secretive. The White House suggested few other changes to dispute settlement, though.
U.S. Trade Representative Robert Lighthizer argued the renegotiating objectives show the administration is working to protect U.S. workers and consumers. "President Trump continues to fulfill his promise to renegotiate NAFTA to get a much better deal for all Americans. Too many Americans have been hurt by closed factories, exported jobs and broken political promises. Under President Trump's leadership, USTR will negotiate a fair deal. America's persistent trade imbalances, break down trade barriers, and give Americans new opportunities to grow their exports. President Trump is reclaiming American prosperity and making our country great again," he said in a statement.
The White House was obligated to announce the goals under Trade Promotion Authority rules known as "fast track" one month before the beginning of negotiations with Canada and Mexico.
Business groups are divided on renegotiating NAFTA. While some industries are eager to rewrite the deal, for others NAFTA is working finely as is and reopening it represents an unnecessary risk. Manufacturers are the most interested, while the agriculture sector is wary of doing so.
For those who do want NAFTA reopened, the renegotiations represent a second chance to get what they wanted out of Trans-Pacific Partnership, the 12-nation trade deal that Trump officially pulled the U.S. out of earlier this year. The U.S., Canada and Mexico constituted one-quarter of the 12 nations involved in the proposed deal. Canadian and Mexican leaders have said the TPP's negotuations should be the framework for a NAFTA renegotiation.
The document shows the administration is attempting a balancing act of improving the rules for domestic companies without creating an opportunity for Canada and Mexico to favor their own industries. For example, the White House calls for "secur[ing] for U.S. investors in the NAFTA countries important rights consistent with U.S. legal principles and practice, while ensuring that NAFTA country investors in the United States are not accorded greater substantive rights than domestic investors."
Similarly, the administration calls for "establish[ing] fair, transparent, predictable and non-discriminatory rules to govern government procurement in the NAFTA countries, including rules mirroring existing U.S. government procurement practices," but it also wants to "maintain broad exceptions for government procurement." Trump has called on his cabinet to find ways to bolster "Buy American" provisions in federal contracting.
The White House is targeting "non-tariff barriers to U.S. agricultural exports," which is mainly a reference to Canadian dairy and poultry, which were exempted under the original NAFTA deal. U.S. producers have complained bitterly about the exceptions. Trump has taken a particular interest in U.S. dairy producers, often calling the existing rules unfair.