The Trump administration sent a clear message to Canada and Mexico on Wednesday: we are not kidding around about fundamentally transforming the North American Free Trade Agreement (NAFTA).
“The views of the president about NAFTA, which I completely share, are well known,” U.S. Trade Representative Robert Lighthizer said. “I want to be clear that he is not interested in a mere tweeking of a few provisions and a couple of updated changes.”
Lighthizer’s remarks came at a press conference to kick off the first round of talks between the U.S., Canada, and Mexico to renegotiate the 25-year-old trade deal. But while Canadian and Mexican representatives emphasized the benefits of the trade alliance in their opening statements, Lighthizer said that NAFTA had “fundamentally failed” many Americans.
“We need to ensure that the huge trade deficits do not continue and we have balance and reciprocity,” Lighthizer said. He went on to say that the agreement had cost America hundreds of thousands of jobs.
Highlighting just how far apart the NAFTA nations are on trade, Canadian foreign minister Chrystia Freeland fought back against the U.S. emphasis on trade deficits. “Canada does not view trade surpluses or deficits as a primary measure of whether a trading relationship works,” she said in her opening statement.
Trade deficits, however, are likely to remain at the heart of the negotiations. Prior to the signing of NAFTA in 1994, the U.S. ran a small trade surplus with Mexico. The Clinton administration said at the time that the deal would lead that surplus to rise and would create 170,000 jobs in the U.S. But shortly after the agreement took effect, Mexican exports to the U.S. exploded higher, creating a traded goods deficit of nearly $16 billion in 1995. The U.S. has had a trade deficit with Mexico in every year since, for a cumulative total deficit of $991.8 billion. Last year, the trade in goods deficit was $64.4 billion.
Although the trade deficit with Canada is much smaller, over the past 10 years it has amounted to $365 billion, Lighthizer said at the meeting.
The meetings that began Wednesday are the first of several scheduled talks between now and the end of the year, when negotiators hope to have agreed on a new deal.
Trump made criticizing NAFTA a focal point for his campaign for the presidency, describing it as “the worst deal ever made in the history of the world.” Early in his presidency, Trump considered exiting NAFTA but eventually settled on calling for the deal to be renegotiated.