It all happened in 1994, when an agreement between the USA and Canada was signed to create the biggest free-trade area in the world. 4 years later (in 1998) Mexico has joined the agreement, too. For over 20 years NAFTA has been uniting the economy of the entire continent. However, when President Donald Trump has come into action, the entire project is under a threat. Does it have any future?
For many years D. Trump insisted that this sort of international trade is a kind of contest and our country loses it. As he became the president, he applied his efforts to reverse the way Americans play their trade cards. Trying to change the position of the States on the trade deals is one of the easiest ways. The new mission is to renegotiate NAFTA. But the thing is that the current political situation is already tense between America and Mexico due to the new border wall. And many experts keep asking, ‘What does the president really want?’
One of the biggest current complains about the agreement is that it practically kills employment of Americans. How so? It frees up many companies to splash the prices on goods by shifting the manufacturing task outside the USA. Trump feels a pressing need to tell the NAFTA partners that his country intends to renegotiate the agreement terms and get a much better deal for US workers.
The reality is such that the plans are straightforward only when the press is somewhere around and direct questions are asked. However, the president’s administration doesn’t have exact plans on how things will keep developing. They are still thinking on the demands during NAFTA negotiations. If the USA withdraw from NAFTA, restrict goods and trade with the partners, this will result in great costs to investors, producers, consumers, etc. The negotiating positions of Canada and Mexico have already hardened since the time the US took aim at dairy and softwood lumber supply management.
The most suitable outcome is a modernized treaty split into 2 parts:
- a bilateral US-Mexico trade deal
- a bilateral US-Canada trade deal
This option will allow the current administration to reverse NAFTA with no need to change the essence of the underlying substance.
NAFTA has always been one of the key points to be changed during the presidential campaign. Trump has called it ‘a bad deal’ more than once. Lately he called it a catastrophic trade deal for the States. But the idea of pulling out of this agreement scares both Democrats and Republicans. The countdown to renegotiations has already started. But the real question is whether they will be more successful for American citizens than the original NAFTA agreement of 1998?
References
- NAFTA: Final Text, Summary, Legislative History & Implementation Directory. (1994). 1-3.
- Anthony B., Piketty, T., Saez, E. (2011). Top Incomes in the Long Run of History. 3-71.
- Blecker, R. A., Esquivel, G. (2013). Trade and the Development Gap. Mexico and the United States: The Politics of Partnership. 83-110.
- Bartra, A., Otero, G. (2009). Contesting Neoliberal Globalism and NAFTA in Rural Mexico: From State Corporatism to the Political-Cultural Formation of the Peasantry. 92-113.
- Vogel, R. D. (2007). Transient Servitude: The U.S. Guest Worker Program for Exploiting Mexican and Central American Workers. 1–22.
- Porter, E. (2016). Nafta May Have Saved Many Autoworkers’ Jobs. The New York Times.
- Murray, R. (2016). The NAFTA Myth. 1-2.