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Private sector advisory group suggests NAFTA rewrite based on TPP

Kayla Tausche
A private sector advisory group is calling for TPP language to be included in the NAFTA renegotiation.

As the Trump administration nears a key deadline in its renegotiation of the North American Free Trade Agreement, a council of private sector executives is urging principals to use portions of the Trans-Pacific Partnership deal scratched during President Donald Trump 's first days in office.

The advisory group, in a report submitted to Congress and the U.S. trade representative in late June, suggested the USTR borrow exact language pertaining to the agricultural sector and suggested using the Asiawide trade deal as the basis for text on environmental and labor regulation, with "additional strengthening of measures beyond what was in TPP," according to a copy of the June 30 letter obtained by CNBC.

"The TPP, which has been demonized by President Trump, was essentially the renegotiation of NAFTA," said Andy Shoyer, co-chair of the international trade practice at Sidley Austin and former trade attorney during the initial NAFTA agreement. "The exercise is already done, in bringing text from the 1990s in the 21st century."

The group has seen some membership turnover between the Obama and Trump administrations but currently includes the chief executives of 3M , MasterCard and Schnitzer Steel and the former CEO of McGraw Hill – as well as representatives from the automobile, manufacturing and steel labor unions, and retail and small-business industry groups.

Its first meeting took place over the phone in June and was described by three attendees as "collegial" and "introductory." A follow-up meeting is scheduled for this fall, according to the attendees. But its feedback is expected to figure prominently in the USTR's approach, since formal meetings with the relevant advisory committees in the Senate and House have yet to take place, according to congressional aides.

Deep policy divisions appear to exist between the business and labor groups: The report cites the "majority" of members preferring to focus on issues outside trade deficits in favor of a "mutually beneficial" trade deal, sentiments to which the labor union representatives dissent in favor of promoting U.S. investment and jobs.

An addendum to the report authored by labor representatives references a "nationwide debate" about the Trans-Pacific Partnership, which was ultimately rejected by candidates from both parties. "As a result, the TPP must not be a template for renegotiating NAFTA, as some suggest."

Democratic lawmakers backed by labor and environmental groups rejected the TPP-type approach ahead of the release of the negotiating objectives on Monday.

"People are very concerned about what the direction of NAFTA is," said Rep. Rosa DeLauro (D-Conn.), an outspoken critic of past trade deals. "We'll see if they have listened and if they maintained their campaign promises, and if not we'll go into the same mode we did with TPP and defeat it."

C. Fred Bergsten, a member of the advisory council and director emeritus of the Peterson Institute for International Economics, said the nonlabor members of the group warned not to focus on the "hobby horse" of the U.S. trade deficit with Mexico .

"Half a dozen major U.S. industries have integrated across North America and their whole business model would be disrupted," Bergsten told CNBC.

While there are opposing views among the advisory group members, a person familiar with the conversations says the USTR's approach is clear, "The doctrine is to create a deal that advantages the U.S. and doesn't take away more jobs."

The trade representative, Ambassador Robert Lighthizer, told Congress he intends to begin talks with Canada and Mexico in mid-August. Lighthizer started a 90-day clock for the U.S. to develop its negotiating stance on May 18, when he formally notified Congress of the administration's intent to renegotiate the deal.