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Trump Administration Wants to Start Process of Renegotiating NAFTA

The Trump administration formally informed Congress Thursday of its intention to renegotiate the North American Free Trade Agreement.
Mexico's resigning Secretary of Finance Luis Videgaray (R) and the new secretary Antonio Meade (L), during during a press conference at the Palacio Nacional in Mexico City on September 7, 2016.ALFREDO ESTRELLA / AFP - Getty Images

The Trump administration formally informed Congress Thursday of its intention to renegotiate NAFTA, the North American Free Trade agreement, with Canada and Mexico — which President Trump frequently attacked as a candidate, calling it "defective," "a total disaster" and the "worst trade deal maybe ever signed anywhere."

Secretary of Commerce Wilbur Ross praised the announcement which came from the newly confirmed U.S Trade Representative Robert E. Lighthizer.

“With this letter, we intend to notify not just congress, but all our trading partners, that free and fair trade is the new standard for U.S. trade deals. Since the signing of NAFTA, we have seen our manufacturing industry decimated, factories shuttered, and countless workers left jobless. President trump is going to change that."

In the course the of more than 20 years since its signing, NAFTA has negatively impacted some parts of the country but it has also benefited others. Overall the trade deal's effects on the U.S. economy have been minimal, according to a report put out by the nonpartisan Congressional Research Service in February.

"NAFTA did not cause the huge job losses feared by the critics or the large economic gains predicted by supporters," the report said. "The net overall effect of NAFTA on the U.S. economy appears to have been relatively modest primarily because trade with Canada and Mexico accounts for a small percentage of U.S. GDP."

The decision to start the 90-day clock to begin negotiations over the deal marks the third time that the President has made a contentious announcement ahead of discussions between the U.S. and Mexico. Thursday’s notification came just as Secretary of State Tillerson and Homeland Security Secretary Kelly were hosting their Mexican counterparts in Washington for high level conversation on drug trafficking.

Mexican Foreign Secretary Videgaray opened his remarks at the joint press conference addressing the elephant in the room before moving on to discuss the real subject of the talks.

“We understand this is a 25 year-old agreement,” said Videgaray. “Since it was negotiated the world has changed, we have learned a lot and we can make it better.”

Secretary Tillerson told reporters there is much more to the U.S. Mexico dynamic than NAFTA and “the wall does not define our relationship.”

“Obviously trade is an important, extremely important issue,” said Tillerson. “I think it does demonstrate a sincere effort on the part of the President.”

Since President Trump first took office both Mexican President Nieto and Canadian President Trudeau expressed fierce support of the existing trade agreement but Thursday’s decision to renegotiate is a significant step back from the President’s initial call for its termination.

Earlier in the week, 18 senators wrote a letter to U.S Trade Representative Lighthizer agreeing that NAFTA “will benefit from strengthening and modernization,” but warning that abandoning the agreement “will have devastating economic consequences.”

The final notice sent Thursday by Lighthizer to Congress described the negotiations with Mexico and Canada as a “modernization” of the trade deal.

“NAFTA was negotiated 25 years ago, and while our economy and businesses have changed considerably over that period, NAFTA has not,” the letter reads. “Many chapters are outdated and do not reflect modern standards.”

Lighthize pledges to work closely with Congress throughout the negotiations and commits to providing “timely and substantive results for U.S. consumers, businesses, farmers, ranchers and workers.”