U.S. Releases NAFTA Renegotiation Objectives

The United States has released their objectives for the renegotiation of the North American Free Trade Agreement.

In a 17 page summary, the U.S. appeared to be sending a message to countries beyond Canada and Mexico, discussing currency manipulation concerns the U.S. has more often associated with China, South Korea, and Japan.

The document mentions both positive and negative thoughts towards NAFTA. Here is a portion of the introduction:

“The America that existed when NAFTA was signed is not the America that we see today. Some Americans have benefited from new market access provided by the Agreement. It contributed to the linking of the continent through trade, while at the same time NAFTA provided much needed market access for American farmers and ranchers.”

“But NAFTA also created new problems for many American workers. Since the deal came into force in 1994, trade deficits have exploded, thousands of factories have closed, and millions of Americans have found themselves stranded, no longer able to utilize the skills for which they had been trained. For years, politicians promising to renegotiate the deal gave American workers hope that they would stop the bleeding. But none followed up.”

The U.S. seeks to remove non-tariff barriers to U.S. agricultural exports to both Canada and Mexico. They list subsidies and “unfair” pricing structures as among those concerns.

The document also mentions “reciprocal and balanced trade,” and one of the objectives of the document is eliminating the U.S. trade deficit within NAFTA. This is seen as more of an issue for Mexico, as trade between Canada and the U.S. is quite balanced.

The U.S. also seeks a big change to how disputes within NAFTA are resolved. As noted by Reuters, “Among the priorities, Lighthizer said the administration would seek to eliminate a trade dispute mechanism that has largely prohibited the United States from pursuing anti-dumping and anti-subsidy cases against Canadian and Mexican firms.”

Mixed results

Reuters notes that NAFTA has had mixed results for the United States. Trade has quadrupled between the NAFTA nations since the deal was signed, but the U.S. lost almost 6 million manufacturing jobs between 2000 – 2010. In 1994, the U.S. had a trade surplus with Mexico, while their trade deficit now exceeds $60 billion. However, China is seen as a much bigger issue when it comes to trade deficits and lost manufacturing jobs.

While there is still decent support for NAFTA within much of Canada, some are starting to question why there has been zero real wage gains in the last 40 years. Increased trade was supposed to make working people and the middle class richer, yet that has not taken place. This is something to consider as the Trudeau government pursues “free trade” with China. A country that – unlike the United States and Mexico – has completely different civilizational values and a totally incompatible form of government.

According to U.S. Trade Representative Robert Lighthizer, negotiations won’t begin until August 16, 2017 at the earliest.

Read the full U.S. NAFTA document here

Spencer Fernando