USA calls for smaller deficits in new NAFTA talks

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"Too many Americans have been hurt by closed factories, exported jobs, and broken political promises" said Robert Lighthizer, promising that his department would now "negotiate a fair deal".

The Trump administration has focused on boosting domestic manufacturing while cutting trade deficits, which it sees as damaging to the economy.

The document said the USA would "through an appropriate mechanism, ensure that the NAFTA countries avoid manipulating exchange rates in order to prevent effective balance of payments adjustments or to gain an unfair competitive advantage".

The Trump administration said it was seeking to reduce the USA trade deficit by renegotiating the terms of NAFTA.

Reuters reports that with talks due to start next month between the United States, Mexico and Canada, Mexican officials have stressed the need to craft a new deal that would strengthen the region against competitors, particularly in Asia.

At the direction of US President Donald Trump, Lighthizer on May 18 notified Congress of the administration's intent to begin renegotiating NAFTA.

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Mexico's economic ministry said in a statement it "welcomes" the U.S. objectives, saying they "will contribute to defining the issues on the negotiating table with greater clarity and the timeline for modernizing the agreement".

Economists have warned that reaching the goals might be hard.

Many economists agree the trade pact can be updated and improved, but have warned that it could be very hard to achieve every goal.

He said it could be hard to reduce bilateral trade deficits because negotiators had a limited ability to affect the private buying decisions of companies and consumers.

"These objectives could lead to a successful negotiation but one that will be hard and where not all the objectives can be achieved", Schott said. That leaves the administration plenty of flexibility for the talks, but also could fuel worries among labor groups and some lawmakers that Mr. Trump won't follow through with campaign vows to reshape US trade policy. The total amount of trade between the NAFTA countries is worth more than $1.2 trillion (1 billion euros).

The negotiating objectives also include adding a digital economy chapter and incorporating and strengthening labor and environment obligations that are now in NAFTA side agreements.

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