Just in case you’ve been living under a rock or simply haven’t been paying attention, U.S. President Donald Trump is not at all happy with the North America Free Trade Agreement (NAFTA) and we should all be concerned. President Trump has gone as far as saying that “NAFTA is the worst trade deal maybe ever signed anywhere, but certainly ever signed in this country.” In line with that statement is Trump’s belief that NAFTA is to blame for the loss of large numbers of American manufacturing jobs to Mexico where wages are lower.
As a point of reference or from a historical perspective, NAFTA was passed by 132 Republicans and 102 Democrats in the House of Representatives, and 34 Republicans and 27 Democrats in the Senate – a true bi-partisan effort and one rarely seen in current the most recent administrations. Republican President George H. W. Bush signed the agreement in 1992 and Democratic President Bill Clinton signed the bill into law in 1993.
It’s true that hard-working communities in the United States have seen plants and factories close and good paying jobs move south of the border or overseas. Well-paid manufacturing jobs have indeed declined in the last decade or two. Opponents of NAFTA use the state of American manufacturing to argue that a “new set of rules” is long overdue.
Supporters of NAFTA defend the agreement for having boosted trade with Mexico enormously while keeping prices down for domestic consumers. Many proponents of NAFTA say that the free flow of capital and goods has actually preserved a lot of North American manufacturing citing that almost $400 billion in trade crossed the U.S.-Mexico border last year and, for that very reason, the U.S. should continue to nurture its relationship with Mexico.
President Trump has threatened to pull out of the North American Free Trade Agreement since the start of his presidential campaign, but he has altered his language, and is now talking about renegotiating instead. One of the reasons analysts believe Trump wants to renegotiate NAFTA is because he likes to work with bilateral rather than trilateral or multilateral agreements. Trump prefers to have certain rules for each partner, rather than the same agreement across the board. He likes to negotiate and wants to maximize the gain out of each partner. Should NAFTA be renegotiated, it is important for the U.S. to consider keeping tariff barriers low or eliminating them completely. The destruction of trade barriers and duties have historically allowed for more freely moving trade and services.
Few think trade between the U.S., Mexico will shut down forever, but it’s likely to change under this administration in ways that seem increasingly hard to predict.
In the coming months we will be monitoring and posting this potential process of renegotiation between the three North American countries and whether it will bring these nations together or drive us each further apart. We hope for the former, and must work hard to advocate for it as well.