How to negotiate a trade deal
President Trump gave formal notice Thursday he will renegotiate NAFTA, the free trade deal between the US, Canada and Mexico.
Administration officials sent a letter to Congress that triggers a 90-day consultation period among the administration, Congress and business.
This means negotiations can begin at the earliest in August. This is the first step toward reshaping a trade deal that became law in 1994 and changed the face of trade in North America.
Trump has labeled NAFTA the worst trade deal in history. NAFTA took on a starring role during the election campaign last year, with Trump promising voters to either throw it out or renegotiate a deal he claims sent millions of US manufacturing jobs to Mexico.
"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," Commerce Secretary Wilbur Ross said in a statement Thursday.
Nonpartisan congressional research concluded in 2015 that NAFTA had not caused an exodus of jobs, nor was it a major job creator.
According to the US Chamber of Commerce, 14 million US jobs depend on trade with Canada and Mexico. Exports and imports between the three countries have boomed since NAFTA became law in 1994.
Mexican officials welcomed the Trump administration’s announcement Thursday. However, their tone on NAFTA was a little different.
"The trilateral agreement has been an immense benefit for all parties," Mexico’s economic ministry said in a statement. "Mexico reaffirms its willingness to update NAFTA."
Mexico’s Foreign Secretary Luis Videgaray Caso said Mexico is prepared to "make it better."
US lawmakers echoed a similar sentiment, expressing a desire to update NAFTA while recognizing its benefits.
"There is no question that NAFTA has been tremendously successful for American workers, farmers, and businesses," Kevin Brady, a Republican congressman from Texas, said in a statement. Brady leads the House Ways and Means Committee which will play a big role during negotiations.
Trump officials haven’t yet been specific about what they want to change in the deal.
A major hurdle was cleared last week when the Senate confirmed Trump’s top negotiator, Robert Lighthizer.
Trump’s decision to start the 90-day period comes a few weeks after he threatened to pull out of NAFTA. Early in his presidency he also threatened to use a 20% tariff against Mexican imports.
Negotiations will enter a very sensitive environment. Trump slapped a 20% tariff on Canadian lumber in April and Mexican officials have repeatedly warned him not to use tariffs, saying they would hit the US with tariffs too.