The White House formally told Congress in a letter Thursday that it intends to open talks with Canada and Mexico to renegotiate the North American Free Trade Agreement. The talks will begin in 90 days.
"The United States seeks to support higher-paying jobs in the United States and to grown the U.S. economy by improving U.S. opportunities under NAFTA," the letter said. "In particular we note that NAFTA was negotiated 25 years ago, and while our economy and businessses have changed considerably over that period, NAFTA has not. Many chapters are outdated and do not reflect modern standards."
The administration said the aim was to modernize provisions relating to intellectual property rights, state-owned enterprises, customs procedures, regulatory practices, and labor and environmental regulations, among others.
The NAFTA agreement, signed in 1993 by President Clinton, lowered trade barrier between the U.S. and Canada. Critics have long complained that the deal subjected domestic industries to unfair competition and pushed down wages. Supporters of the deal counter that it was part of the reason for the booming economy of the 1990s.
President Trump has been a major critic of NAFTA and other trade deals, arguing that other countries have got the better deals under them. Last month, Trump drafted an executive order pulling the U.S. out of NAFTA but was urged by Commerce Secretary Wilbur Ross and Agriculture Secretary Sonny Perdue, among other administration officials, to take a more measured approach. Personal appeals from the Mexican president and Canadian prime minister also played a part.
The president himself said later that abruptly pulling out of the trade agreement would create too much of a "shock to the system" but has pointedly not ruled out leading the U.S. out of the deal in the future.
Business groups involved in international trade expressed concern about the prospect of more protectionist policies. "It's critical to get to an outcome that builds upon NAFTA's success in creating a more open North American market. This modernization must strengthen America's competitiveness in the global economy rather than impose new barriers," said the National Foreign Trade Council, a coalition group that includes leading energy, manufacturing and retail businesses.
Liberal groups, on the other hand, expressed skepticism. They argued that the administration's record to date on trade matters does not inspire confidence. "The real question is, what comes next?" said the environmentalist Sierra Club. "Given that Trump is working to stack his Cabinet full of billionaire supporters of status-quo trade deals who believe that climate change is a hoax, there is reason to be more than skeptical."
Underf the terms of NAFTA, a president can unilaterally tell Mexican and Canadian governments that the U.S. is withdrawing from the deal and pull out six months after that notice is given. Under the terms of the Trade Promotion Authorirty Act, the president is required to give 90 days notice to Congress before entering into trade negotiations.