The United States adopted a hardline stance in Washington yesterday to kick off the talks to renegotiate the North American Free Trade Agreement (NAFTA).
U.S. Trade Representative Robert Lighthizer made it clear in his opening statement that President Donald Trump was not interested in “a mere tweaking of a few provisions” of the 23-year-old agreement.
“We feel that NAFTA has fundamentally failed many, many Americans and needs major improvements,” he said.
Lighthizer said 700,000 Americans have lost their jobs as a direct result of NAFTA, and stressed the need to address multibillion-dollar trade deficits with both Mexico and Canada. He also said that rules of origin, especially in the automotive industry, “must require higher NAFTA content and substantial U.S. content.”
Digital and energy trade as well as environment, labor and currency standards are also expected to be on the renegotiation agenda.
The tone set by Lighthizer did not surprise representatives of a 150-strong delegation from the Mexican private sector, who felt it was simply a reflection of the tough line President Trump has long adopted in his rhetoric on trade.
“We expected heavy-handedness because that’s how the language they’ve used has been,” said Enrique Guillén, president of the business chamber Canacintra.
President of the industry group Concamin, Manuel Herrera, was not surprised either: “. . . we had already heard those declarations and expressions from the U.S.,” while Business Coordinating Council (CCE) president Juan Pablo Castañón said that the worst-case scenario for Mexico would be withdrawal from the agreement but even that would not be catastrophic or provoke a recession as some analysts have warned.
Canada and Mexico both defended the agreement yesterday. Mexico’s chief negotiator, Economy Secretary Ildefonso Guajardo, said that NAFTA should be modernized to increase rather than decrease trade and it had to benefit all three countries.
“For a deal to be successful, it has to work for all parties involved. Otherwise, it is not a deal.”
Guajardo said the first round of talks will begin to shape a new agreement so that the formal negotiation process can begin in the second round, scheduled to be held in Mexico in early September.
He echoed the words of the business sector by saying that there were no surprises in the positions adopted.
He rejected a suggestion that Mexico was to blame for perceived problems with NAFTA, claiming instead that Mexico “has been part of the solution because by integrating us into value chains we have managed to maintain North America’s competitiveness with other regions of the world.”
Guajardo also said that without the value Mexico adds to regional integration, the impact of competition with Asia would have been much more disastrous on job creation.
Trade has quadrupled between the U.S., Mexico and Canada since NAFTA was introduced in 1994 with its value surpassing US $1 trillion in 2015.
The first round of talks will conclude on Sunday.