Trump’s NAFTA revamp would require concessions

President-elect Donald Trump’s plan to renegotiate the North American Free Trade Agreement (NAFTA) to make it “a lot better” for U.S. workers would not be a one-way street for his administration, as Canada and Mexico prepare their own list of demands that could require difficult U.S. Concessions. The 22-year-old NAFTA and other trade deals became lightning rods for voter anger in the U.S. industrial heartland states that swept Trump to power this month. Trade experts, academics and government officials say Canada and Mexico would also seek tough concessions and that NAFTA’s zero-tariff rate would be extremely difficult to alter. And any renegotiation would likely take several years. Trump, who during the campaign called NAFTA the “worst trade deal ever” and threatened to levy a 35-percent tariff on Mexican-assembled autos and other goods, would have a hard time raising U.S. tariffs without scrapping the agreement, trade experts say. “There is no precedent in free trade negotiations for one side raising tariffs more than the other,” said Chad Bown, a senior fellow at the Peterson Institute of International Economics in Washington. “If U.S. workers are more expensive than Mexican workers, the only way to level the playing field is to do things that raise costs in Mexico,” Bown said. But if NAFTA is reopened, Canada will insist that any renegotiation bring an end to a decades-old dispute over Canadian exports of softwood lumber, said David MacNaughton, Canada’s ambassador to the United States. U.S. producers claim the Canadian wood is unfairly subsidized because it comes from federal lands and have threatened to seek billions of dollars in tariffs, which Canadian officials say would make a “mockery” of free trade. For Mexico’s part, any concessions that would favor U.S. industrial goods could be met with demands to increase U.S. import quotas for Mexican sugar and protections for Mexico’s potato crop. And both Mexico and Canada would likely demand greater access to compete for U.S. public sector procurements, now largely protected by “Buy America” laws. A major Trump administration infrastructure spending program would make this a more enticing target, Cutler said.