Down the Stretch They Come: Nations Must Push to Finish NAFTA Deal

After a year of tough negotiations, the United States and its neighbors may be nearing agreement on a revised North American Free Trade Agreement (NAFTA).

Progress in recent weeks between the U.S. and Mexico over the treatment of car manufacturing in a new NAFTA gives reason for hope. Mexico’s trade minister, foreign minister and the special representative of Mexico’s president-elect are back in Washington this week to continue talks.

There is an air of optimism among negotiators. The White House reportedly hopes to announce a U.S.-Mexico handshake on key issues Thursday.

Success on a new treaty is far from assured, however. Even with further U.S.-Mexico progress this week, Canada needs to review the results of bilateral U.S.-Mexico negotiations and then all three must turn to very difficult trilateral issues that still need to be resolved.

Canada is uncomfortable with the U.S. tactic of focusing on Mexico first in hope of creating pressure on Canada to be more flexible. Canada may well react negatively if cornered. The Mexicans and Canadians insist that NAFTA should remain a trilateral accord, despite U.S. arguments for breaking it into two bilateral deals.

Stakeholders in the $1.3 trillion North American market should keep pressing for progress. A renewed NAFTA is more important than ever as U.S.-China trade tensions rise.

A stronger, modernized NAFTA accord would bring new growth opportunities and predictability to relations with the United States’ two largest export markets and to the North American commercial marketplace that supports up to 14 million U.S. jobs and helps U.S. businesses compete more effectively with other global commercial powerhouses, like China.

Agreement in North America would importantly allow the U.S. to focus on China, which is by far the most egregious practitioner of “unfair” trade practices and the most potent commercial rival for the United States. The current trade truce with the European Union also bolsters that focus.

The window of opportunity to conclude the NAFTA agreement is very narrow if it is to get approved this year. For the U.S. administration to present an agreement to the current Republican-controlled Congress, it apparently needs an agreement in principle in the next few weeks.

The Mexicans would like to have the agreement completed before Mexico’s new president, Andres Manuel Lopez Obrador (AMLO), takes office on Dec. 1. Canada has a longer political timeframe: Prime Minister Justin Trudeau faces parliamentary elections on or before Oct. 21, 2019.

For Trump, AMLO and Trudeau, an agreement that each can present as a “win” for the home team can bring a political boost.

Agreements on the auto sector should help address President Trump's concern about trade deficits, for example, while Mexico’s president-elect would like to start his term in office with the North American market stable and encouraging for investment and growth in Mexico.

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