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NAFTA renegotiation talks open amid high expectations

Canada, the US and Mexico prepare to sit down and renegotiate their trade deal with plans to add a chapter on digital trade, as well as incorporating side agreements on environmental and labour standards

16 August 2017, 8:10am
The timeline for the talks is expected to be aggressive
The timeline for the talks is expected to be aggressive
Negotiators from Canada, Mexico and the United States open the first round of talks on Wednesday to revamp the 23-year-old regional free trade agreement, with biggest uncertainty being whether a deal can pass President Donald Trump's "America First" test.

There are high expectations but vastly different views on how to remake the North American Free Trade Agreement into a deal that pleases all sides, and fulfills President Donald Trump's repeated campaign promises to help US workers.

Trump famously denounced NAFTA as "the worst trade deal maybe ever signed anywhere," blaming the agreement for shuttering US factories and sending US jobs to low-wage Mexico. Trump promised to pull out of the agreement, but succumbed to pressure to renegotiate instead. The test will be whether negotiators can prove that a new NAFTA agreement can address US concerns.

Trump recently warned again that he will "terminate NAFTA" if "we don't get the deal we want," but the call from the US business community in the run-up to the talks has been "do no harm," amid concerns that a new agreement will unravel a complex North American network of manufacturing suppliers built around NAFTA.

Trump, who made trade a centerpiece of his presidential campaign as he promised to reinvigorate the manufacturing sector, pulled the United States out of the Trans Pacific Partnership trade pact shortly after taking office in January. But he has since backed off other trade threats, including declaring China a currency manipulator and tearing up NAFTA, which he regularly calls a disaster.

US-Canada-Mexico trade has quadrupled since NAFTA took effect in 1994, surpassing $1 trillion in 2015.

Large negotiating teams from Canada, Mexico and the United States will meet through Sunday to develop the new text of the pact. They are due to reconvene September 5 in Mexico City.

The timeline for the talks is expected to be aggressive, given elections in Mexico in July 2018, as well as the US legislative calendar.

A USTR official confirmed plans to add a chapter on digital trade, as well as incorporating side agreements added after the fact on environmental and labour standards.

Canada also has stressed the need for stronger labour and environmental rules in the agreement.