The North America Free Trade Agreement was signed into law by President Clinton. One of Trump’s campaign promises was to renegotiate the agreement. It now seems they are close to signing a new arrangement. The negotiations are only involving representatives from the United States and Mexico. They include representatives from the incoming president, Lopez Obrador.
White House Council of Economic Advisers Chairman Kevin Hassett announced, according to Bloomberg, “that we should see something in the fall.”
Negotiations between United States and Mexico progressing to resolution
It has been slow progress. Trump has increased tariffs on both Canada and Mexico during the negotiations. Trump’s tariffs will negatively impact car prices. The original deal was supposed to be free trade agreement which would eliminate tariffs but used them until they could renegotiate a new deal.
Lopez Obrador will take over as president of Mexico December 1. All parties involved believe the deal will be approved before that date.
Representatives of Obrador are involved in the current negotiations. Their involvement is important to ensure the new regime is in agreement of the new deal to avoid a possible withdrawal of Mexico when Lopez Obrador takes his new position. Justin Trudeau and Canada have not been a party to the negotiations.
Conflicting views between bilateral or trilateral agreement for the future
Donald Trump has stated that he would consider an agreement between the United States and Mexico. This would create a scenario where basically NAFTA would be voided and the United States would enter into separate agreements with both Canada and Mexico.
Canada is meeting with Mexico about NAFTA
Canada has sent a trio of representatives to Mexico ahead of Mexico’s meeting with the United States.
Those representatives are Foreign Affairs Minister Chrystia Freeland, Finance Minister Bill Morneau, and International Trade Minister Jim Carr. They are meeting with Lopez Obrador, the incoming Mexican president.
At least they are willing to negotiate about NAFTA. In order for them to be a part of the new deal, they must be willing to sit back down with the United States. One reason for the stalled negotiations was the slight they felt after Trump left the G7 summit to go to the summit with North Korea. If negotiations restart with the United States, then the chances of a trilateral deal increase. If Canada cannot get past the differences reported by Global News with the United States, then the most likely outcome will a bilateral agreement and separate agreements among the United States, Canada, and Mexico.
Is NAFTA vital to trade in North America?
Free trade promotes competition. For example, if Canada can produce steel cheaper than in America, then companies will purchase it from Canada. This motivates American companies to reduce their manufacturing costs to produce cheaper steel. This competition increases innovation for all companies and countries involved. This will help the nations compete globally. The agreement has to involve both Canada and Mexico. The agreement has to be free trade, period. There can be no tariffs on any goods or services.
This is the only trade agreement that will be fair to all the participating countries. It will lead to cheaper goods and manufacturing helping all economies. It will also make the goods produced in the United States, Canada, and Mexico more competitive in the global marketplace. This deal needs to get done.