US President Donald Trump has put the wheels in motion on a major trade shake-up, after his administration triggered the renegotiation of the North-American Free Trade Agreement on Thursday.
Gary Hufbauer, senior fellow at the Peterson Institute, says the United States could seek modest "technocratic" changes, including provisions to update NAFTA to reflect technologies that have emerged since the original agreement was negotiated.
In all three countries, NAFTA has meant a downward standardization of wages, labor rules, and environmental standards affecting workers and farmers across each border. "For example, digital trade was in its infancy when Nafta was enacted".
The U.S. can be expected to play hardball when the NAFTA negotiations begin, but its negotiators shouldn't expect Canada and Mexico to accept a deal that is counterproductive to their own economies.
Lighthizer told reporters that NAFTA has been successful for USA agriculture, investment services and the energy sector, but not for manufacturing.
The clock was set ticking today in a letter from U.S. Trade Rep. Robert Lighthizer.
The move launches a 90-day consultation period involving Congress, industry groups and US President Donald Trump's administration, after which time talks with NAFTA partners Canada and Mexico can begin, possibly as soon as mid-August. Negotiations are projected to be completed by the end of the year.
"We understand this is a 25 year-old agreement", said Videgaray.
US Commerce Secretary Wilbur Ross meanwhile said with the NAFTA announcement "we intend to notify not just Congress, but all our trading partners, that free and fair trade is the new standard for US trade deals".
"The agreement is trilateral and should continue to be a trilateral platform. Why? This is our position", he said, arguing that continent-wide supply chains should make North America the most competitive region in the world.
It also did not include the type of harsh rhetoric the president has used to describe NAFTA or the trade practices of Canada and Mexico in the past.
"NAFTA's track record is one of economic growth and middle-class job creation", Canada's minister of foreign affairs, Chrystia Freeland, said in a statement.
US wheat industry officials say renegotiating NAFTA could bring benefits, but they urge caution.
Trump has pledged to use the Nafta talks to shrink goods trade deficits that stood at $63 billion (€56.5 billion) with Mexico and $11 billion with Canada past year, according to United States census bureau data.
"Congress and the Administration must work hand-in-hand if we are to achieve the high-standard trade agreements our country needs to grow", Sen.
Democratic congressmen Richard Neal and Bill Pascrell Jr. said Lighthizer's Nafta letter was lacking in specifics and didn't appear to be seeking the "fundamental reform" that Trump promised during the election.