The Trump Administration Says It’s Ready to ‘Modernize’ NAFTA
The Trump administration has announced its intention to move forward on one of its most prominent campaign promises: renegotiating the North American Free Trade Agreement, or NAFTA. In a two-page letter to Congress, recently approved U.S. Trade Representative Robert Lighthizer stated that the administration “intends to initiate negotiations with Canada and Mexico regarding modernization” of the agreement, which was ratified in 1993 and took effect on January 1, 1994, to reduce barriers to trade between the U.S., Canada, and Mexico.
Lighthizer enumerates several broad goals for the renegotiation process in his letter. Emphasizing that “our economy and businesses have changed considerably” since NAFTA was originally negotiated 25 years ago, he states that the administration will seek new provisions to address a number of issues, including intellectual-property rights, labor laws, and environmental regulations, as well as measures “establishing effective implementation and enforcement of the commitments made by our trading partners.” The White House published a more detailed list of proposed changes in an eight-page draft letter sent to Congress in March, in which the acting trade representative Stephen Vaughan listed 49 specific objectives across 19 categories, ranging from eliminating barriers on U.S. exports to addressing anti-competitive business practices in all three party countries.
Trump’s promise that he would renegotiate the trade deal or even pull out of it altogether was a cornerstone of his presidential campaign, putting him at odds with the Republican establishment, which has historically supported free trade generally and NAFTA specifically. In presidential debates against Hillary Clinton, Trump called the pact “the worst trade deal maybe ever” and “one of the worst things that ever happened in our country,” saying that it had cost America millions of manufacturing jobs that moved to Mexico (although most economists disagree with both characterizations). During the campaign, Trump said relatively little about the other party in the agreement; recently, however, he has focused his ire on Canada’s protective practices toward its dairy industry and imposed a tariff on Canadian softwood lumber as retaliation for the country’s policy of subsidizing sales in the United States.
Nevertheless, whether Trump would act on his pledge, and when, remained unclear until Lighthizer’s announcement Thursday morning. The president appeared ready to announce the U.S.’s withdrawal from NAFTA in late April. However, after a phone call with Justin Trudeau and Enrique Peña Nieto, the prime minister of Canada and president of Mexico, respectively, Trump changed his tune, saying that his fellow leaders had convinced him to renegotiate the deal instead, as termination would be a “pretty big shock to the system.” (The Canadian news outlets National Post and Metro later reported that Jared Kushner, Trump’s son-in-law and senior adviser, spoke with Trudeau in advance of the call to urge the Canadian prime minister to talk Trump out of of terminating the agreement).
Moreover, as was the case with many of his campaign promises, Trump typically spoke about NAFTA in broad terms, providing relatively few details about what steps he would take as president to alleviate the supposed burden it placed on the American economy. Lighthizer and Vaughan’s letters begin the process of translating Trump’s sweeping rhetoric into actionable policy.
Per the terms of NAFTA, the administration’s announcement initiates a 90-day waiting period, after which Lighthizer and his staff will begin negotiations with their counterparts from Canada and Mexico, with specific details on policy objectives due to Congress after 60 days.