Washington – The Trump administration will seek changes to the North American Freed Trade Agreement allowing it to reimpose tariffs if a flood of imports from Canada and Mexico causes “a threat of serious injury” to U.S. industry, according a draft document sent to Congress.
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The administration also will seek to eliminate a requirement in the 23-year-old trade deal that anti-dumping and anti-subsidy disputes be settled via a special dispute panel. Some U.S. industries including lumber have complained that the mechanism is ineffective in stopping unfair subsidies.
The objectives are contained in a draft notification letter circulated by the U.S. Trade Representative’s office to members of Congress for review. The letter, seen by Reuters, is part of the legal process required to launch negotiations to revamp the NAFTA.
President Donald Trump called NAFTA a “disaster” throughout the 2016 election campaign, but the plan outlined in the letter would keep many of its provisions in place, including a settlement system for other disputes that circumvents local courts.
“The persistent U.S. deficit in goods trade with Canada and Mexico demands that this administration take swift action to revise the relationship to reflect and respond to new 21st century challenges,” Acting USTR Stephen Vaughn said in the letter, which is subject to revisions before it is finalized.
Another draft objective says the administration wants “to establish rules that require government procurement to be conducted in a manner that is consistent with U.S. law and the administration’s policy on domestic procurement preferences,”
This could allow for Trump’s “Buy American” plan, but also cause U.S. companies to lose business in Mexico and Canada.
The document also calls for protections of digital trade and commerce, tougher intellectual property enforcement and requirements that state-owned companies operate in a commercial fashion.
The draft proposal is subject to revision, and the administration must give Congress 90 days’ notice under trade law before beginning formal NAFTA renegotiations.
Trump has long vilified NAFTA as draining millions of manufacturing jobs to Mexico, and he has vowed to quit the trade pact unless it can be renegotiated to shrink U.S. trade deficits.