Mexico and Canada may discount US President Donald Trump’s remarks about the country’s withdrawal from the North American Free Trade Agreement (NAFTA), Russell A. Green, Will Clayton Fellow in International Economics at Rice University's Baker Institute (Houston) told Trend.
"Trump’s threat to withdraw completely from NAFTA should be taken seriously. Nonetheless, there are reasons Mexico and Canada may discount his remarks. First, the remarks came during a political rally and may have been directed more at supporters than the negotiations. Second, there is very little support for withdrawing from NAFTA in Congress, so Trump risks further alienating significant portions of his own party. Third, some legal scholars have offered that the president does not even have the power to do so. While foreign policy treaties like alliances may be canceled by the president autonomously, trade treaties are not the same. They fall under the Commerce Clause in the US Constitution, which stipulates that Congress has authority," the expert explained.
The most likely outcome of the NAFTA negotiations is a re-vamped, modernized treaty that promotes efficient trade relationships, resembling the Trans-Pacific Partnership, Green believes.
The US is unlikely to make much headway on its more controversial anti-trade measures, though some watered-down demands may make it into the final document, he added.
"Mexico is by far the most exposed to NAFTA trade. The majority of Mexican exports go to the US. It is the trade deficit with Mexico which inspired Trumps interest in renegotiation, and balancing it through anti-trade measures would harm Mexican export industries," said Green.
He pointed out that US agriculture, automotives and electronics industries depend heavily on NAFTA trade.
"Agriculture, however, may take a big hit as US agricultural products may not be competitive in Mexico with higher tariffs," the expert believes.
US President Donald Trump has revived a threat to pull the US out of the North American Free Trade Agreement with Canada and Mexico just days after officials from the three countries began the process of renegotiating the deal.
"Personally, I don’t think we can make a deal. I think we’ll end up probably terminating NAFTA at some point," he told supporters in Arizona.
The United States commenced bilateral trade negotiations with Canada more than 30 years ago, resulting in the US-Canada Free Trade Agreement, which entered into force on January 1, 1989. In 1991, bilateral talks began with Mexico, which Canada joined. The NAFTA followed, entering into force on January 1, 1994. Tariffs were eliminated progressively and all duties and quantitative restrictions, with the exception of those on a limited number of agricultural products traded with Canada, were eliminated by 2008.
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