NAFTA Negotiations

As you likely remember, Donald Trump called the North American Free Trade Agreement (NAFTA) the worst trade deal the United States has entered. During his presidential campaign, Trump argued he was going to end NAFTA. After the election, he toned down his argument, instead now arguing that he would renegotiate NAFTA, and if need be, he would end it. Starting on August 16, Canada, México and the United States will begin renegotiation talks.

Renegotiating NAFTA is governed by the trade deal itself. The talks will be governed by a policy announcement that the Trump administration gave Congress prior to the beginning of the talks. Publicly, Trump has said that he wants the talks to result in a lower trade deficits for the United States.

Although there is no set time table, political considerations both in the United States and in México makes it important that the negotiations be concluded by December. The United States will have the mid elections next year and México will also hold national elections. This makes it difficult for the trade negotiations to go past the beginning of the upcoming new year.

Although Donald Trump argued for harsh and strict renegotiation objectives to protect U.S. jobs and make trade more effective for the United States, the Office of the United States Trade Representative released the official U.S. government’s objectives.

The July 17, 2017 “Summary of Objectives for the NAFTA Renegotiation” document lists the objectives the United States is seeking for the NAFTA negotiations. Instead of the focused, Trump America First objectives, the United States has instead listed vaguely-worded objectives with little specificity and lots of room for interpretation.

Most importantly, there is no Donald Trump threat of pulling out of NAFTA, should the negotiations not result in the lessening of trade deficits or increasing wages in the U.S. Although wage disparity is vaguely listed, the U.S. objectives do not list specific levels nor standards that they wish to achieve.

The Democrats have already criticized the lack of job protection specificity in the objectives. Business leaders in the United States have sighed a sign of relief that Trump appears to have backed away from ending the trade agreement. They have issued statements applauding the administration’s apparent intent on keeping NAFTA in force.

Other than lower trade deficits, the Trump administration seems to have back peddled on ending NAFTA, and instead seems to be on the road to keeping it in force.