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Trump Administration Says It Will Launch NAFTA Renegotiation

Trucks move along Interstate 35 in Laredo, Texas. It's a major thoroughfare for trade between Mexico and the U.S. Eric Gay/AP hide caption

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Eric Gay/AP

Trucks move along Interstate 35 in Laredo, Texas. It's a major thoroughfare for trade between Mexico and the U.S.

Eric Gay/AP

The Trump administration has set into motion the process to renegotiate the North American Free Trade Agreement, following through on the president's earlier promise.

U.S. Trade Representative Robert Lighthizer formally notified congressional leaders in a letter Thursday that the president intends to launch negotiations with Canada and Mexico "as soon as practicable."

"The United States seeks to support higher-paying jobs in the United States and to grow the U.S. economy by improving U.S. opportunities under NAFTA," the letter reads. "In particular, we note that NAFTA was negotiated 25 years ago, and while our economy and businesses have changed over that period, NAFTA has not."

Trump has called NAFTA a "horrible deal" for the U.S. He discussed "tweaking" parts of the deal in February, and in April, he threatened to scrap it. But the president ultimately said he planned to renegotiate the agreement.

"I decided rather than terminating NAFTA, which would be a pretty big, you know, shock to the system, we will renegotiate," he told reporters in April, as NPR reported. "Now, if I'm unable to make a fair deal, if I'm unable to make a fair deal for the United States, meaning a fair deal for our workers and our companies, I will terminate NAFTA. But we're going to give renegotiation a good, strong shot."

It's not clear exactly what the U.S. is seeking to change in the deal, though in his letter, Lighthizer said the Trump administration wants to see new provisions "to address intellectual property rights, regulatory practices, state-owned enterprises, services, customs procedures, sanity and phytosanitary measures, labor, environment, and small and medium enterprises."

Earlier Thursday, Mexican Foreign Secretary Luis Videgaray told reporters that his government "welcomes this development — we are prepared. We are ready ... to work together with both the governments of the U.S. and Canada to make our trade agreement better. Better for the people of Mexico, the U.S. and the people of Canada."

Canadian Minister of Foreign Affairs Chrystia Freeland described NAFTA's record as "one of economic growth and job creation" across the continent. "We are steadfastly committed to free trade in the North American region and to ensuring that the benefits of trade are enjoyed by all Canadians."

The agreement, which has been in place since 1994, lifted many of the tariffs on trade between the U.S., Canada and Mexico.

Lighthizer told reporters that "NAFTA has been successful for U.S. agriculture, investment services and the energy sector, but not for manufacturing," as Reuters reported. He said he hopes negotiations will be completed by the end of the year.

The nonpartisan Congressional Research Service described NAFTA's overall impact on the U.S. economy as "relatively modest," (as NPR's Marilyn Geewax pointed out):

"The political debate surrounding the agreement was divisive with proponents arguing that the agreement would help generate thousands of jobs and reduce income disparity in the region, while opponents warned that the agreement would cause huge job losses in the United States as companies moved production to Mexico to lower costs.

"In reality, NAFTA did not cause the huge job losses feared by the critics or the large economic gains predicted by supporters. 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. However, there were worker and firm adjustment costs as the three countries adjusted to more open trade and investment."