The Trump administration began talks Wednesday to reform the 23-year-old North American Free Trade Agreement, a negotiation that could boost U.S. business and fulfill one of the president's primary campaign promises — or end up jeopardizing the North American economy.
At stake is the legitimacy of President Trump, who criticized NAFTA as “the worst trade deal maybe ever signed anywhere” and campaigned on a pledge to renegotiate it. But also on the line are trillions of dollars of trade that flow through the North American economy. As talks have approached, American farmers, ranchers, retailers and representatives of other industries have warned the administration against disrupting the pact, fearful of losing the trading advantages that NAFTA gives them.
On Wednesday, U.S. trade negotiators confronted the challenge of translating Trump's campaign trail pledges into technical policy as they met Canadian and Mexican representatives for the first of several rounds of negotiation scheduled to take place before the end of the year.
In an opening statement, Robert E. Lighthizer, the Trump administration’s chief trade negotiator, said the United States would seek to preserve the pact’s advantages for American farmers and ranchers, but he emphasized that Trump would not be content with minor updates.
“I want to be clear that he is not interested in a mere tweaking of a few provisions and a couple of updated chapters,” Lighthizer said. “We feel that NAFTA has fundamentally failed many, many Americans and needs major improvement.” Among the U.S. goals he listed were reducing substantial trade deficits, manufacturing more goods in North America and improving standards for workers.
Trade experts described both Lighthizer, a deputy trade negotiator in the Reagan administration, and chief NAFTA negotiator John Melle as experienced negotiators. But they suggested that the United States may face more challenges in the NAFTA talks than the president’s statements have implied.
“There’s considerable political risk in reopening these negotiations,” said Cécile Shea, a senior fellow at the Chicago Council on Global Affairs and a former diplomat. “I’m not sure that the White House, which is not filled with a lot of people with international negotiating experience, is focused on that fact that Canada and Mexico will have demands.”
Like other agencies in the Trump administration, the Office of the U.S. Trade Representative, the body that negotiates trade agreements, still has numerous high-level vacancies. The USTR website shows that five important positions directly under Lighthizer have yet to be confirmed — including deputy U.S. trade representative posts and the chief negotiators for agriculture and intellectual property, key areas for the NAFTA negotiations.
Trade analysts noted that the administration has few negotiators with previous NAFTA experience. Trump has been so opposed to NAFTA and the Trans-Pacific Partnership that having prior experience with trade agreements is often viewed as a political liability for potential appointments, they said.
The administration may also be coming to the negotiating table with an informational disadvantage, analysts said.
The United States is renegotiating NAFTA under a legal provision known as Trade Promotion Authority, which allows U.S. negotiators to submit the agreement’s final text to Congress for a simple up or down vote, rather than voting on every provision of the deal. That law also requires U.S. negotiators to clearly lay out their goals for the public, as the administration did in a document released July 17.
That process means that Congress has been able to review and give guidance on the administration’s goals for NAFTA. But trade experts say it also creates a negotiating dynamic in which Mexico and Canada, which don't have such provisions, are entering the talks with more knowledge about what the United States needs to achieve politically than U.S. negotiators have about them.
In remarks Monday, Canadian Minister of Foreign Affairs Chrystia Freeland appeared to take a tough stance as she briefly outlined Canada’s main goals — including adding new provisions to protect the environment and the rights of workers, women and indigenous people, as well as preserving a mechanism for settling disputes that some U.S. industries have opposed.
Freeland mentioned an incident in U.S.-Canada trade negotiations in 1987 when a Canadian administrator walked out on the Reagan administration over a disagreement on the dispute settlement process. “Our government will be equally resolute,” Freeland said.
Negotiators will also face a particularly ambitious timeline. U.S. and Mexican officials have said they would like to conclude talks before the end of the year, well before Mexico’s next presidential election on July 1, 2018 — when NAFTA could become a contentious political issue.
Chip Roh, the former deputy U.S. chief negotiator of NAFTA, said the timeline will be hard to follow, given the size of the trade agreement. “It’s hard for me to see how you have a resolution that everyone can call a win-win in that time frame,” Roh said.
The United States' position as the largest economy in North America will give U.S. negotiators an advantage as they seek to reform the pact — a factor Trump has often mentioned in his vow to renegotiate NAFTA. Yet Canada and Mexico have been hedging that advantage by actively seeking out other free-trade agreements that would give them alternatives to the U.S. market, Shea said.
Mexico is negotiating a deal with the European Union, and Canada is exploring talks with China. Meanwhile, both Canada and Mexico are pushing forward with the Trans-Pacific Partnership, a pact with a dozen countries that Trump officially withdrew the United States from Jan. 23.
Mexico in particular has emphasized that it is exploring alternatives to the massive supply of grain and other agricultural goods that U.S. farmers send south of the border. “We’ve said that Brazil and Argentina are two of the big markets that we’re looking at, especially for grains and other basic supplies that come from the United States,” Moisés Kalach, the international negotiations coordinator of the Mexican private sector, said Wednesday. “We need to be open to make sure we have Plan B, Plan C, Plan D.”
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