President Donald Trump said repeatedly on the campaign trail that the 23-year trade agreement has sent USA manufacturing jobs to Mexico and needs to be redone.
By sending a formal letter to Congress, U.S. Trade Representative Robert Lighthizer begins a 90-day consultation period with Congress, U.S. industries and the American public.
American Farm Bureau Federation President Zippy Duvall said in a statement: "The American Farm Bureau looks forward to working with the administration, Congress, other agricultural groups, and officials in Canada and Mexico to protect these important markets while also addressing issues that have limited the trade potential of USA farmers and ranchers".
"The United States seeks to support higher-paying jobs in the United States and to grow the U.S. economy by improving USA opportunities under NAFTA, " Lighthizer wrote.
"As a starting point for negotiations, we should build on what has worked in NAFTA and change and improve what has not", Lighthizer told reporters.
He added that the agreement was outdated and did not reflect modern standards.
The final notice sent Thursday by Lighthizer to Congress described the negotiations with Mexico and Canada as a "modernization" of the trade deal.
The Obama administration attempted to address many of these deficiencies in the 2015 Trans-Pacific Partnership trade deal, which included Canada and Mexico, but Trump pulled out of TPP in one of his first official acts as president.
While both sides concede Nafta needs updating, the congressional Republicans most likely to support a final deal would rather see a tweaking, since a significant overhaul or major new provisions could end up eroding the benefits companies and farmers get from reliable, duty-free exports to Canadian and Mexican markets.
Lighthizer was appointed USA trade representative Monday.
Mexican foreign minister Luis Videgaray, speaking at a news conference with secretary of state Rex Tillerson in Washington, said the trade pact needed to be updated after almost 25 years.
"You're struggling to understand what exactly he wants to negotiate and what the intent is". The world has changed, we've learned a lot, and we can make it better. Insisting on ideas like that would make agreement hard to reach. The veteran trade lawyer said the US would prefer to keep the three-way structure, a notable comment from an administration that has denounced multilateral deals as unwieldy. "On the other hand, efforts to abandon the agreement or impose unnecessary restrictions on trade with our North American partners will have devastating economic consequences". White House "has not decided over nature of pact" Ross last week said the White House had not yet decided whether to continue the pact as a three-nation deal, or split it into two separate bilateral agreements, something Canada and Mexico oppose.
Back in March, a draft of a letter sent to lawmakers said the Trump administration would seek tax equality and the ability to slap tariffs on Mexican and Canadian imports if they pose a serious injury threat to USA industry. But the trade gap has widened partly because American consumers are eager to buy relatively low-cost cars and other goods from Mexico.
Regarding NAFTA's effect on Canada, Investopedia notes, "Canada experienced a more modest increase in trade with the US than Mexico did as a result of NAFTA, at an inflation-adjusted 63.5 per cent (Canada-Mexico trade remains negligible)". But since it took effect in 1994 and eased tariffs, annual farm exports to Mexico have jumped almost five-fold to about $18 billion.
U.S. Rep. Sandy Levin, D-Royal Oak, criticized the administration's approach to renegotiating the deal in a statement, and called for a series of hearings in the Ways and Means Committee before negotiations begin so Congress has complete clarity. Mexican auto workers still earn less than $10 an hour, allowing manufacturers to keep small vehicle prices low and affordable to USA families on a budget.
The trade deal, signed in 1992 and put into effect in 1994, became one of the defining issues of the 2016 presidential campaign, especially in MI. "The agreement also encouraged a more than tripling of regional trade and cross-border investment between the three countries also grew significantly".