NAFTA: tbc?

some very old grunge map of NAFTA

The North American Free Trade Agreement (NAFTA) is up for renegotiation.

Active from 1994, it eliminated barriers for many goods, creating a surge in trade between its three signatories: US, Mexico and Canada.

Will it continue?

That’s tricky.

Trump has repeatedly said he’d rip it up ASAP.

But at least by seeking a renegotiation (unlike with TIPP), it’s a step forward.

Be warned.

With his healthcare plan failure, Trump is looking to appeal to his blue collar supporters who gave him the presidency, before the midterms. He can do this with a major redrafting that brings jobs.

But he’s also a major US energy supporter.

And energy, in particular natural gas, is one of the biggest benefactors of the current deal. Free trade with Mexico allows the US to export its massive gas surplus. Without it, gas prices would plummet, and American jobs and revenue would be lost.

US car makers aren’t too keen on changes either.

Many manufacture in Mexico and don’t want a point of origin clause to be introduced.

Analysts argue that the US is too concerned about its trade deficit with Canada, rather than its deficit overall: a deal with China would be far more effective.

But there is some consensus.

Reviewing employment standards, supply chains and adapting to new technological developments are shared priorities.

Also, Canada and Mexico seem more accommodating, instead wanting to “modernise” rather than greatly alter the agreement.

But don’t expect any new agreement until December by the earliest.



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