US adopts combative tone as talks begin on revamped Nafta

[WASHINGTON] President Donald Trump isn't looking for a "mere tweaking" of the North American Free Trade Agreement, and will be seeking a major overhaul to a deal he believes has failed Americans, Mr Trump's top trade official said as talks began with Mexico and Canada to revamp the accord.

"He is not interested in a mere tweaking of a few provisions and an updating of a couple chapters," US Trade Representative Robert Lighthizer said Wednesday in Washington. "We feel that Nafta has fundamentally failed many Americans and needs major improvements." Nafta has cost the US at least 700,000 jobs since the deal came into effect in 1994, Mr Lighthizer said. The US will seek improvements in a number of areas, including tighter rules-of-origin that dictate local-content requirements in products, stronger labor standards and guards against currency manipulation.

The Trump administration's tough tone contrasts with expectations among some experts that the US might merely seek to modernise Nafta along the lines of the Trans-Pacific Partnership, an accord with Asia-Pacific nations that Mr Trump withdrew from during his first week in office.

After agreeing on ways to modernise Nafta, Mr Lighthizer said the "tough work" will begin of delivering a better deal for American farmers, businesses, workers and families.

The start of talks Wednesday marks Mr Trump's first major step toward fulfilling his pledge to level the playing field for American workers and companies. While his administration has launched investigations into unfair trade practices and expanded export markets for certain US products such as beef in China, it is just now delving into what could prove a drawn-out process to redefine the parameters of a major trade pact.

Speaking alongside Mr Lighthizer, Mexican Economy Minister Ildefonso Guajardo said Nafta has been a "strong success for all parties," and he cautioned against "tearing apart" the aspects of the accord that have worked.

"To be successful, it has to work for all parties involved, otherwise it's not a deal," Mr Guajardo said.

He also reiterated that Mexico is looking for a deal in its own national interest, as some express concern a revamp will generally favour the US Mexican unions that say they've been left out of Nafta re-negotiations will march Wednesday in Mexico City.

Canada's Foreign Minister Chrystia Freeland reiterated the country's position that the trade agreement needs modernising, but said fundamentally it has benefited all three countries. The success of the pact shouldn't be viewed through the lens of trade gaps or surpluses, she said, while noting at the same time Canada's trade is largely balanced with the US.

"Canada's objectives are clear: We want to protect Nafta's record as an engine of job creation and economic growth. We will work to modernise Nafta to bring it up to date," she said. "We're going to work hard with our partners to make Nafta more progressive, particularly with regard to labour, the environment, gender and indigenous rights."

The opening remarks underscored the differences between the three countries: while the US is focused on protecting American workers and improving its trade balance, Mexico and Canada emphasised the need to preserve the broad gains of trade to all three nations.

Commerce Secretary Wilbur Ross has said he wants negotiations to wrap up by early next year before Mexico's July presidential election and midterm congressional elections in the US further politicise discussions. That may be a challenge, considering that historically it has taken years for presidents to negotiate and implement trade deals.

This week's initial talks, which are scheduled to wrap up on Sunday, will provide important clues on the timing, as a contentious beginning could set the stage for tough discussions to come.

BLOOMBERG