Donald Trump administration outlines new NAFTA goals

As Prime Minister Justin Trudeau reminded the National Governors Association last Friday, Canada is the largest customer of two-thirds of American states and “buys more from the US than China, Japan and the United Kingdom combined”.

“If you have a concern with dairy in Wisconsin or softwood lumber in the Pacific Northwest you are going to say, ‘Hmm, I want that in the negotiations, ‘” he said. The U.S. didn’t have a deficit with Canada past year.

While wanting to provide “reasonable adjustment periods for USA import sensitive agricultural products”, USTR said they would also seek to engage in “close consultation with Congress on such products before initiating tariff reduction negotiations”.

Unlike those who advocate for cheaper products and tariff-free commerce, they’re speaking out for the blue-collar workers on both sides of the Rio Grande who say they have been devastated by the trade agreement.

The United States said its top priority for the talks was shrinking the U.S. trade deficit with Mexico and Canada, a recurring complaint of U.S. President Donald Trump. The trade deficit with Canada hit a high in 2008, while the trade gap with Mexico almost reached $75 billion in 2007.

Mexico’s government didn’t immediately respond to the Trump administration’s negotiating objectives.

“It is very consistent with the president’s stance on liking trade barriers, liking protectionism”, Chad Bown, a senior fellow at the Peterson Institute for International Economics, told the New York Times.

Noting that the nation’s trade balance with Mexico has gone from a $1.3-billion surplus in 1994 to a $64-billion deficit previous year – and that “market access issues” have arisen in Canada involving dairy, grain and other products – Lighthizer said the renegotiated deal will have as a specific goal lowering the national trade deficit and “break down barriers to American exports”.

On government procurement, the US wants more opportunities for American firms to bid on public projects, without offering reciprocity. The well-being of America’s trading partners wasn’t something candidate Trump seemed to care much about during the campaign. Indeed, the toned-down nature of the American objectives was taken as a sign that Canada’s intense outreach effort in the U.S.is already paying off. Investor state dispute settlement provisions must be eliminated.

Trump’s team is calling for the end of the NAFTA panel, which could allow it to apply tariffs more easily. Neither Canada nor Mexico will give up a dispute resolution mechanism of some type.

The Trump administration has held Canada’s feet to the fire in recent months over key trade files, imposing steep duties on softwood lumber exports, railing against Canada’s supply managed dairy system, and threating to impose a border adjustment tax.

The report calls for higher labor standards across all three countries.

Instead, it’s a document of compromise: It has a few controversial and Trumpian principles in it, but many of its propositions are standard fare for modern free trade agreements.