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'Words You'll Hear': Trump Administration To Talk NAFTA Renegotiation


One more word you'll hear this week - well, it's really an acronym, but it is so familiar, we're going to call it a word - NAFTA, the North American Free Trade Agreement. Later this week, the Trump administration will kick off its talks to renegotiate NAFTA with Canada and Mexico. And despite Trump's fiery rhetoric about NAFTA on the campaign trail, it appears the administration has backed away from throwing out the 23-year-old trade deal or even majorly overhauling it. We're joined now by NPR's Chris Arnold. Hi, Chris.


SMITH: So, Chris, let's go back to the days of the campaign. Here is what President Trump had to say about NAFTA back then.


PRESIDENT DONALD TRUMP: NAFTA was the worst deal ever made in the history of the world. It was a one-way highway out of the United States.

SMITH: The worst deal in the history of the world (laughter).

ARNOLD: Right. I mean, there is definitely no hyperbole or exaggeration going on there whatsoever.

SMITH: That is a bad deal.

ARNOLD: Yes. But as you know, I mean, look, candidate Trump back then was resonating with voters who were upset about the decline in manufacturing jobs. And he was tapping into some very real frustrations. And, certainly, many Americans who've been affected by global trade and seen their friends or themselves lose jobs - I mean, they see these trade deals as the bad guys stealing American jobs.

SMITH: So what do we actually expect to happen when NAFTA renegotiations start on Wednesday?

ARNOLD: Well, what we don't expect to see is what happened to the TPP - right? - the Trans-Pacific Partnership. Now, similarly on the campaign, President Trump - when he was candidate Trump - was bashing the TPP. And when he got elected, he followed through on his pledge to scuttle it. Now, this is very different. NAFTA is not going to go away. What we're seeing here is some more tweaking around the margins. There's something called rules of origin, which has to do with what percentage of a product has to be made in either Mexico or the U.S. or Canada. They're going to be looking to tweak that.

There's some updating of NAFTA, which everybody pretty much agrees needs to happen in part because, look, I mean, technologies, e-commerce, there's issues about data security. I mean, stuff that just nobody contemplated 30 years ago when NAFTA was created. We have to write some of that stuff into it. And there's some labor and environmental regulations. Basically, it's easier to kind of skirt regulations in Mexico, and the U.S. says, well, that's not fair. But as far as tearing up NAFTA or drastically changing it, it looks like that is not going to happen.

SMITH: Well, why not? The Trump administration did scrap the TPP, so why not get rid of NAFTA?

ARNOLD: Well, look, a lot of U.S. businesses were not happy about ditching TPP. There were farmers, for example, who hoped to sell a lot more crops in Asia as a result of that deal. The TPP wasn't in effect yet. It was more amorphous and easier to kill. NAFTA is more than 20 years old, and there are just so many supply chains and industries that have been built and grown up around it. If you're driving in a Ford car, and you go to roll down the window, that little switch you use to put your window up and down - the first components of that start in Asia, they come to a factory in Colorado, then they get shipped to Mexico - Juarez, Mexico - then they come back - as this part gets built - to either the U.S. or Canada. And then the final car might be assembled in Mexico or the United States.

It's super complicated. And then you multiply that by the millions of products that get made in these three countries, and you can see that there is just this big complex web of business relationships spanning both borders. And it's just very hard to make big changes without hurting U.S. companies and killing U.S. jobs, too.

SMITH: NPR's Chris Arnold. Chris, thank you.

ARNOLD: You're very welcome. Transcript provided by NPR, Copyright NPR.

NPR correspondent Chris Arnold is based in Boston. His reports are heard regularly on NPR's award-winning newsmagazines Morning Edition, All Things Considered, and Weekend Edition. He joined NPR in 1996 and was based in San Francisco before moving to Boston in 2001.
Stacey Vanek Smith is the co-host of NPR's The Indicator from Planet Money. She's also a correspondent for Planet Money, where she covers business and economics. In this role, Smith has followed economic stories down the muddy back roads of Oklahoma to buy 100 barrels of oil; she's traveled to Pune, India, to track down the man who pitched the country's dramatic currency devaluation to the prime minister; and she's spoken with a North Korean woman who made a small fortune smuggling artificial sweetener in from China.