U.S. makes lower trade deficit top priority in NAFTA talks

Reuters

WASHINGTON (Reuters) – The United States on Monday launched the first salvo in the renegotiation of the 23-year-old North American Free Trade Agreement (NAFTA), saying its top priority for the talks was shrinking the U.S. trade deficit with Canada and Mexico.

In a much-anticipated document sent to lawmakers, U.S. Trade Representative Robert Lighthizer said he would seek to reduce the trade imbalance by improving access for U.S. goods exported to Canada and Mexico under the three-nation pact.  

For the first time in a U.S. trade deal, the administration also said it wants an “appropriate” provision to deter currency manipulation by trading partners. The move appeared aimed at future trade deals rather than specifically at Canada and Mexico, which are not considered currency manipulators.

The 17-page document asserted that no country should manipulate its currency exchange rate to gain an unfair competitive advantage, an often-cited complaint about China in past years.

Shortly before the release of the document, President Donald Trump lashed out against trade deals and unfair trade practices, saying he would take more legal and regulatory steps during the next six months to protect American manufacturers. {ID:nL1N1K81D1]

Canadian Minister of Foreign Affairs Chrystia Freeland said the U.S. list was “part of its internal process” although a source familiar with Canadian government thinking said the document was “not earth shattering.”

Trade experts have argued that shrinking the yawning U.S. trade deficit will not be achieved by revising trade deals but rather by boosting U.S. savings.

“The first bullet point shows their preoccupation with bilateral trade deficits, and that’s unfortunate,” said Chad Brown, a senior fellow and trade expert at the Peterson Institute for International Economics. “There’s not much that trade policy and trade agreements can do to change those. That’s more of a macroeconomic issue.”

http://www.reuters.com/article/us-usa-trade-nafta-statement-idUSKBN1A2272