U.S. Will Renegotiate NAFTA, Talks Could Begin In August

The Trump administration formally notified Congress that it will renegotiate the North American Free Trade Agreement, setting the stage for talks to begin as soon as mid-August.

U.S. Trade Representative Robert Lighthizer informed key lawmakers of the plan to overhaul the 23-year old pact with Canada and Mexico in a brief letter Thursday, in which he listed a few broad-brush goals for the talks.

He also told reporters he expected the effort to lead to a successful renegotiation, rather than U.S. withdrawal from the pact, as President Donald Trump came close to doing last month.

“My hope is, my expectation is, that will not be necessary,” said Lighthizer, who was confirmed by the Senate just a week ago, during a call with reporters to announce the letter.

In the call, he said the United States favored keeping the trilateral structure of the pact, rather than negotiating separate bilateral deals with Canada and Mexico, an idea administration officials had previously floated. But that doesn’t mean all the negotiating sessions will have to be between the three countries, he added.

“The ambition is a trilateral agreement, but a lot of the talks will be bilateral,” he said.

Thursday’s letter starts the clock on a 90-day period for the U.S. trade representative to consult with lawmakers before any negotiations can begin. The timetable and the formal notification are requirements that must be met for any revamped trade deal to qualify for an up-or-down vote by Congress. The notification means talks with Canada and Mexico can’t begin before August 16.

The United States is under considerable pressure to wrap up the negotiations quickly. The Mexican presidential election season will be in full swing in January of next year, with the vote scheduled for June 18. After that, it will be tricky for Mexico to continue negotiations because the new president doesn’t take office until Dec. 1, Antonio Ortiz-Mena, who formerly served as the Mexican Embassy’s top economic affairs official in Washington, noted.

“It’s a long time. I just don’t see how Mexico will be able to continue to engage with the U.S.” during the months-long period between the election and before the new president is sworn in, said Ortiz-Mena, who is now a senior advisor at the Albright Stonebridge Group.

On Thursday, Lighthizer said he hoped they could complete the renegotiation by year’s end, a tight timetable by recent trade talk standards. The original negotiations for NAFTA built on a pre-existing trade bilateral deal with Canada that took 20 months to complete, according to the Peterson Institute for International Economics in Washington. Meanwhile, the talks to add Mexico took 18 months to complete.

But more recent trade talks have dragged on as the deals have tackled trickier issues such as intellectual property and digital trade. The Trans-Pacific Partnership, a 12-nation accord that was negotiated by the Obama administration and thrown overboard by Trump, took eight years to hash out, according to PIIE.

The administration is under pressure to act quickly and secure a win before next year’s congressional elections.

Trump’s vows to scrap or renegotiate NAFTA were a centerpiece of his campaign. He has faulted the agreement for shifting American factory jobs to Mexico. But the administration so far hasn’t said what changes it is proposing to bring those jobs back, and Thursday’s letter provided no clues. In fact, a draft letter the administration circulated on Capitol Hill earlier this year, before Lighthizer was confirmed, was far more detailed.

The letter stated the administration a new agreement to “support higher-paying jobs in the United States and to grow the U.S. economy by improving U.S. opportunities under NAFTA.”

Among the goals are adding provisions to address digital trade, intellectual property rights, customs procedures, phytosanitary standards for health and quality of livestock and produce, and labor and environmental standards, he wrote.

Photo credit: Mark Lyons / Stringer