Swordsmyth
07-17-2017, 06:44 PM
The US today released a 17-page outline of a "tough negotiating strategy (http://www.reuters.com/article/us-usa-trade-nafta-statement-idUSKBN1A2272)" to revise the 1994 North American Free Trade Agreement, meant to reduce trade imbalances with Mexico and Canada and boost exports of everything from farm goods to financial services while for the first time saying it would seek to deter currency manipulation by trading partners. The outline comes in advance of preparations to kick off heated negotiations to revamp Nafta.
The much anticipated document (press release (ttps://ustr.gov/about-us/policy-offices/press-office/press-releases/2017/july/ustr-releases-nafta-negotiating)and link to full document (https://ustr.gov/sites/default/files/files/Press/Releases/NAFTAObjectives.pdf)) released by U.S. Trade Representative Robert Lighthizer said the Trump administration aimed to reduce the U.S. trade deficit by improving access for U.S. goods exported to Canada and Mexico and contained the list of negotiating objectives for talks that are expected to begin in one month. Topping Trump’s list is a "simple" objective: “improve the U.S. trade balance and reduce the trade deficit with Nafta countries.” Lighthizer said that the negotiations would begin no earlier than Aug. 16, 2017.
Among other things the document makes the unexpected assertion that no country should manipulate currency exchange to gain an unfair competitive advantage, which according to Citi's economists was the only notable surprise in the entire document:
That line of focus centers on FX: “Through an appropriate mechanism, ensure that the Nafta countries avoid manipulating exchange rates in order to prevent effective balance of payments adjustment or to gain an unfair competitive advantage.”
Citi Economics highlighted this as one of the most controversial risks of inclusion in these guidelines. However, it also cited belief that if included in the principles, this issue may need to be addressed separately. Specifically for countries like CAD and MXN.
While Canada and Mexico are not formally considered currency manipulators by the US Treasury, the reference in the list of objectives will likely set a template for future trade deals such as the pending negotiation to modify a 5 year old free trade deal with South Korea, a country in far greater risk of being branded a currency manipulator as it sits on the Treasury's monitoring list for possible signs of currency manipulation.
Among the list of general priorities, the administration will seek to eliminate a trade dispute mechanism that has largely prohibited the United States from pursuing anti-dumping and anti-subsidy cases against Canadian and Mexican firms. It also seeks to eliminate a range of non-tariff barriers to U.S. agricultural exports to Canada and Mexico. These include subsidies and unfair pricing structures
USTR said it would seek to strengthen NAFTA's rules of origin to ensure that the pact's benefits do not go to outside countries and to "incentivize" the sourcing of U.S. goods. It offered no details on such incentives and did not specify how much of a product's components must originate from within North America.
More at: http://www.zerohedge.com/news/2017-07-17/white-house-lays-out-nafta-renegotiating-strategy
Here's hoping it all falls apart and goes away.
The much anticipated document (press release (ttps://ustr.gov/about-us/policy-offices/press-office/press-releases/2017/july/ustr-releases-nafta-negotiating)and link to full document (https://ustr.gov/sites/default/files/files/Press/Releases/NAFTAObjectives.pdf)) released by U.S. Trade Representative Robert Lighthizer said the Trump administration aimed to reduce the U.S. trade deficit by improving access for U.S. goods exported to Canada and Mexico and contained the list of negotiating objectives for talks that are expected to begin in one month. Topping Trump’s list is a "simple" objective: “improve the U.S. trade balance and reduce the trade deficit with Nafta countries.” Lighthizer said that the negotiations would begin no earlier than Aug. 16, 2017.
Among other things the document makes the unexpected assertion that no country should manipulate currency exchange to gain an unfair competitive advantage, which according to Citi's economists was the only notable surprise in the entire document:
That line of focus centers on FX: “Through an appropriate mechanism, ensure that the Nafta countries avoid manipulating exchange rates in order to prevent effective balance of payments adjustment or to gain an unfair competitive advantage.”
Citi Economics highlighted this as one of the most controversial risks of inclusion in these guidelines. However, it also cited belief that if included in the principles, this issue may need to be addressed separately. Specifically for countries like CAD and MXN.
While Canada and Mexico are not formally considered currency manipulators by the US Treasury, the reference in the list of objectives will likely set a template for future trade deals such as the pending negotiation to modify a 5 year old free trade deal with South Korea, a country in far greater risk of being branded a currency manipulator as it sits on the Treasury's monitoring list for possible signs of currency manipulation.
Among the list of general priorities, the administration will seek to eliminate a trade dispute mechanism that has largely prohibited the United States from pursuing anti-dumping and anti-subsidy cases against Canadian and Mexican firms. It also seeks to eliminate a range of non-tariff barriers to U.S. agricultural exports to Canada and Mexico. These include subsidies and unfair pricing structures
USTR said it would seek to strengthen NAFTA's rules of origin to ensure that the pact's benefits do not go to outside countries and to "incentivize" the sourcing of U.S. goods. It offered no details on such incentives and did not specify how much of a product's components must originate from within North America.
More at: http://www.zerohedge.com/news/2017-07-17/white-house-lays-out-nafta-renegotiating-strategy
Here's hoping it all falls apart and goes away.