Of course we’re using the word “evolving” loosely here. Like VERY loosely…
With the Trump administration’s first 100 days fast approaching, many are starting to look closer at the legislative promises he had originally made. One of those was withdrawing from NAFTA.
As you may have guessed, based on President Donald Trump’s other political promises, the withdrawing of NAFTA isn’t happening. But that doesn’t mean his administration isn’t looking at retooling NAFTA. So what is President Trump’s current position on the trade agreement? Let’s take a look with our 10-Point Expert.
Point 1: Some background; the North American Free Trade Agreement (NAFTA) is an agreement between Canada, Mexico, and the United States, that created a trading bloc between the three nations. Essentially, the goal of NAFTA was to eliminate trade barriers – and more importantly investment barriers – that existed between the three nations. For example, the elimination of tariffs between the three nations was one of the bigger measures that have come from the NAFTA agreement.
Point 2: For the most part, the impact of NAFTA on the US economy is generally looked at to be a positive one. Its implementation has opened up investment opportunities, especially between the US and Mexico.
Point 3: Yet the economic advantages of NAFTA also came with job loss in the manufacturing sector. And while most jobs that have been lost in manufacturing were due to new automation standards (ie robots), public perception has NAFTA taking the brunt of that blame. This had led to specific groups of the population resenting free trade deals like NAFTA.
Point 4: In his 2016 presidential campaign, Donald Trump ran on the idea that NAFTA had “devastated the manufacturing industry” and was one of “the worst trade [deals] maybe ever signed anywhere, but certainly ever signed in this country.”
Point 5: Trump had campaigned around the idea of renegotiating the deal and threatened to scrap it altogether, if he didn’t like the new trade deal’s terms. As we all know now, that message had resonated greatly among Trump’s followers, particularly those in the Rust Belt region and helped him get to the White House.
Point 6: Recently, there has been a draft proposal floating around in Congress that outlines President Donald Trump’s plans when it comes to making changes to NAFTA. From the looks of the proposal, President Trump’s proposed changes to NAFTA looks to be more about general reform, than a giant overhaul! This shows a drastic shift in trade policy that the Trump administration has taken.
Point 7: The basic ideas of the draft proposal look to try and compromise on key areas regarding NAFTA which include; the US’ trade deficit between Mexico and Canada, stricter manufacturing standards, and the reintroduction of tariffs.
Point 8: One of the major points that the draft proposal does bring up is in the migration of US jobs to Mexico. While there are some stipulations that all three countries can agree on (modernizing regulations that take the information economy into account), others will be harder to agree upon (pushing for stricter environmental and labor standards, which Mexico has greatly benefited from the current lax standards). While these should be tough negotiation points, considering all three countries had agreed to similar standards in the now defunct Trans-Pacific Partnership, it’s expected that everyone should be able to come to a consensus.
Point 9: One point of contention that will be a major point of debate is the Trump administration wanting to bring back the use of tariffs. As we stated earlier, currently under NAFTA, the use of tariffs have completely disappeared. The Trump administration however wants to bring them back for industries that have been hurt by the free trade agreement. Specifically, President Trump would like to use it to support US manufacturing, putting tariffs on goods coming from Mexico, in which theoretically would make US manufactured goods more enticing for consumers. Of course nothing ever is that simple, and in reality both Mexico and Canada will create provisions to off-set the measure, if not completely rejecting the idea entirely.
Point 10: To be blunt, this not the complete overhaul of NAFTA that President Trump had promised on the campaign trail. At best, the president’s draft proposals are just slight modifications to NAFTA. While these draft proposals are subject to change, and by no means final, they look to be less of a “evolution” of President Trump’s views on free trade and more of reality settling in to a president that promised radical change.
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