President Donald Trump's administration wants across-the-board changes to the North American free-trade agreement that would tilt the rules of cross-border commerce more clearly in favour of U.S. business.
A draft eight-page letter to Congress from acting United States Trade Representative Stephen Vaughn outlines more than 40 negotiating objectives the White House is seeking as the U.S. prepares to reopen NAFTA in talks with Canada and Mexico.
The revisions sought go far beyond the modest "tweak" for Canada that Mr. Trump promised when he received Prime Minister Justin Trudeau in Washington last month. Instead, they would imprint Mr. Trump's "America-first" approach to trade on the 23-year NAFTA accord.
The document, which appears designed to impress Congress with how exhaustive the White House's NAFTA rewrite ambitions remain, also serves as a reminder to Canada and Mexico that Mr. Trump has not yet taken any demands off the table.
Some of the objectives carry little explanation, using coded language recognizable to Republicans.
One that jumps out is a vow to "level the playing field on tax treatment," a phrase long associated with Republican calls for a border adjustment tax that would be imposed on foreign imports. It's almost word for word what the Republican Party described in a 2016 proposal for such a levy, where the party talks of how the U.S. should "be able to compete on a level playing field."
The Trump administration says it wants to eliminate from NAFTA the Chapter 19 dispute settlement system, which grants Canadian companies a means of directly appealing decisions by the U.S. government where Washington has slapped duties on their products.
It also appears to be signalling it wants to hike duties on imports unless they contain a higher level of U.S. content. The administration left some of its intentions here vague but said it wants NAFTA "rules of origin" to ensure the deal "supports production and jobs in the United States."
The White House, as well, is seeking changes that would give preferential treatment to the U.S. in government purchasing – a "buy American" measure that would make it harder for Canadian firms to bid on U.S. government contracts.
And it wants the right under NAFTA to roll back the preferential exemptions Canada and Mexico receive under the deal when it comes to "safeguard" actions where Washington wants to stop a flood of imports.
Mr. Trump is also set to issue two trade-related executive orders Friday. One will mandate an investigation of the U.S.'s trade deficits with 16 countries, including Canada, to inform how the administration will proceed in trade negotiations.
Commerce Secretary Wilbur Ross, Mr. Trump's NAFTA point man, said Thursday that the investigation will determine if the trade deficits are for reasons he deems legitimate – such as a country supplying the U.S. with goods, such as petroleum, that the U.S. does not have enough of domestically – or if they are caused by bad trade deals or efforts on the U.S.'s trading partners to erect non-tariff barriers.
Mr. Ross warned that the U.S.'s trading partners "talk about free trade, but they are far more protectionist than we are."
Peter Navarro, director of Mr. Trump's National Trade Council, said the President would also sign an order directing border guards to crack down on collecting countervailing duties and confiscating counterfeit merchandise. Since 2001, Mr. Navarro said, the country has failed to collect $2.3-billion (U.S.) in countervailing duties meant to punish other countries for unfairly subsidizing products or dumping them in the U.S. market below the cost of production.
Toronto trade lawyer Mark Warner said the Vaughn letter builds on trade demands the U.S. sought in the failed Trans-Pacific Partnership deal. He said Canada can expect a difficult slog ahead.
"It's more than a tweak but it is probably the best anyone could hope for given Trump's campaign rhetoric," Mr. Warner said.
"We aren't out of the woods yet. Canada faces tough negotiations over trade remedies and dispute settlement. It will be hard to isolate existing trade disputes from those discussions."
Mr. Trudeau, when asked about the letter to Congress, said Canada has not yet received official notice of the Trump administration's intention to renegotiate NAFTA.
He said the trade deal is good for the U.S. economy and part of Canada's strategy is to remind the Americans of that.
"They have to be very careful not to burden themselves by bringing forward protectionist measures," Mr. Trudeau said.
Sean Spicer, the White House press secretary, nevertheless cautioned Thursday against presuming the Vaughn letter represents the opening negotiation position of the Trump administration. "[U.S. Trade Representative] Robert Lighthizer isn't even nominated yet. That is not a statement of administration policy at this point."
Under U.S. trade law, Mr. Trump's administration must provide 90 days' notice to Congress outlining its aims in trade talks before kicking off negotiations. Mr. Vaughn's letter, obtained by the website Inside U.S. Trade and posted online, appeared to be a draft version of such notice.
The draft does not go as far as some of the Trump administration's toughest rhetoric. There is nothing in the letter about seeking an agreement from Mexico to buy more American goods or about abolishing NAFTA tribunals altogether – both measures that some of Mr. Trump's officials have talked about.
Natural Resources Minister Jim Carr said he found little support for a border adjustment tax during two days of meetings last month with U.S. officials in Washington. He said the Trudeau government will keep a "running conversation going" with American political leadership.
"We heard from virtually everybody that they too are free traders, and they think that the essentials of a strong economic partnership are in place. And that while we can always improve trade agreements and relationships, there really is a sense we are a model to the world."
Saskatchewan Premier Brad Wall is slated to meet next week with Mr. Ross as well as Secretary of Energy Rick Perry.
The Trump administration has signalled that it will undertake the NAFTA renegotiation using the trade promotion authority – the so-called "fast track" – which allows the President wide range to negotiate trade deals as long as he consults with Congress and adheres to a set schedule.
Representative Kevin Brady, chairman of the House ways and means committee, said Congress will play a major role in deciding what goes on the table. After the committee's closed-door session with Mr. Ross on Tuesday, Mr. Brady said the administration was committed to "an unprecedented amount of consultation" with legislators. He said opening markets to U.S. goods was the top objective Mr. Ross emphasized.
"The priority is clearly our market access, modernizing this for the 21st century and making sure that the agreement is enforceable by all parties," he said.
With reports from Greg Keenan in Brampton, Ont., and Shawn McCarthy in Ottawa
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