Manufacture This

The blog of the Alliance for American Manufacturing

Talks between the U.S. and Canada unraveled Friday, but will resume on Wednesday.

The Trump administration moved forward on Friday with its U.S.-Mexico trade agreement, officially notifying Congress that it plans to enter the new deal.

That deal, of course, is intended to replace the North American Free Trade Agreement (NAFTA), and by sending the official notification letter to Congress, the administration starts a 90-day countdown to withdraw from the old agreement.

And while the U.S. and Mexico have come to terms, whether any agreement can be reached with the third member of NAFTA – Canada – remains unclear. The administration said Canada could be added to the agreement “if it is willing.”

Things had looked promising earlier in the week, with Canadian Foreign Minister Chrystia Freeland telling reporters on Thursday afternoon that the atmosphere was positive and “we are making progress.”

Then on Friday afternoon, the Toronto Star released a bombshell report that President Trump had told Bloomberg in off-the-record remarks that he would not compromise with Canada. In true Trump style, the president confirmed those comments via Twitter on Friday afternoon.

Oh boy.

Despite the animosity between the president and our Northern neighbor, U.S. Trade Representative Robert Lighthizer and his team are still set to meet with Freeland and her team on Wednesday. In a statement, Lighthizer said that the week’s talks “were constructive, and we made progress.”

“Our officials are continuing to work toward agreement,” Lighthizer added.

So what now?

While there certainly has been a ton of juicy back-and-forth diplomatic brinkmanship in recent days, we still are missing a ton of information about what the actual agreement between the United States and Mexico looks like, and what a potential deal involving Canada may include. That’s ultimately what will matter to American workers and manufacturers.

As Matt noted earlier this week, it was encouraging to see reports that the U.S.-Mexico deal includes stronger rules of origin for automobiles, along with higher wage standards. But we have yet to see the specifics, so it’s difficult to judge how effective any of this might be. There also are procedural questions for the administration to consider as it negotiates with Canada, which remains an important trade partner.

Here’s what matters: The original NAFTA agreement is outdated and needs to be modernized, given the technological and globalization challenges that have emerged since it was first signed into law by former President Bill Clinton back in 1993.

We have a few specific ideas on how to improve the old NAFTA, and urge negotiators to work for an agreement that creates a better playing field, an environment more welcoming to domestic factory investments, and policies that restore and expand lost supply chains.

There’s still a long way to go in this process, and the diplomatic drama will no doubt continue. But Lighthizer and his team should stay focused on delivering a better deal for American workers, which is what’s ultimately at stake.