Washington — President Donald Trump’s administration has notified Congress that it intends to renegotiate the North American Free Trade Agreement, which begins ticking down a 90-day window before the president can press for changes to the trade deal or withdraw from it completely.
Any changes to NAFTA, enacted in 1994 to create a free-trade zone between the U.S., Mexico and Canada, will quickly reverberate in the U.S. auto industry. The major U.S. car companies have plants in Canada and Mexico, and are increasingly shifting small-car production south of the border.
U.S. Commerce Secretary Wilbur Ross said Thursday that he is sending a letter to Congress that is intended to “notify not just Congress, but all our trading partners, that free and fair trade is the new standard for U.S. trade deals.
“Since the signing of NAFTA, we have seen our manufacturing industry decimated, factories shuttered, and countless workers left jobless,” Ross said in a statement. “President Trump is going to change that.” He said he looked forward to finding “a solution that is both fair and beneficial for all parties.”
Democrats argued that the Trump administration’s notice was not specific enough about the changes to NAFTA that the new president intends to seek.
“What they put out today is vague and doesn’t tell us anything,” U.S. Rep. Debbie Dingell, D-Dearborn, said in an interview with The Detroit News.
U.S. Rep. Dan Kildee, D-Flint Township, said the Trump administration will have to address rules that have kept wages low and suppressed union rights in Mexico.
“Donald Trump ran for president as the best negotiator on the face of the earth. Here’s his chance to prove it,” Kildee said in a press conference at the U.S. Capitol.
“Simply saying you’re going to renegotiate NAFTA isn’t going to get it done,” he continued. “The people in my hometown and places all across the country shouldn’t be put in a position where they have to compete with Mexican workers who themselves are exploited.”
U.S. Sen. Debbie Stabenow, D-Lansing, said in a statement that modernization of the trade agreement is “long overdue.”
“As we move forward, we need to make sure that any changes to NAFTA lead to an improvement in our quality of life and higher incomes, not a race to the bottom,” she said.
Renegotiating NAFTA was a central tenant of Trump’s campaign. The new president has promised to improve economic conditions in the nation by withdrawing the U.S. from trade deals that he says are unfair to workers.
Trump seized upon discontent with NAFTA, which eliminated tariffs on most goods produced in North America, during his successful presidential campaign. The trade deal has been blamed for auto companies moving production of smaller cars to Mexico.
“Before NAFTA went into effect — by the way, NAFTA, a total disaster — there were 280,000 autoworkers in Michigan,” Trump said in a March 15 speech at the American Center for Mobility in Ypsilanti. “Today, that number is roughly 165,000 — and would have been heading down big league if I didn’t get elected, I will tell you that right now.”
Canada is Michigan’s biggest trading partner. The state exported $23.5 billion in goods there in 2015, according to the U.S. Department of Commerce. Shipments to Canada accounted for nearly 44 percent of Michigan’s exports.
Mexico was Michigan’s second-largest trading partner with $11.7 billion in exports in 2015. That accounted for about 22 percent of the state’s exports.
NAFTA rules currently require that cars be only 62.5 percent made in North America to qualifying for the trade deal’s duty-free treatment.
Dingell, who has pushed to move the duty-free requirement for autos up to 90 percent, said it is important to get any changes to the trade agreement right because its impact is being felt heavily in the U.S. auto industry.
“I worked for GM. I know we’re competing in a global market,” she said. “But it’s got to be fair. ... People in the Midwest are scared their jobs are going to be shipped overseas any day.”
Groups that represent major U.S. auto companies in Washington have expressed measured support for Trump’s proposal to renegotiate NAFTA.
“NAFTA has helped to boost the global competitiveness of the U.S. auto industry sector and we support modernizing the agreement in ways that will further strengthen North America as a manufacturing powerhouse, stimulate economic growth and drive job creation,” American Automotive Policy Council President Matt Blunt said in a statement Thursday. The AAPC is a Washington association that says it “represents the common public policy interests” of Fiat Chrysler Automobiles, Ford Motor Co. and General Motors Co.
Association of Global Automakers President John Bozzella said in a statement: “While it has fostered economic integration throughout the region and enhanced our economic competitiveness, we recognize the need to modernize this agreement to address technological changes to better meet new market demands.”