US takes tough lines as NAFTA negotiations begin

United States Trade Representative Robert Lighthizer, flanked by US Chief Negotiator John Melle and US General Counsel Stephen Vaughn, speaks at a news conference prior to the inaugural round of North American Free Trade Agreement renegotiations in Washington, US, August 16, 2017.[Photo/Agencies]

The United States on Wednesday laid down a tough line for modernizing the North American Free Trade Agreement, demanding major changes to the pact that would reduce US trade deficits with Mexico and Canada and increase US content for autos.

Speaking at the start of the talks in Washington, US President Donald Trump's top trade adviser, Robert Lighthizer, said Trump was not interested in "a mere tweaking" of the 23-year-old pact, which he blames for hundreds of thousands of job losses to Mexico.

"We feel that NAFTA has fundamentally failed many, many Americans and needs major improvement," Lighthizer, the US Trade Representative, said in an opening statement.

Canadian and Mexican officials defended NAFTA and said its benefits and structure should be preserved while it is modernized.

Lighthizer said he would demand increased regional and US content in autos produced in the region, the largest source of a $64-billion US goods trade deficit with Mexico last year. He also said the United States would insist on strong provisions governing labor and currency practices.

"We need to ensure that the huge trade deficits do not continue and we have balance and reciprocity. This should be periodically reviewed," said Lighthizer. "The rules of origin, particularly on autos and auto parts, must require higher NAFTA content and substantial US content."

The demand is at odds with auto producers and suppliers in the region, who are concerned that increasing local content requirements will raise their costs and make their factories less competitive with those in Asia and Europe.

Canadian Foreign Minister Chrystia Freeland, who suggested this week her country could walk away if the US insisted on scrapping a NAFTA mechanism to resolve trade disputes, also took a swipe at the US fixation on cutting its trade deficits.

REUTERS