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News > World

Trump Administration Triggers NAFTA Renegotiation

  • Semi trucks headed for Windsor, Ontario, exit onto the lane towards the Ambassador bridge in Detroit, Michigan, April 26, 2017.

    Semi trucks headed for Windsor, Ontario, exit onto the lane towards the Ambassador bridge in Detroit, Michigan, April 26, 2017. | Photo: Reuters

Published 18 May 2017

"Many chapters are outdated and do not reflect modern standards," U.S. trade representative Robert Lighthizer said.

U.S. President Donald Trump’s administration formally notified Congress Thursday of its intent to renegotiate the North American Free Trade Agreement with Canada and Mexico in an effort to "modernize" the 23-year-old trade pact. 

Trump Backs Down on Threats to Leave NAFTA

In a letter sent to congressional leaders, U.S. trade representative Robert Lighthizer said a 90-day consultation period is triggered, during which they will consult with "Congress and American stakeholders to create an agreement that advances the interests of America’s workers, farmers, ranchers, and businesses."

Formal talks with Canada and Mexico will begin by Aug. 16. 

Renegotiation of NAFTA was a key campaign promise of Trump, who has referred to NAFTA as a "disaster" and has contended that the trade agreement has resulted in the loss of millions of U.S. manufacturing jobs. 

Trump in late April had considered a full withdrawal of the U.S. from NAFTA, but was persuaded by senior officials in his administration to pursue negotiations instead.

"I received calls from the president of Mexico and the prime minister of Canada asking to renegotiate NAFTA rather than terminate. I agreed," Trump tweeted in April. "Subject to the fact that if we do not reach a fair deal for all, we will then terminate NAFTA. Relationships are good — deal very possible!"

Lighthizer said in a conference call with reporters that NAFTA has been successful for U.S. agriculture, investment services and the energy sector, but not for manufacturing.

"As a starting point for negotiations, we should build on what has worked in NAFTA and change and improve what has not," Lighthizer said. "If renegotiations result in a fairer deal for American workers there is value in making the transition to a modernized NAFTA as seamless as possible."

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In his letter to congressional leaders, Lighthizer pointed out that NAFTA hadn’t kept up with the changes in the economy and business over the last 25 years. 

"Many chapters are outdated and do not reflect modern standards," Lighthizer said.

The administration will aim to introduce additional provisions to address issues like digital trade, intellectual property rights, labor and environmental standards, rules for state-owned enterprises and food safety standards.

"As the president has said, we are going to give renegotiation a good strong shot," Lighthizer told reporters.

Both Canada and Mexico have said they are ready to support the effort to update NAFTA, which has been praised for boosting industry and creating tight manufacturing and business links throughout the region.

Mexico’s Economy Ministry released a statement welcoming the announcement and affirmed its “willingness to modernize NAFTA to face the challenges of the 21st century.”

According to the Center for Economic and Policy Research, Mexican poverty has risen since the deal's implementation in 1994 as economic growth and real wages stagnated while nearly 5 million family farmers were displaced, propelling Mexico's poor toward migration to the United States — crucial drivers of social instability and unrest.

Chrystia Freeland, Canada’s foreign minister, told parliament in Ottawa on Wednesday, “What Canada has said from day one is that we are ready to come to the table any time.”

But both countries are having trade issues with the U.S. that may shadow future talks. Earlier this year, the Trump administration imposed tariffs on imports of Canadian lumber and it is now engaged in sensitive negotiations with Mexico over imports of Mexican sugar.

Lighthizer said he hoped that those issues would be settled under separate negotiations being conducted by the U.S. Commerce Department before the NAFTA talks begin.

He added that he hopes to complete negotiations by the end of 2017.

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