U.S. signals intent to renegotiate NAFTA

WASHINGTON, D.C. — The Trump administration has taken its first formal step toward renegotiating the 25-year-old North American Free Trade Agreement (NAFTA), notifying Congress of its intention to start negotiations with representatives of Canada and Mexico within 90 days.

The Trump administration's goal in renegotiating the treaty is to "support higher-paying jobs in the U.S. and to grow the U.S. economy by improving U.S. opportunities to trade with Canada and Mexico," according to the text of a letter sent to Congress by Robert Lighthizer, who heads the Office of the U.S. Trade Representative (USTR), which is part of the executive branch.

Negotiations will begin no earlier than Aug. 16. The USTR will publish a notice in the Federal Register requesting public input on the direction, focus, and content of the NAFTA negotiations.

Groups such as the National Association of Manufacturers (NAM) and Association of Global Automakers reacted positively to the news, while organizations such as Public Citizen and the United Steelworkers union fear that NAFTA renegotiation will be a back-door attempt to revive portions of the Trans-Pacific Partnership, which President Trump killed earlier this year after explicitly promising to do so during his campaign.

"Manufacturers are rolling up their sleeves to identify ways to modernize the 23-year-old NAFTA so the United States can be competitive in today's global economy," said Linda Dempsey, vice president of international economic affairs for NAM.

"The jobs of 2 million manufacturing workers depend on trade with Canada and Mexico. It's most important that we protect those jobs and use this opportunity to create more."

In response to the USTR letter, the Association of Global Automakers, a trade group represents the U.S. operations of international motor vehicle manufacturers, original equipment suppliers, and other automotive-related trade associations, said it supports the administration's efforts to update and plans to "work constructively" with the administration.

"While [NAFTA] has fostered economic integration throughout the region and enhanced our economic competitiveness," said John Bozzella, president and CEO of the trade group, "we recognize the need to modernize this agreement to address technological changes to better meet new market demands."

The office of USTR is responsible for developing and coordinating U.S. international trade, commodity, and direct investment policy, and overseeing negotiations with other countries. The head of USTR is the U.S. Trade Representative, a Cabinet member who serves as the president's principal trade adviser, negotiator and spokesperson on trade issues.

In terms of the tire industry, the U.S. exports more tires to Canada and Mexico than any other countries, and Mexico is the only major trading partners with which the U.S. has a trade surplus.

In 2016 Mexico took in $887.2 million worth of tires from the U.S. and exported $781.3 million to the U.S., yielding a trade surplus of $164.3 million, according to Tire Business' analysis of Department of Commerce figures.

Canada, on the other hand, exported more ($1.59 billion) to the U.S. than it imported ($701 million), yielding a trade deficit of $889 million.

The heads of the automotive aftermarket trade groups in Canada, Mexico and the U.S. — Automotive Industries Association of Canada, Asociación Nacional de Representantes, Importadores y Distribuidores de Refacciones y Accesorios para Automóviles, A.C. and Auto Care Association met recently and "reaffirmed a unified commitment" to NAFTA, noting that any changes to NAFTA could disrupt tightly integrated supply chains, thereby increasing production costs and affecting job growth.

Earlier, Center for Automotive Research published a report showing that showed NAFTA has been a net positive for the automotive industry and for the U.S. economy as a whole, supporting high-wage jobs and making North America a more attractive place to do business.