Renegotiation of the North American Trade Pact Will Focus on Mexican Workers, Autos, Farming and E-Commerce
NAFTA talks are scheduled to start next week in Washington after Trump, who called the 1994 agreement “the worst trade deal maybe ever signed anywhere,” chose to renegotiate.
Some of the items on the table include pay and working conditions for Mexicans, resolving disputes among the countries, automobile manufacturing and farmers, and e-commerce.
Trump has blamed NAFTA for lost U.S. manufacturing jobs. But congressional research disputed this.
U.S. trade with Canada and Mexico has more than tripled since the agreement took effect. In 2015, the U.S. exported more than $419.2 billion in goods to Mexico and Canada. More than $67.3 billion of this, or about 16 percent, is automotive-related.
The U.S. had a trade deficit of $11.2 billion with Canada in 2016 and $63.2 billion with Mexico. But overall trade figures don’t take into account goods that are manufactured with parts made elsewhere. Cars assembled in Mexico in 2015 were about 40% U.S. parts, for example.
Without NAFTA, large parts of the U.S. automotive industry might have moved to other low-wage countries in Asia, Eastern Europe or South America.
American farmers have quadrupled their exports to Canada and Mexico, but some farmers view NAFTA as a broken promise.
Florida farmers have cut the number of acres they plant in tomatoes by 25% as Mexico has increased its production by 230%. Kenneth Parker, executive director of the Florida Strawberry Growers Association, has called the four-fold rise in strawberry imports from Mexico “a clear and present danger.”
The U.S. is pushing for higher wages for Mexican workers which would make it less attractive for U.S. companies to build plants there. Mexico argues that its lower cost of production has benefits for all of North America. Average annual wages in Mexico were $15,230 in 2015, compared with $48,213 in Canada and $59,691 in the United States.
The U.S. also wants limits on duty-free online purchases, an area dominated by the United States, to be raised to $800. Mexican and Canadian industries fear this could harm their industries.
The existing agreement includes a dispute-settlement panel that allows for Mexico and Canada to appeal decisions made by the U.S. to slap duties on their products. The U.S. wants to do away with it. But both Canada and Mexico oppose this, and Canada may be prepared to leave the talks if the U.S. insists.
Featured Photo: A Ford assembly plant in Michigan (company photo).