Washington is hosting the first round of re-negotiations for the North American Free Trade Agreement or NAFTA. It’s the first time in history that a wide-ranging, free trade agreement is being re-worked. Washington’s top trade negotiator said U.S. President Donald Trump wants major revisions.
CGTN’s Jessica Stone reports.
“I want to be clear that he is not interested in a mere tweaking of a few provisions and a couple of updated chapters. We feel that NAFTA has fundamentally failed many, many Americans and needs major improvement,” said Robert Lighthizer, the U.S. Trade Representative.
The Mexicans and Canadians said what the agreement really needs is modernization.
“The issue is not tearing apart what it has worked, but rather, how we can make our agreement work better,” said Mexican Economy Minister, Ildefonso Guajardo.
Canada, and Mexico are seeking small changes to NAFTA.
“We pursue trade free and fair, knowing it’s not a zero-sum game,” said Chrystia Freeland, Canadian Foreign Minister.
But Washington seeks to use the talks to reduce its trade deficits with both neighbors. Last year, the U.S. had a goods trade deficit of $11 billion with Canada, and $64 billion with Mexico.
But many economists have argued the best way to reduce trade deficits is to cut U.S. government spending—not to renegotiate a trade deal.
Millions in North America have a lot riding on the results.
“We have seen how some regions in Mexico have practically achieved full employment,” Juan Pablo Castonon of The Business Coordinating in Mexico said. “We want to see how to continue this free-trade model with high competitiveness in our three countries as a region.”
Farmers have a stake in the outcome, too.
“I represent dried beans and we have definitely benefited with our trade with Mexico,” said Cindi Allen of Allen Farms. “And other farmers have benefited with their trade with Canada and beef.”
“We have a very, very stable market,” Yves Leduc of Dairy Farmers of Canada said. “We feel it’s important to maintain the stability so that’s essentially the challenge that we are facing here right now.”
Consumers could end up footing the bill for the most costly changes.
“Seventy-five percent of Canadian vehicles are exported to U.S. consumers, and so I think that this administration is smart enough to understand that at some point if you increase the pain point for Canadian to Mexican cost, those costs are gonna be borne by the end consumer,” said Flavio Volpe, Auto Parts Manufacturer’s Association of Canada.
A U.S. trade source tells CGTN that all parties will propose revisions and the talks wrap up Sunday. Then, two more rounds are expected next month in Mexico and Canada.
With NAFTA taking effect nearly a quarter century ago, negotiators said they need to upgrade the treaty’s labor and environmental standards and write new sections for digital commerce and currency.
Members of the Trans-Pacific Partnership did this. But the incentives for concessions were much greater under TPP because countries were opening up new markets. In this case, Canada, Mexico and the U.S. have already opened up many of their sectors for trade.