From the campaign trail, to stump speeches across the country since his election, President Trump’s made clear what he thinks of the North American Free Trade Agreement, known commonly as NAFTA.
“NAFTA was the worst trade deal in the history of this country,” the president told an audience in Monessen, Pa., back in June 2016.
He echoed that sentiment in April 2017 in Wisconsin when he called NAFTA a “disaster for the United States,” and again this month in a Wall Street Journal interview, when he promised to terminate the agreement if the U.S. couldn’t secure a better deal.
But the administration’s aggressive approach to the talks has set off shockwaves of concern from Mexico City to Ottawa that the United States might soon abruptly end the 24-year old agreement.
”While we hope for the best, we look for win-win outcomes. we also need to be very clear that we will defend our national interest,” Canadian Foreign Minister Chrystia Freeland said.
The Trump administration has dispatched U.S. Trade Representative Robert Lighthizer to all five rounds of negotiations between the parties, talks that will continue this month.
The U.S. has proposed that a revised NAFTA include:
* lower trade deficits
* eliminate unfair subsidies
* end the dispute resolution panel
* sunset the deal every five years pending re-approval
* update the rules of origin
The latter, for example, would have a major impact on the U.S. auto industry.
Currently under NAFTA, at least 62 percent of the material in a car or light truck made in the region must be from North America to be able to enter the marketplace tariff-free.
The Trump administration has proposed increasing that minimum to 85 percent, with 50 percent made in the United States.
Canada appears poised to fight fire with fire. The country filed a 32-page complaint to the World Trade Organization in December accusing the U.S. of nearly 200 examples of what it deemed unfair trade practices. Lighthizer called it “an ill-advised attack.”
He added, “Canada’s claims are unfounded and could only lower U.S. confidence that Canada is committed to mutually beneficial trade.”
Mexican officials have warned they’ll leave the NAFTA negotiating table if President Trump decides to trigger the 6-month process to withdraw from the trade pact.
However, pulling out of NAFTA could prove costly to the American economy. Government figures estimate the U.S. has enjoyed a $1 billion trade surplus in agricultural goods with Canada alone.
Keenly aware of the tempest and its potential impact on his country’s economy, Canada’s Ambassador to the United States David MacNaughton has been eager to extol the virtues of free trade, even if it might require a few tweaks to satisfy the parties.
“Canada is actively engaged in modernizing NAFTA so that together we can create more jobs, grow our economies and secure better benefits for workers across North America,” MacNaughton said, adding that almost 9 million U.S. jobs depend on trade and investment with Canada.
As the parties prepare for the next round of talks set to begin in Montreal on January 23, Congressional Republicans from U.S. border states whose economies depend on trade — and some U.S. automakers who build their products in all three countries — are urging the administration to modernize NAFTA, not end it. A unified appeal gaining momentum, just as the White House considers its next move.