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Trade

Top US business group accuses Trump of ‘poison pill proposals’ to dismantle Nafta

PUBLISHED : Wednesday, 11 October, 2017, 2:02am
UPDATED : Wednesday, 11 October, 2017, 2:22am

The most powerful US business lobby accused the Trump administration on Tuesday of making “poison pill proposals” to sabotage talks aimed at modernising Nafta, as negotiators began gathering in Washington for fresh trade talks.

Talks to update the 23-year-old North American Free Trade Agreement (Nafta) have turned increasingly acrimonious. Mexico accuses US President Donald Trump of spoiling for a “protectionist war” with proposals aimed at balancing trade.

Trump warned again he would like to scrap the treaty that created one of the world’s biggest trade blocs, in an interview with Forbes published on Tuesday.

“I happen to think that Nafta will have to be terminated if we’re going to make it good,” he said.

That hardline position did not appear to have wide support ahead of the fourth negotiating round starting in Washington on Wednesday, with many US businesses and farmers lining up to back the existing agreement.

Speaking in Mexico City, Thomas Donohue, the US Chamber of Commerce’s president and chief executive, listed several US proposals that he said would undermine US$1 trillion in annual trilateral trade, including a “sunset clause” to force regular negotiations.

His comments marked the second broadside the chamber has launched against the Trump administration’s stance on renegotiating Nafta in less than a week. It has argued repeatedly that the trade pact is critical to US industries such as agriculture and manufacturing.

“There are several poison pill proposals still on the table that could doom the entire deal,” Donohue said at an event hosted by the American Chamber of Commerce of Mexico, where he said the “existential threat” to Nafta threatened regional security.

Nafta talks report progress and year end goal to finish negotiations on track

US officials have suggested incorporating a sunset clause in Nafta that would kill it unless it was renegotiated every five years. The officials have also suggested eliminating a key dispute resolution mechanism, much to the dismay of Canada.

Donohue singled out plans to make carmakers source more parts in North America, as well as proposed changes to the dispute resolution mechanism as obstacles to Nafta’s renewal. He also cited plans to limit Canadian and Mexican access to US government procurement rules.

Carmakers in Mexico said excessive content requirements could do serious damage to the industry’s competitiveness.

“The impact would be the opposite of what’s intended: US industry would source more inputs from Asia and less from the US. That’s right – this proposal would actually send business overseas,” Donohue said.

He also slammed the emphasis placed by the White House on reducing the US trade deficit.

“It’s the wrong focus and is impossible to achieve without crippling the economy,” he said.

The chamber sent a letter to the White House on Tuesday signed by more than 300 local US business groups in support of Nafta.

The United States, Mexico and Canada began renegotiating Nafta this summer.

Trump has repeatedly threatened to withdraw if he does not win concessions to reduce a US trade deficit of around US$64 billion with Mexico.

“The president has strongly criticised this agreement for years. We realise that as bad as it has been for us, it has been great for Mexico and Canada. Naturally they will defend this lopsided accord,” US trade Representative Robert Lighthizer said on Tuesday. “To rebalance will require substantial change and not mere tweaking. The President has vowed to bring jobs and investment back to America. We will do no less,” he added.