As NAFTA talks begin,
Trump's 'America First' agenda looms large
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[August 16, 2017]
By Lesley Wroughton and David Lawder
WASHINGTON (Reuters) - As the United
States, Canada and Mexico kick off negotiations on Wednesday to
modernize the North American Free Trade Agreement, the biggest
uncertainty is whether a deal can pass President Donald Trump's "America
Trump has blamed NAFTA for shuttering U.S. factories and sending U.S.
jobs to low-wage Mexico. The test will be whether negotiators can prove
that a new NAFTA agreement can alter that course.
The call from the U.S. business community in the run-up to the talks has
been "do no harm" amid concerns that a new agreement will unravel a
complex North American network of manufacturing suppliers built around
Trump, who made trade a centerpiece of his presidential campaign as he
promised to reinvigorate the manufacturing sector, pulled the United
States out of the Trans Pacific Partnership trade pact shortly after
taking office in January. But he has since backed off other trade
threats, including declaring China a currency manipulator and tearing up
NAFTA, which he regularly calls a disaster.
U.S.-Canada-Mexico trade has quadrupled since NAFTA took effect in 1994,
surpassing $1 trillion in 2015.
Derek Burney, a former Canadian ambassador to Washington who was
involved in the first NAFTA negotiations, said that in the previous
NAFTA talks there was a political commitment from all sides to reach a
deal. That is not the case now, he said.
"The question ... is, What will Trump accept as a success in these
negotiations?" said Burney. "To me that is the biggest wild card of
Robert Holleyman, a former deputy U.S. trade representative during the
Obama administration, said the "toughest nut to crack" in the talks will
be whether changes meet Trump's goals to reduce the $64 billion U.S.
trade deficit with Mexico.
"We know where he wants to make changes to NAFTA. Whether those changes
lead up to something that actually reduces the trade deficit with Mexico
is wholly unclear," Holleyman said.
NAFTA renegotiations will be a major test of Trump's ability to meet his
campaign promises to restore U.S. manufacturing jobs. Although he has
inherited a strong economy that has added 1.29 million jobs this year,
his promises of an ambitious legislative agenda have been derailed by
the failure of a healthcare bill and the lack of a detailed plan for tax
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Trucks wait in the queue for border customs control to cross into
U.S. at the Bridge of Americas in Ciudad Juarez, Mexico, August 15,
2017. REUTERS/Jose Luis Gonzalez
Weighing heavily over the talks is the upcoming 2018 Mexico presidential
election. Mexico has urged all sides to complete the negotiations before
the campaign ramps up in February to avoid it becoming a political
AN "AMBITIOUS" FIRST ROUND
This week's talks will be led by U.S. Trade Representative Robert
Lighthizer, Canadian Foreign Minister Chrystia Freeland and Mexican
Economy Minister Ildefonso Guajardo. Each side is expected to make
remarks at the start of the talks being held at a historic Washington
The first round of meetings, which is expected to last until Sunday,
will largely be administrative and focus on merging proposed texts from
all three sides, according to a senior U.S. trade official, speaking to
reporters on the eve of the talks.
The official said the sides were aiming for an "ambitious" first round
The United States has made lowering the $64 billion U.S. trade deficit
with Mexico its top priority in the NAFTA talks, although trade experts
argue that such a goal will not be achieved through trade deals but
rather by boosting savings.
It also wants to strengthen NAFTA's rules of origin, which specify how
much of a product's components must originate from NAFTA countries.
One of the most contentious issues in the talks is likely to be over the
"Chapter 19" mechanism requiring the use of binational panels to settle
anti-dumping and anti-subsidy disputes, which the Trump administration
wants to eliminate because the rulings often go against the United
Canada's Freeland suggested on Monday that Canada would walk away from
the talks if the United States insisted on scrapping the mechanism.
Mexico has said its NAFTA goals are free access for goods and services,
greater labor market integration and a strengthening of energy security.
(Reporting by Lesley Wroughton and David Lawder; Additional reporting by
David Ljunggren; Editing by Leslie Adler)
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