NAFTA talks are to be extended an additional year after the most recent round talks met a stalemate between JustinTrudeau, Donald Trump and Enrique Nieto. The North American Free Trade Agreement (NAFTA) is a trade deal that was signed in 1992. Making Mexico, the United States and Canada a trilateral trade bloc. This is defined as an agreement between governments to eliminate or severely lessen potential barriers to trade like tariffs or non-tariff barriers (NTBs) to trade. This is to make trade between these three countries much more lenient and simple.
While this sounds like a net positive, NAFTA does have some drawbacks. Some argue that regional trade deals like NAFTA make it difficult to establish global free trade. This is a far-off goal, but one of the major roadblocks of global free trade are these trading blocs. There is research that points to workers in the three countries suffering due to trade competition. This can currently be seen through the U.S. using Canada as a primary filming location due to the economic differences and the freedoms provided by NAFTA. This information comes from numbers provided by whitehouse.gov.
NAFTA is important to the economic health of all the countries involved, and has greatly influenced how Canada has done business since the trade deal’s full implementation in 1994. Notably, bilateral agricultural trade in Canada has gone up dramatically. In the year 2008 alone Canada exported $381 billion to the U.S. and Mexico. The effect on Mexico has been similar especially in the meat market they have become the second-largest supplier of American meats since NAFTA was implemented.
The reason that NAFTA is back in the public eye has a lot to do with Donald Trump. It was no grand secret that NAFTA would be in his sights as something to either change or eliminate. His infamous quote from the 2016 election said as much “the single worst trade deal ever approved in [the United States]”.
However, it is now evident this was not all talk. The American, Mexican and Canadian governments have all been working to renegotiate NAFTA since August. While it is somewhat unclear as to why negotiations must be extended, this can be explained by understanding to the statements from Canadian Foreign Affairs Minister Chrystia Freeland. While her outlook on the renegotiation was positive, she was clear that things had to change at the discussion for NAFTA to work.
“[Renegotiation] cannot be achieved with a winner-take-all mindset or an approach that seeks to undermine NAFTA rather than modernize it” said Freeland.
However while Mexico’s economic secretary Ildefonso Guajardo echoed these concerns it was the U.S. representatives that seemed to be proposing more drastic ideas. Even proposing a sunset clause that could end the trade deal in as little as five years. This was also proposed alongside mechanisms that would do away with the deal’s enforcement policies.
Oddly enough, the U.S. has more of a stake in this trade deal than their actions would claim. In a study done by the executive office of the President it was found that at least 140,000 small American businesses rely on the tariff and NTB-free trade in order to operate as they do. This only makes the United States’ government’s reckless abandon with these trade negotiations all the more confusing.
The extension of the talks means that there have been no final decisions yet. The Brock Press will be covering the outcome of these talks and their resulting effects on Canada in the upcoming months.