Mexico, US and Canada start first round of NAFTA renegotiations

16 August, 2017

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Government officials from the U.S., Mexico and Canada met in Washington, D.C., this Wednesday for the first of seven rounds of renegotiations of the North American Free Trade Agreement (NAFTA).

U.S. Trade Representative Robert Lighthizer welcomed his Canadian and Mexican counterparts to Washington, D.C., for what he called a historic day.

In an opening statement, the U.S. official acknowledged that NAFTA has benefited some Americans, like farmers and ranchers who found new markets for their goods in Canada and Mexico. However, he also said the deal had "fundamentally failed many, many Americans and needs major improvement," adding that the deal “had cost hundreds of thousands of jobs”.

"The views of the president about NAFTA, which I completely share, are well-known," he added. "I want to be clear that he is not interested in a mere tweaking of a few provisions and a couple of updated chapters."

The agreement went into effect in 1994 eliminating tariffs on most goods traded among the three countries. But some key issues on today’s economy like E-commerce and digital rights have made some of those rules obsolete.

Contrary to Lighthizer’s tone, his foreign counterparts characterized the deal as positive. Canadian Foreign Minister Chrystia Freeland highlighted economic benefits to both her country and the U.S., while Mexican Secretary of the Economy Ildefonso Guajardo called the agreement a "strong success for all parties," as he cautioned against “tearing apart” the aspects of the accord that have worked.

“To be successful, it has to work for all parties involved, otherwise it’s not a deal,” Guajardo said.

The statements included subtler hints of differences already manifesting themselves before the negotiations. For example, Freeland characterized the trade deficit between Canada and the U.S. as "balanced," but stressed that her country doesn't focus heavily on these numbers: "Canada doesn't view trade surpluses or deficits as a primary measure of whether a trading relationship works."

Lighthizer, meanwhile, lamented the U.S. trade deficit with Canada and gave a 10-year count of the deficit, which is at US$ 365 billion. The deficit with Canada just last year, however, was around US$ 11 billion.

Round one of the negotiations begins with comparatively basic organizational issues. The countries will table their own texts, to be merged quickly into one new document which will become the backbone of a new agreement.

Brackets will be left around questions that remain undecided. And over the course of negotiating rounds this week in Washington, next month in Mexico and the following month in Canada, negotiators will attempt to strike a deal in record time before next summer’s Mexican election.

Analysts say it’s a historically fast timetable yet achievable, because the countries know each other so well from numerous negotiations, including NAFTA, the Trans-Pacific Partnership, and the World Trade Organization.

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