– This is the script of CNBC's news report for China's CCTV on May 19, Friday.
Welcome to CNBC Business Daily, I'm Qian Chen.
The Trump administration on Thursday notified Congress that it plans to renegotiate the North American Free Trade Agreement, the three-member deal with Mexico and Canada that President Donald Trump has repeatedly attacked.Now, the United States can start renegotiating the agreement 90 days from the notification to Congress.
In an interview with CNBC earlier this month, U.S. secretary of commerce Wilbur Ross said the deal has been out of date for so long.
[Wilbur Ross, U.S. secretary of commerce] "NAFTA IS AN ANCIENT TREATY. IT'S DECADES OLD. NEITHER OUR ECONOMY NOR THE MEXICAN NOR THE CANADIAN ECONOMIES ARE REMOTELY SIMILAR TO WHAT THEY WERE BACK WHEN THE DEAL WAS DONE. THERE'S NOTHING IN IT REALLY ABOUT THE DIGITAL ECONOMY. THERE'S RELATIVELY LITTLE IN IT ABOUT THE SERVICE ECONOMY. AND IN THE SECTIONS THAT IT DOES ADDRESS SOME OF THOSE ARE ALSO CLEARLY OBSOLETE."
A letter from U.S. Trade Representative Robert Lighthizer to congressional leaders says the administration wants NAFTA to be "modernized."
The letter said that the administration will renigotiate a deal that includes new provisions to address intellectual property rights, state-owned enterprises, environment, etc.
And what are some specific industries that leaders from the three countries are gonna talk about after 90 days?
Here's a sneak preview of key issues at stake:
Dairy - it's a prime sensitive spot when Canada negotiates trade deals. In Canada's sheltered dairy industry, imports get slapped with an extremely high duty beyond a fixed quota. Recently, Canada has been facing intense pressure to pry open the system in recent negotiations. And the U.S. could seek a more dramatic opening.
Besides, Softwood. Not long ago, the U.S. imposed an anti-subsidy tariff of 20% over imports of Canada's softwood lumber.
Between the US and Mexico, analysts and researchers caution that U.S. companies that sell into Mexico would face much higher tariffs, or taxes, than Mexican companies that sell into the U.S. if the deal goes away.
Mexico charges an average tariff of 7.4% for imports from countries that aren't part of a trade agreement. The average tariff the U.S. charges to countries it doesn't have a trade deal with is 3.7%.
Now, the letter to Congress says that the Trump administration intends to start the renegotiation as early as August.
[Wilbur Ross, U.S. secretary of commerce] "THE KEY TO THE TIMELINE IS THE MEXICAN ELECTIONS ARE NEXT YEAR. THE PRESIDENTIAL ELECTION. SO THE CLOSER WE GET TO THE ELECTION THE MORE DIFFICULT IT WILL BE TO GET ANYTHING THROUGH."
CNBC's Qian Chen, reporting from Singapore.