NEW YORK (Reuters) - The head of the largest U.S. railroad said on Wednesday that based on conversations with officials from President Donald Trump’s administration including Commerce Secretary Wilbur Ross, he is confident upcoming talks will result in a “more effective” North American Free Trade Agreement (NAFTA).
“I’ve grown more convinced that they’re reasonable on trade, I probably had more concerns about that three months ago,” Union Pacific Corp (UNP.N) Chief Executive Lance Fritz told Reuters in an interview. “We’ve had good conversations with the administration and I’m confident they’re going to do the right thing when it comes to NAFTA.”
Renegotiation of NAFTA was a key campaign promise of Trump, who frequently called the 23-year-old trade pact a “disaster” that has drained U.S. factories and sent well-paid manufacturing jobs to Mexico.
Trump has pledged to use the upcoming NAFTA talks to shrink goods trade deficits that stood at $63 billion with Mexico and $11 billion with Canada last year, according to U.S. Census Bureau data.
Fritz said he plans to talk to U.S. Trade Representative Robert Lighthizer and has already held discussions with Mexican regulators and the Canadian and Mexican ambassadors. The consensus from those talks is that parts of NAFTA concerning e-commerce, intellectual property and country of origin will be “modernized” but that a complete rewrite of the trade agreement is unlikely.
Lightizer informed Congress last month that renegotiations of NAFTA would begin in mid-August.
Administration officials have been “clear in their conversations with us what they’re targeting and it makes sense to us,” Fritz said.
About 40 percent of Union Pacific’s freight volume is based on international trade and about 12 percent is based on cross-border trade with Mexico.
Fritz said although the Trump administration has not yet delivered much in terms of legislation, the railroad has witnessed a significant sea change in the U.S. regulatory environment.
“We’re getting a more deft touch when it comes to the regulatory burden,” he said. “Under the previous administration it was approaching extreme under some circumstances.”
Fritz said the railroad is discussing waivers to some regulations to test alternative approaches. One such waiver under discussion involves using computers instead of people to conduct daily tests on locomotives.
In one of his first moves after taking office in January, Trump signed an executive order formally withdrawing the United States from the 12-nation Trans-Pacific Partnership (TPP).
When asked if that decision provided an opportunity for China to step in and set the agenda in trade, Fritz said: “It’s too early to tell, but I think that would be the risk.”
“I’m chagrined,” he added. “I think TPP was a good idea and I’m disappointed that we didn’t continue the process of getting that ratified.”
“I thought that was a good agreement for the United States,” he said.
Editing by Matthew Lewis