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5/19/2017 7:00:00 AM Write a Letter to the Editor Write a letter to the Editor

US Strikes Gentler Tone on NAFTA as Talks Countdown Begins

President Donald Trump’s top trade negotiator came out of the gate sounding like he wants to fine-tune the North American Free Trade Agreement, not blow it up as some feared.

During the election campaign, Trump called the trade deal with Mexico and Canada a “disaster” that cost millions of U.S. jobs and hollowed out the manufacturing sector. A few weeks ago, he was weighing whether to pull out of the deal entirely.

But his new trade representative, Robert Lighthizer, struck a more dovish tone May 18 in serving notice to Congress of the administration’s intention to renegotiate the accord. Lighthizer noted the deal has been a success for some U.S. industries, such as agriculture, investment services and energy. The veteran trade lawyer said the U.S. would prefer to keep the three-way structure, a notable comment from an administration that has denounced multilateral deals as unwieldy.

Meanwhile, the letter he sent to lawmakers to kick-start consultations omitted many of the thorny points cited in an earlier draft, such as leveling the playing field on tax treatment and bulking up “Buy America” procurement provisions — goals that might meet stiff resistance from Canada and Mexico.

“It suggests they want to modernize and update the agreement, rather than doing a complete makeover,” said Wendy Cutler, managing director of the Asia Society Policy Institute. While the U.S. goal of reaching a new deal this year is ambitious, it’s not unrealistic if it doesn’t seek to radically change NAFTA, said Cutler, who served as senior U.S. negotiator on the 12-nation Trans-Pacific Partnership agreement.

Trump early in his presidency ended America’s participation in the TPP, which the Obama administration hadn’t been able to persuade Congress to approve.

A quick turnaround on NAFTA would be a much-needed win for the embattled president, who learned that former FBI director Robert Mueller will investigate Russia’s role in the 2016 election and possible links to the Trump campaign.

America’s NAFTA partners welcomed the strategy of modernizing rather than scrapping the trade pact. Canadian Foreign Affairs Minister Chrystia Freeland said talks will provide an opportunity to “align NAFTA to new realities,” while her Mexican counterpart Luis Videgaray said the three countries can reshape NAFTA “under a win-win framework.”

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By Bloomberg News


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