U.S. trade update
Major trade developments in the U.S. this month
Trade was a huge news story in the U.S. this month on two fronts: first, the Trump Administration unveiled its goals and timeline for a NAFTA renegotiation with Mexico and Canada. Second, in particularly tense week from a legislative perspective, in the final week of July, U.S. and UK officials met to officially kick off the U.S.-UK Trade and Investment Working Group.While the current administration has been particularly vocal on confronting and eliminating trade deficits in a majority of their public trade policy discussions, they’ve also been clear that modern bi-lateral trade discussions are the direction they want to move towards in the coming years. As such, it was a busy month on the trade front as the U.S. officially outlined priorities for renegotiating NAFTA with Canada and Mexico, and significantly began to kick the tires with the UK on areas where the two countries could encourage trade growth.
- On NAFTA the Trump administration released a blueprint of renegotiation goals earlier this month that contained a broad list of objectives that seem to combine the president’s goals with some provisions that echo the trans pacific partnership. USTR released a 17-page document that highlights a plan to reduce the U.S. trade deficit with Mexico, restrict the amount of imported material in goods that qualify under the agreement, and eliminate a controversial mechanism to review trade remedies. The release also calls for new guidelines to govern the trade of services, as well as digital goods like music and e-books, which were not included in the original 1994 agreement. In addition, it asks for "appropriate mechanism[s]" to ensure that the countries do not manipulate their currency to gain an unfair competitive advantages. More than one-third of all U.S. exports flow through Mexico and Canada. Renegotiations are expected to officially kick off on August 16.
- Not to be forgotten amidst the political challenges that will surround the renegotiation of NAFTA is the good will the U.S. administration has towards eventually formalizing a trade deal with the UK. The U.S. and UK officially kicked off a working group on U.S./UK trade and investment discussions the final week of July with secretary of state Liam Fox making the rounds in D.C. The same week CBI president Paul Drechsler visited D.C. and called on U.S. secretary of commerce Wilbur Ross and United States trade representative Bob Lighthizer to deliver the message that the U.S. and UK already share a hugely important trading relationship, that will only grow stronger with firm commitments from both governments. This will clearly be an area to watch over the next few months.