On July 17, 2017, U.S. Trade Representative (USTR) Robert Lighthizer released the Trump Administration’s objectives for the renegotiation of the North American Free Trade Agreement (NAFTA). An overarching objective for the Trump Administration is to improve NAFTA for American manufacturers and workers. Upon the release of USTR’s renegotiation objectives, Ambassador Lighthizer stated that “[t]oo many Americans have been hurt by closed factories, exported jobs, and broken political promises. . . . We will seek to address America’s persistent trade imbalances, break down trade barriers, and give Americans new opportunities to grow their exports.”
In an introduction to its objectives, USTR explains that the U.S. economy and U.S. trade relationship are significantly different than they were when NAFTA went into effect in 1994. According to USTR, while NAFTA has provided significant benefits to many Americans, NAFTA “also created new problems for many American workers. Since the deal came into force in 1994, trade deficits have exploded, thousands of factories have closed, and millions of Americans have found themselves stranded, no longer able to utilize the skills for which they had been trained.”
The first specific negotiating objective listed by USTR is to “[i]mprove the U.S. trade balance and reduce the trade deficit with the NAFTA countries.” Specifically regarding industrial goods, USTR seeks to maintain existing duty-free access and “strengthen disciplines to address non-tariff barriers that constrain U.S. exports to NAFTA countries.” Among many other objectives, USTR also aims to “[p]reserve the ability of the United States to enforce rigorously its trade laws, including the antidumping, countervailing duty, and safeguard laws.”
In addition, USTR hopes to eliminate the dispute settlement mechanism (currently contained in Chapter 19 of NAFTA) through which a NAFTA country (Canada, Mexico, or the United States) may appeal another NAFTA country’s determination in an antidumping or countervailing duty investigation to an arbitration panel instead of the domestic courts. It is possible that the other NAFTA parties could oppose this negotiating objective. For example, Canadian Prime Minister Justin Trudeau recently stated that “a fair dispute resolution system is essential for any trade deal that Canada signs onto, and we expect that that will continue to be the case in any renegotiated NAFTA, that we will continue to have a fair dispute resolution system.”
In addition to the desire to modify existing NAFTA provisions, USTR’s announcement also indicates that the United States will seek to negotiate entirely new provisions in any revised NAFTA. These include objectives on combating corruption, protecting digital trade in goods and services and cross-border data flows, and ensuring that NAFTA countries do not manipulate their currencies.
In July, USTR also announced that the first round of NAFTA renegotiation will occur from August 16 to August 20 in Washington. According to Secretary of Commerce Wilbur Ross, the renegotiation process may continue into 2018. Since Ambassador Lighthizer notified Congress in May that President Trump intended to begin the renegotiation process, Congress also has been actively involved in gathering information regarding the Administration’s renegotiation efforts and objectives. Congress already held hearings on NAFTA with Ambassador Lighthizer in June, and the House Ways and Means Committee held a hearing on July 18 regarding the modernization of NAFTA in which stakeholders from various industries participated. Congress will certainly continue to hold hearings to seek information from, and engage in ongoing discussions with, USTR about the renegotiation of NAFTA.
