Trump’s wish list for NAFTA set to come today


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NAFTA explained

President Trump hates America’s trade deals. But he hasn’t said what better deals would look like, or how he’ll bring jobs back from Mexico.

That should change on Monday. Trump’s U.S. trade representative, Robert Lighthizer, is expected to publish a list of goals for the upcoming renegotiation of NAFTA, the free trade agreement among Canada, Mexico and the United States.

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Trump made NAFTA his No. 1 trade target during his campaign for the White House.

“NAFTA is the worst trade deal maybe ever signed anywhere, but certainly ever signed in this country,” he said during the first presidential debate in September.

The president blames NAFTA for the loss of millions of jobs to Mexico, even though nonpartisan congressional research found that NAFTA had only a modest impact on the U.S. economy and didn’t cause an exodus of jobs.

Still, Trump credits the criticism of NAFTA in part for his victory, and renegotiating it is central to his pledge to bring jobs back.

Related: Trump seeks to renegotiate trade deal with South Korea

About 14 million U.S. jobs depend on trade with Canada and Mexico, according to the U.S. Chamber of Commerce. More than $1 billion in commerce crosses the southern and northern borders of the United States every day.

So a lot is on the line, and businesses in each country worry that Trump will impose tariffs or withdraw from the deal altogether if the talks go south. That could lead to a trade war.

Here’s what to watch for when the Trump administration releases its NAFTA wish list.

Related: Japan and European Union ink new trade deal

1. Bring back manufacturing jobs

Trump and his team have said they want to create jobs in the United States by changing a key provision in NAFTA called rules of origin.

For any manufactured product sold in the three countries, the rules say a certain percentage of the parts must come from those three countries. For example, for any car sold in North America, 62.5% of the parts have to come from Canada, the United States or Mexico.

Some trade experts believe Trump wants to raise that percentage to force car companies to use more parts from the United States. While that could generate jobs, experts say, it could raise car prices, too.

2. Close the U.S.-Mexico trade deficit

During the campaign, Trump often cited the U.S. trade deficit — $63 billion last year — and framed it as an indication of lost jobs and lost money.

Experts believe Trump may seek a clause in a new NAFTA that would require Mexico to balance the deficit, or at least bring the $63 billion closer to $0.

Many economists say Trump’s fixation on the trade deficit is misguided. A trade deficit with Mexico means American businesses and individuals bought more goods and services from Mexico than Mexicans bought from the United States. Deficits are no indication of lost jobs, companies or money.

Related: Spurned by Trump, China and Mexico talk up a trade deal

3. TPP lives

Trump quickly fulfilled a campaign promise in January when he pulled the United States out of the Trans-Pacific Partnership, another big regional trade agreement. The Obama administration had helped lead the talks for TPP.

Trump’s trade team says the principles of TPP could be revived in a new NAFTA. Commerce Secretary Wilbur Ross called certain aspects of TPP “the starting point” for a new deal with Canada and Mexico, though he didn’t specify which ones.

TPP included provisions to enforce higher labor standards, better environmental rules and tighter protections around intellectual property rights. Those could be woven into NAFTA.

4. The Amazon clause

NAFTA went into effect in 1994 — before cell phones, WiFi and Snapchat. There’s nothing in NAFTA about e-commerce.

As technology has evolved — and as shopping in all countries moves online — businesses like Amazon (AMZN, Tech30) and eBay (EBAY) have been left outside the NAFTA rulebook.

A new NAFTA could lower the trade barriers for those companies and bring them more business. For example, it could reduce the taxes that Mexican shoppers pay for buying from Amazon.

CNNMoney (New York) First published July 17, 2017: 12:29 PM ET


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