A group of top CEOs has a message for President Donald Trump: Move quickly on an update of the North American Free Trade Agreement but don't mess with the underlying structure.
In a letter to the White House, the top executives of 32 major companies emphasized the benefits they currently get from Nafta. However, they said, they are willing to work with the administration on a "modernization" of the deal that keeps its three-way structure with Mexico and Canada, rather than on an overhaul that starts from scratch.
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The executives' letter follows the Trump administration's notification to Congress last week that it plans to begin, as soon as August, negotiations on the 23-year-old trade agreement, which eliminates tariffs and sets the rules for trade among the three countries.
The letter's signatories include David MacLennan, chief executive of Cargill Inc., which benefits from duty-free agricultural sales to Mexico and Canada; Lance Fritz, chief executive of Union Pacific Corp., which handles about 70% of rail volume traveling to and from Mexico; and Steven Rendle, chief executive of VF Corp., the global apparel and footwear giant that imports many brands bought by American consumers.
"While this remains open, it creates an environment of uncertainty," said Evan Greenberg, chief executive of insurer Chubb Ltd. "To bring it to a thoughtful conclusion among all three parties is important," he said, adding that Nafta allowed the company to expand and become a dominant insurer in Mexico.
The letter was written as an expression of support for the effort but contained a clear warning against harming a pact that the CEOs say supports 14 million American jobs and a trading volume of more than $3.5 billion daily.
"We encourage the administration to proceed quickly and trilaterally," the executives said. "Uncertainty about the future of America's terms of trade with Canada and Mexico would suppress economic growth and may cause political reactions that undermine U.S. exporters."
Mr. Trump has at various times backed everything from a "tweaking" of U.S. trading with Canada and Mexico to a "massive" renegotiation, and he has brought attention to longstanding agricultural battles that could complicate the talks.
Robert Lighthizer, the newly confirmed U.S. trade representative, said last week that the administration would seek to preserve the current structure of Nafta. But he didn't make any guarantees and said many issues would be handled bilaterally.
Mr. Lighthizer sent Congress an official notification for Nafta talks last week, meaning officials are required under a 2015 trade law to submit in the next two months a set of negotiating objectives, according to guidelines set by Congress.
The executives on Thursday backed adhering to the guidelines Congress set in the 2015 law, which allows fast-track approval by Congress of trade deals.
Mr. Trump faces political challenges in negotiating and winning congressional passage of a deal. Most Republican lawmakers -- with the backing of businesses, including the ones that signed Thursday's letter -- don't want sweeping changes to the pact.
But most Democratic lawmakers, labor groups and much of Mr. Trump's political base want to add new features to balance trade with Mexico as part of the renegotiations for Nafta, which Mr. Trump called a "disaster" in the 2016 campaign.
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(END) Dow Jones Newswires
May 26, 2017 09:50 ET (13:50 GMT)