Trump Sets Nafta Goals: Dilute Pact’s Force, Loosen Regional Bonds

Proposals spark a backlash from Mexico and Canada and from business groups in all three countries


U.S. trade officials have made that theme clear in recent days, prompting a backlash from Mexico and Canada and from business groups in all three countries, casting new uncertainty over the talks as they resume in Washington.

One provision designed with that objective is a “sunset” clause that would force Nafta’s expiration in five years unless all three countries act to renew it, said people briefed on the plan.

Other proposals, these people said, would weaken or eliminate the mechanisms aimed at settling disputes between the three countries and curbing the unilateral threats and sanctions that frequently roiled trade ties in earlier years.

.. The administration wants to “change the incentives to disincentives,” and “create more uncertainty and reluctance for U.S. businesses to invest in Mexico,” 

.. Another pending proposal would require for the first time that certain products contain not just a certain level of Nafta-regional content, but U.S.-specific content. That plan, applied to autos and auto parts, would require 50% of Nafta products come specifically from the U.S.

.. Business groups say the U.S. plans—particularly the sunset clause and the one weakening the “investor-state dispute settlement” process—would make it harder for executives to plan the cross-border investment feeding regional supply chains that Nafta has encouraged and that, they say, has raised the efficiency and competitiveness of the North American economy.