Trump plan to renegotiate NAFTA targets U.S. trade deficit

July 18 (UPI) -- President Donald Trump's administration has released its plan for renegotiating the 23-year-old North American Free Trade Agreement -- by seeking to increase sales of domestic products and reducing the U.S. trade deficit.

The Trump administration said its goal is to create a NAFTA modernized to reflect the standards of the 21st century, and represent a "fairer deal" -- a theme the president has repeated.

"The new NAFTA must continue to break down barriers to American exports. This includes the elimination of unfair subsidies, market-distorting practices by state owned enterprises, and burdensome restrictions of intellectual property," U.S. Trade Representative Robert Lighthizer said in a statement Monday. "It will ensure that the United States obtains more open, equitable, secure, and reciprocal market access, and that our trade agreement with our two largest export markets is effectively implemented and enforced."

NAFTA was signed by President Bill Clinton and ratified by Congress in 1993, and took effect the next year, liberalizing trade among Mexico, Canada and the United States. The trade deal reduced or eliminated tariffs on most products, creating one of the world's largest free trade zones, and aimed to help small businesses by lowering costs and reducing bureaucracy in trade.

Trump had vowed to "renegotiate NAFTA or withdraw from the deal under Article 2205" within his first 100 days in office -- and has repeatedly called NAFTA a "bad deal" that's harmed Americans while benefiting Mexico and Canada.

However, while Trump's administration argues NAFTA is a failure due to the trade deficit between the United States and its neighbors, many economists argue the deficit is driven by macroeconomic factors and not trade agreement provisions.

Other goals of Trump's NAFTA effort are to strengthen current labor and environmental obligations, remove subsidies deemed unfair, emphasize negotiations over the digital economy, and end free-market-distorting practices by state-owned companies and restrictions on intellectual property.

In 2015, the U.S. Congressional Research Service concluded that NAFTA's effects were neither damaging nor helpful.

"In reality, NAFTA did not cause the huge job losses feared by the critics or the large economic gains predicted by supporters," the independent report said. "The net overall effect of NAFTA on the U.S. economy appears to have been relatively modest, primarily because trade with Canada and Mexico accounts for a small percentage of U.S. GDP."