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USTR's Nafta objectives draw range of reactions

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The United States Trade Representative (USTR) will seek to boost exports and slice the country’s trade deficits, especially with Mexico, in its renegotiations of the North American Free Trade Agreement (Nafta), the USTR said in mid-July.

The USTR aims to bolster market access and exports for U.S. manufacturing, agriculture and services, both into Mexico and Canada, in the first major overhaul of a trade deal the U.S. has ever undertaken. “Too many Americans have been hurt by closed factories, exported jobs and broken political promises. Under President Donald Trump’s leadership, USTR will negotiate a fair deal,” USTR Robert Lighthizer
said in a statement

For industrial goods, the U.S. seeks to maintain “reciprocal duty-free market access,” while slimming non-tariff barriers, the USTR’s summary of objectives said. (By law, the USTR must release a set of negotiating objectives 30 days before actual talks, which were slated to start on Aug. 16).

Rules-of-origin laws should be strengthened to incentivize North American sourcing, while federal Buy America rules must be maintained.

The objectives also target currency manipulation in addition to seeking to boost the energy sector and expanding U.S. trade remedy law.

But business executives, labor representatives and lawmakers greeted the USTR’s objectives with mixed reviews in a July 17 hearing on Nafta renegotiations in the U.S. House Ways and Means’ subcommittee on trade.

Celeste Drake, the AFL-CIO union’s trade and globalization policy specialist, criticized the objectives as unspecific and unambitious. The AFL-CIO represents workers across industries, including mining, retail, agriculture and construction.

Some lawmakers argued that Trump’s negotiating objectives seemed virtually copied from negotiating goals for the Trans-Pacific Partnership (TPP) agreement, a deal that he actually shot down.

Ranking subcommittee member Bill Pascrell (D.-N.J.) called the USTR’s objectives “milk toast” and a recycled version of the “same old, same old,” with little evidence that its provisions would create jobs or grow wages.

Drake singled out Trump’s proposed trade remedy reforms as the most promising section, but reminded lawmakers that trade remedies only protect jobs. “Trade remedies can’t create jobs. They can only defend jobs that are being attacked by unfair trade practices,” she told
lawmakers.

“The objectives are not a radical retransformation of Nafta. They essentially look like tweaking around the edges, and much of it seems fully adopted from the trade negotiation objectives from the TPP,” she said.

The trade remedy section of potential interest to steelmakers, who file multiple trade cases, proposes measures to combat “third-country dumping” and duty evasion, and also establish “early warning” import monitors.

The USTR also proposes to eliminate Nafta’s “global safeguard exclusion” and its Chapter 19 dispute settlement system. The latter allows Nafta members review and overturn trade duties via a special, three-member panel and has been used in cases like Deacero SAPI de CV’s failed appeal of a U.S. reinforcing bar duty.

Some business executives and lawmakers stressed that renegotiation should “do no harm” and maintain the existing benefits
of Nafta while reworking certain sections for fresh benefits.

Many highlighted the dangers of scrapping Nafta. One rail executive cited 50,000 rail-related jobs directly dependent on North American trade. An energy executive also noted that 60 percent of U.S. natural gas exports land in Mexico.

Other organizations, such as the Coalition for a Prosperous America fair trade advocacy, chaired by former Trump trade
advisor Daniel DiMicco, hailed the USTR’s negotiation principles as the first coherent U.S. strategy on trade.

“Never before has a president prioritized reduction of the U.S. trade deficit in trade negotiations,” DiMicco, the coalition’s chairman and former chief executive of Charlotte, N.C.-based Nucor, said. “The Trump administration’s Nafta objectives for trade in goods importantly begins
with this goal as the top priority.”

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