US comes out swinging at NAFTA renegotiations, lists reform demands

Aaron P. Bernstein | Reuters

United States Trade Representative Robert Lighthizer speaks at a news conference prior to the inaugural round of North American Free Trade Agreement renegotiations in Washington, U.S., August 16, 2017.

The United States, Canada and Mexico held a joint news conference in Washington on Wednesday, as discussions began to amend the 23-year-old North American Free Trade Agreement.

After statements from Canadian Minister of Foreign Affairs Chrystia Freeland and Mexican Secretary of Economy Ildefonso Guajardo Villarreal, U.S Trade Representative Robert Lighthizer presented a list of demands on behalf of the White House.

“I want to be clear, [President Donald Trump] is not interested in a mere tweaking of a few provisions and a couple of updated chapters,” Lighthizer said. “NAFTA has fundamentally failed many, many Americans and needs major improvement.”

The U.S. is entering the talks with the goal of reforming problems perceived by Trump, such as trade deficits, rules of origin, currency manipulation and market-distorting practices. Lighthizer went into what he, on behalf of the White House, expects to achieve during the renegotiations, beginning with trade balances among the three nations.

“We need to assure that the huge deficits do not continue, and we have balance and reciprocity,” Lighthizer said.

Rules of origin must change according to Lighthizer. The regulations stipulate how much of a final product may include non-NAFTA country components to qualify for NAFTA tariff benefits. Lighthizer put special emphasis “on autos and auto parts,” saying that a new agreement “must require higher NAFTA content, and substantial U.S. content” for products to qualify. A new accord must include a product’s country of origin is “verified, not deemed,” he said.

Lighthizer also said “labor provisions should be included in the agreement and should be as strong as possible,” referencing the White House’s complaint regarding U.S. jobs leaving the country.

“The agreement should have effective provisions to guard against currency manipulation,” Lighthizer added. “We should include provisions to guard against market-distorting practices of other countries, including third-party dumping and state-owned enterprises.”