U.S. Seeking a Trade Deficit Reduction in Early NAFTA Talks and Not Much Else

Matt Posky
by Matt Posky

Despite President Trump having initially framed his proposed NAFTA renegotiations as a hardline “America First” endeavor, the administration’s stance has soften significantly. In a recent summary of objectives, U.S. Trade Representative Robert Lighthizer highlighted fairness as the key issue throughout.

Absent were any mention of abandoning the deal if certain conditions were not met and the steep tariffs previously alluded to by the president. In fact, any mention of tariffs specifically targeted their reduction or elimination — for both imported and exported goods. There are, however, numerous examples that reaffirm the Trump administration’s earlier objectives and a handful of inclusions that should please domestic automakers.

The biggest of these is a streamlining of the regulatory practices between participating countries, something manufacturers have wanted for quite some time. While the White House has pressed for deregulation in the United States, automakers have more to gain though uniform regulatory practices between countries. One of the first items in the summary states the importance of promoting “greater regulatory compatibility with respect to key goods sectors to reduce burdens associated with unnecessary differences in regulation, including through regulatory cooperation where appropriate.”

With the automotive industry existing as one of the most heavily regulated industrial businesses on the planet, it isn’t difficult to surmise who Lighthizer is targeting.

Matt Blunt, president of the American Automotive Policy Council, a group representing U.S. automakers, told Reuters the regulatory streamlining would be a boon to automakers. He also said the summary’s focus on eliminating currency manipulation was a worthwhile endeavor.

A statement from Ford Motor Company echoed Blunt’s assertion: “Foreign currency manipulation is the 21st century trade barrier, and we strongly support the inclusion of this top-tier issue in the U.S. negotiating objectives for NAFTA.”

However, currency manipulation hasn’t been much of an issue between the North American partners — indicating that the NAFTA renegotiation is an attempt at being proactive, or will serve as a framework for whatever replaces the Trans Pacific Partnership Agreement.

Also included in the summary are numerous references to bringing labor provisions into the center of the agreement, in the hope that member countries legally adopt standards as recognized in the ILO Declaration. That includes the abolishment of all child labor and the right to organize without fear of repercussion. It also discusses holding participating countries accountable for providing fair minimum wages and worker safety without being explicit as to those guidelines.

While that’s all well and good, it does little to establish clear-cut boundaries or provide the sweeping changes that were initially promised. It does hint at minimizing the country’s trade deficit with Mexico — a double-edged sword, as it technically results in the U.S. having access to exceptionally affordable goods — but there’s nothing mirroring the president’s earlier tough talk.

On Monday, Trump promised to bolster U.S. manufacturing by reducing the $64 billion trade deficit with Mexico while showcasing products made in all 50 states. “No longer are we going to allow other countries to break the rules, to steal our jobs and drain our wealth,” Trump said from the White House’s South Lawn.

However, the summary makes very few strict demands — opting instead to “promote” fairness or “improve” industrial trade disparities. Depending on your politics, it may not have needed to either. But there is a clear distinction between the presidents stern rhetoric and what Lighthizer will be asking for.

If you’re interested, the full document is available on Office of the United States Trade Representative’s website for perusal.

Matt Posky
Matt Posky

A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.

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  • GoHuskers GoHuskers on Jul 19, 2017

    Yet another Trump lie.

  • Speedlaw Speedlaw on Jul 19, 2017

    H. Ross Perot called this one correctly. The Dems sold out their base with this one, which is why they listen to Donald, even though he could not care less like any real con man. The Union, democratic strongholds, main street USA, was gutted. I drive around all day in upstate NY, looking at small towns that used to have a factory and downtown, now they have a dollar store and rehab clinic. I wish I were exaggerating. My young adult world was way more fair overall than today....now get off my lawn !!!!

  • Corey Lewis Think how dated this 80s design was by 1995!
  • Tassos Jong-iL Communist America Rises!
  • Merc190 A CB7 Accord with the 5 cylinder
  • MRF 95 T-Bird Daihatsu Copen- A fun Kei sized roadster. Equipped with a 660cc three, a five speed manual and a retractable roof it’s all you need. Subaru Levorg wagon-because not everyone needs a lifted Outback.
  • Merc190 I test drive one of these back in the day with an automatic, just to drive an Alfa, with a Busso no less. Didn't care for the dash design, would be a fun adventure to find some scrapped Lancia Themas or Saab 900's and do some swapping to make car even sweeter. But definitely lose the ground effects.
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