The renegotiation or overall termination of the North American Free Trade Agreement (NAFTA) is on top of President Donald Trump’s plans for trade. Listed fourth in a number of proposed platforms on Trump’s official website, the President plans to “tell NAFTA partners that we intend to immediately renegotiate the terms… If they don’t agree to a renegotiation, we will submit notice that the United States intends to withdraw from the deal.”
President Trump has been an outspoken critic of NAFTA, calling it the “worst trade deal in history” during the first round of presidential debates. He places blame on the agreement for the loss of manufacturing jobs in Rust Belt states, such as companies like Ford who build their cars in Mexico before selling them in the United States, as reported by CNN.
In spite of Trump’s negative rhetoric, Mexico has expressed willingness to negotiate with the president on NAFTA. Mexico’s foreign relations secretary Luis Videgaray announced his desire to begin negotiation talks as soon as possible, according to the New York Times.
Videgaray stressed that he wants to begin the negotiations talks soon to “dispel this uncertainty” following the election of Donald Trump. Videgaray stated that Trump’s election has caused concern in light of the President’s comments pressuring companies not to move jobs to Mexico.
Although Trump’s comments on NAFTA have focused almost entirely on Mexico, Canada also has reason for concern. Canada’s Prime Minister, Justin Trudeau, has spent the past fifteen months seeing eye to eye with former President Obama on issues such as trade agreement. Now he will have to adjust to the different approach Trump will take.
Former Canadian ambassador to Washington Michael Kergin stressed that Trump has “certainly got Mexico in his sights, but it’s a three-way agreement. What hits Mexico will inevitably have an impact on us.”
Gordon Ritchie, who helped negotiate the Canada-U.S. Free Trade Deal, echoed Kergin’s concerns, noting that the United States would be affected by barriers put up against imports, due to supply chains.
NAFTA was signed into law in 1994 under, then President Bill Clinton. The trade agreement between the United States, Canada, and Mexico eliminates all taxes among the three nations to allow goods and supplies to flow smoothly across borders.
Regarding Trump’s concern that NAFTA takes away domestic jobs, the issue is not that simple. While there have been jobs lost, there are also millions of U.S.-based jobs that depend on NAFTA, with about 6 million U.S. jobs depending on trade with Mexico.
A nonpartisan 2015 report published by Congress found that NAFTA did not cause mass job loss as critics feared, nor large economic gains supporters predicted. Rather, the report found that NAFTA had an overall modest effect on the economy, mainly because trade with Mexico and Canada accounts for a small percentage of U.S. GDP.
CNN reported that American citizens actually benefit from NAFTA. Since it is cheaper to produce products in Mexico, Americans, in turn, pay less for food, clothes, cars, and electronics when imported.