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Separate Deals with Mexico, Canada could Replace NAFTA

Separate Deals with Mexico, Canada could Replace NAFTA

President Trump has long sought to renegotiate or throw out the North American Free Trade Agreement (NAFTA), a 23-year-old trade deal that connects the US economy with those of Mexico and Canada. 

Such efforts began in May, when Trump submitted a letter to Congress announcing his formal intentions to renegotiate the trade deal. Officials from Mexico, Canada, and the US met in Northern Virginia this week for the fourth round of talks on the subject. 

“I think Justin understands this, if we can’t make a deal, it will be terminated and that will be fine,” said Trump on Wednesday, referring to Canadian Prime Minister Justin Trudeau. “It’s possible we won’t be able to reach a deal with one or the other. But in the meantime, we’ll make a deal with one.”

Among other things, negotiators are looking to craft tougher labor and environmental rules and prevent companies from outsourcing production to cut costs. 

Aspects of the deal that Trump wants to revisit include:

• Currency rules

• Rules of origin

• The process by which foreign companies can be challenged in court 

• The ability of government contracts to give preference to American companies

“Thus far, we have made good progress, and I look forward to several days of hard work,” said US trade representative Robert Lighthizer.

Canada seems willing to do away with NAFTA and negotiate a new deal with the US if necessary, but Mexico has announced it will cease negotiations with the US if Trump pulls out of NAFTA. 

Pulling out is definitely a possibility. The president has repeatedly called NAFTA a “disaster.” He says the deal puts American workers in unfair competition with lower-paid Mexican workers and insists that it has contributed to the trade deficit. 

Author’s Note: NAFTA was great when it went into effect in 1994, but things have changed since then. NAFTA has been interpreted and re-interpreted to the point where parts of it are detrimental to the US. Trump is in a position to get a much better deal for the US. If Mexico refuses to cooperate, that’s their problem. 

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