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Trump Has Started Renegotiating NAFTA

by Countable | 8.18.17

What’s the story?

NAFTA – the North American Free Trade Agreement – is undergoing a modernization. The Clinton-era partnership between the U.S., Canada and Mexico has been debated since its inception and rollout, but it came under intense fire during Donald Trump’s campaign, when he called NAFTA "the worst trade deal in the history of the world."

During the past few days, negotiators from the U.S., Canada and Mexico have been meeting and discussing changes to the program, including rules of origins for goods produced in the region.

Why does it matter?

Jobs and the economy

Whether NAFTA helped or hurt workers remains a subject of debate. "Trump is right that the 1994 agreement with Mexico and Canada displaced U.S. jobs—some 850,000, most of which were in manufacturing," wrote Jeff Faux, the director of the Economic Policy Institute in Washington. “But he is wrong in his claim that American workers lost out to Mexican workers because U.S. negotiators were outsmarted. The interests of workers were never a priority for either [country].”

Other economists, however, point to different factors. As the Washington Post noted, some economists have "found that while NAFTA lowered wage growth for some blue-collar workers, its effect on American wages was small." And still other economists “found no discernible impact on U.S. wages from trade with Mexico and Central America.” There’s little disagreement that cheaper labor and the elimination of tariffs drove automobile manufacturing south.

In mid-July, the Trump administration released a lengthy list of objectives for the NAFTA renegotiation, which aims to remedy these and other issues. They include:

  • Balancing flows of trade. Trump has said it’s unacceptable that Mexico exports nearly $63 billion more goods than it takes in.

  • Scrapping the dispute resolution mechanism. Trade disagreements are mediated through independent, binational panels. Trump has said these panels violate U.S. sovereignty.

  • Update 2.0. Intellectual property, e-commerce, apps and other technologies - that weren’t around in ‘94 - need to be addressed in the new document.

Teams of negotiators from the three countries are expected to meet at least seven times over the next six months.

What do you think?

Do you believe that NAFTA was good or bad for American businesses and American workers? What would you change about NAFTA? Hit the Take Action button and tell your reps what trade issues you’d like to see addressed. Then share your thoughts below.

—Josh Herman

(Photo Credit: PeskyMonkey via iStockphoto)

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