Free Trade

The Longer NAFTA Negotiations Drag On, The Less Likely Withdrawal Seems

Trade representatives for Canada and Mexico have both officially rejected U.S. demands in the latest round of formal negotiations over NAFTA, the North American Free Trade Agreement.

Trump campaigned against the treaty, but its economic importance and success have made pulling the trigger on withdrawal untenable to large portions of the country, and even within his administration.

Instead, the Trump administration has continued to make demands for changes through the formal re-negotiation process, with the threat of unilateral withdrawal hanging over the talks.

The latest U.S. position was to request additional protectionism and trade barriers for manufacturing, and to seek a five-year sunset clause that will cause the treaty to lapse unless all three nations re-approve it.

These were decried as “poison pills” by the U.S. Chamber of Commerce, which strongly opposes reintroducing trade barriers within the NAFTA zone.

Petty protectionism by the Trump administration, but NAFTA is too crucial to torpedo

Even within the framework of NAFTA, the administration has tried to pick trade-war fights with our northern neighbor. Recent hot-button disputes include retaliatory tariffs imposed on Canadian lumber, as well as Bombardier jet planes.

The pretense is objection to various Canadian subsidies, but the hypocrisy is plain, particularly in the case of American aircraft mega-behemoth Boeing.

These fights will continue through the arbitration and court procedures laid out by NAFTA and other relevant trade treaties and legislation. In the meantime, Canada and Mexico have both seem to have decided that drawing out the negotiations as long as possible will make it less likely that the erratic Trump administration will unilaterally withdraw.

That’s not a bad bet, given the strength of opposition to NAFTA withdrawal among members of Congress and American business interests like the Chamber of Commerce. Trump’s protectionism will continue to manifest itself in petty and sporadic ways, but breaking up the free-trade zone that spans the North American continent is increasingly unlikely.

(President Donald Trump and Canadian Prime Minister Justin Trudeau pose for photographs after Trudeau’s arrival at the White House October 11, 2017, in Washington. The United States, Canada and Mexico are currently engaged in renegotiating the 25-year-old North American Free Trade Agreement. Photo by Chip Somodevilla/Getty Images.)


Leave a Comment