NAFTA Could Expire Within 5 Years, According to a New Proposal from the U.S.

North American Free Trade Agreement
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The White House Pushes for a Renewal System for NAFTA

The North American Free Trade Agreement, or NAFTA, has an uncertain future as the U.S. seeks to renegotiate the deal, something that President Donald Trump promised would be a priority of his administration.

The current proposal from the U.S. trade negotiators is seeking to initiate a “sunset clause,” whereby NAFTA would be subject to renewal by the participating countries every five years. Unless the parties can agree to extend the trade agreement, it would expire.

The harsh stance of the Trump administration in the negotiations is a direct continuation of one of Trump’s oft-repeated campaign promises.

During Trump’s campaign, he maligned the state of America’s trade agreements, saying that they were being taken advantage of on a number of fronts. One of the agreements that received a lot of criticism from Trump was NAFTA.

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Many have also been critical of NAFTA’s role in stripping the U.S. of middle-class manufacturing jobs. The White House has been critical of companies exporting labor to Mexico in order to take advantage of the lower wages for workers, stripping middle-class Americans of job opportunities.

One of the industries on the receiving end of a good deal of criticism for precisely those types of actions mentioned above was the auto industry. Trump has long been critical of car manufacturers for using NAFTA to move factories south.

The NAFTA negotiations come at a time when relations between the U.S., Canada, and Mexico are strained.

Trump’s fiery condemnation of Mexico during the campaign and his promise to build a wall to bolster the border security was not well received by the U.S.’s southern neighbor. While relations have eased since the early days of this administration, Mexico and the U.S. are still recovering from the president’s incendiary words.

As for Canada, the U.S. and its northern ally have recently entered a spat over the Bombardier Inc (OTCMKTS:BDRBF) “C Series” jets. Boeing Co (NYSE:BA), an American aerospace company, accused rival Bombardier of receiving heavy subsidies from the Canadian government, giving it an unfair competitive advantage when its jets enter the U.S. market.

The initial ruling by the U.S. Commerce Department imposed a harsh 219.63% preliminary anti-subsidy duty on Bombardier jets. While the tax has yet to be initiated, with the ruling to decide the matter likely not coming until 2018, the move has strained tensions between the U.S. and Canada.

Canada, for its part, denies that Bombardier received unfair subsidies and has fired back by delaying the purchase of the Boeing “Super Hornet,” a fighter plane.

If the NAFTA trade talks continue to assume a more combative edge, then diplomatic relations between these once very close countries could continue to devolve, with potentially millions of jobs suffering in one way or another as a result.


Source

U.S. Offers Proposal That Could Kill Nafta in 5 Years,” Bloomberg, October 12, 2017.

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Categories: News, Political Discord

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