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US formally starts NAFTA renegotiation process

US Trade Representative Robert Lighthizer on May 17 formally notified Congress of the administration’s intention to renegotiate the North American Free Trade Agreement with Canada and Mexico.

The notification allows negotiations to start by mid-August.

Lighthizer’s letter to congressional leaders  included none of the bluster and hostility that President Trump has directed at America’s NAFTA partners, Canada and Mexico.

The letter said NAFTA needed to be improved in the areas of intellectual property rights, digital trade, state-owned enterprises, customs procedures, food safety, workers’ rights and environmental protection.

NAFTA does not address digital trade, because it didn’t exist in 1993 when the deal was signed, but it now dominates every aspect of international commerce in goods and services. Workers’ rights and environmental protection are addressed in unenforceable side agreements. Making those standards tougher and fully enforceable would lessen the incentive for U.S. companies to move production to Mexico.

The letter also said trade rule enforcement “should be improved in the context of NAFTA.”

It is hard to imagine how that might happen. NAFTA allows a private company from one of the three countries that has operations in one of the others to file a complaint with the NAFTA secretariat against the host country if the company believes its rights have been violated. This Investor-State Dispute Settlement (ISDS) chapter allows for a hearing before a three-judge arbitration panel. Since 1994, the United States has prevailed in every NAFTA ISDS complaint that it has filed or has been filed against it and that has proceeded to a final ruling.

It looks difficult to imagine a deal offering the US more.

The US Administration appears to have told the media it expected talks to be over by the end of 2017.