Eighteen-page list of objectives released by White House only offers broad remedies
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By Gina Chon
WASHINGTON (Reuters Breakingviews) — Donald Trump’s fuzziness over his NAFTA demands should give mediators some wiggle room. The U.S. president wants to cut trade deficits with Mexico and Canada and strengthen rules for products made in North America. But his trade representative is offering few details on how to accomplish those goals, while cribbing other ideas from the ditched Trans-Pacific Partnership.
Attacking NAFTA was one of the mainstays of Trump’s presidential campaign — and his first six months in office. He has attacked companies that opened factories in Mexico to make products for sale in the United States. And he has threatened to impose a 35 per cent tariff on cars imported from south of the border. He has also disparaged what he believes is Canada’s anti-competitive dairy market and has already imposed anti-dumping duties on softwood lumber imports.
The 18-page list of objectives released by the White House on Monday only offers broad remedies. For example, to reduce trade deficits, the United States wants to “improve competitive opportunities for exports of U.S. textile and apparel products.” On another key provision, the goal is to “ensure the rules of origin incentivize the sourcing of goods and materials from the United States and North America.” Current rules require that 62.5 per cent of North American-made vehicles originate from NAFTA countries.
Several of the recommendations are similar to provisions in the TPP, which Trump also lashed out at and pulled out of soon after taking office. The trade deal, which involved 12 countries including Canada and Mexico, called for prohibiting discrimination against online data and allowing such information to flow freely. U.S. Trade Representative Robert Lighthizer has now adopted this as part of the NAFTA goals.
One area that will be contentious is a suggestion to eliminate a trade-dispute mechanism that allows parties to appeal trade penalties before an independent, binational body instead of in a domestic court. Critics say that mechanism infringes upon a country’s sovereignty.
Overall, though, Trump’s NAFTA objectives steer clear of specific recommendations that could box in negotiators. That gives more latitude to dealmakers on all sides, who are under domestic political pressure to not cave in to one another. It may increase the chance of striking a decent deal for all parties.
CONTEXT NEWS
• U.S. Trade Representative Robert Lighthizer on July 17 released a summary of objectives for the upcoming renegotiation of the North American Free Trade Agreement with Mexico and Canada.
• The goals include reducing trade deficits with NAFTA countries, strengthening rules of origin to ensure the pact’s benefits aid products that are made in North America and increasing market access for telecommunications and financial services.
• The objectives also call for eliminating a NAFTA chapter that allows countries to appeal trade penalties in an independent, international legal forum known as the investor-state dispute settlement. It’s an alternative to a review before domestic courts.
• The goals also include some provisions that were in the Trans-Pacific Partnership, a trade deal with 12 countries including the United States. President Donald Trump pulled the United States out of that pact shortly after he was elected. The NAFTA objectives include a provision prohibiting discrimination against online data and allowing such information to flow freely. NAFTA talks are set to begin after Aug. 16.
