White House calls for changing, but not scrapping, NAFTA in draft letter

The Trump administration will seek many modest – but numerous – changes to the North American Free Trade Agreement, according to a draft of a letter sent last week to Congress, displaying a much more conventional approach to trade negotiation than the dramatic changes President Donald Trump had suggested he planned to seek.

The draft letter, first reported by The Wall Street Journal, suggests a much more diplomatic tone than President Trump has threatened to use during NAFTA renegotiations. It says, among other things, that the White House would look to strengthen cooperation under the World Trade Organization, an international group that the Trump administration had suggested in the past it might not abide by.

The draft letter also reinforces how Canada and Mexico are the U.S.'s two largest export markets and that the countries have "shared borders" and "shared goals, shared histories and cultures, and shared challenges."

NAFTA is a free-trade agreement that went into force in 1994 after the Clinton administration reached a deal with Canada and Mexico. NAFTA has dramatically expanded trade between the three countries, but Democrats and Republicans have said the agreement should be revisited and changed because they fear it has hurt U.S. workers. President Trump has complained that the trade agreement has allowed Mexico to take advantage of the U.S., causing an imbalance in the kinds of goods that are shipped across the border and luring away U.S. jobs in the process.

To renegotiate NAFTA, the White House must send a letter to Congress stating its intent, and the White House's Office of the U.S. Trade Representative began circulating a letter last week. The White House must formally notify Congress 90 days before it formally begins renegotiating the trade agreement, and when the letter is formally sent to Capitol Hill, that process will start.

"For reasons of scale alone, improving the NAFTA has the greatest potential to benefit the workers, farmers, and firms of the United States," the draft says, which was signed by Stephen Vaughan, the acting U.S. Trade Representative.

The eight-page letter outlines a number of categories where the U.S. will seek changes to NAFTA. They include things like "rules of origin" changes that would prevent companies from circumventing preferential duty rates. It would also seek to strengthen intellectual property rights and a commitment from Mexico and Canada not to impose customs duties on digital products.

Some of the proposed changes are generic and could be interpreted a number of different ways. The draft letter says, for example, that it would "address anticompetitive business conduct, and other competition-related matters, as appropriate."

Trump has said that if Mexico does not agree to the U.S.'s demands in the renegotiations, he would likely withdraw from NAFTA. But the letter does not include this threat and suggests that a reworked trade deal is possible.

"We are committed to concluding these negotiations with timely and substantive results for U.S. workers, consumers, businesses, farmers, and ranchers, keeping in mind U.S. priorities and negotiating objectives," the draft letter says.

Because the letter was just a draft, it will likely be changed before it is formally sent and received on Capitol Hill.