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President Donald Trump has frequently denounced the North American Free Trade Agreement, promising either to renegotiate it with extreme prejudice or terminate it altogether. On Thursday his administration served official notice that he is serious, notifying Congress that it intends to start negotiations with Canada and Mexico in 90 days.
So Nafta is as good as doomed? Maybe not. The agreement can easily be changed in ways that enlarge rather than shrink opportunities for mutually beneficial trade -- and there’s reason to hope that this might actually happen.
US Trade Representative Robert Lighthizer’s letter to Congress is far from belligerent. It proposes “modernization” of the agreement, with new provisions on digital trade, intellectual-property rights, labor and environmental standards, regulatory measures and so on. There’s no suggestion of higher tariffs. Lighthizer told reporters, “As a starting point for negotiations, we should build on what has worked in Nafta and change and improve what has not.”
Good idea! And it so happens that a convenient template for most of those changes already exists in the abandoned Trans-Pacific Partnership, which the US stupidly failed to close last year. TPP’s purpose was precisely to establish a modern approach to free trade by encompassing new products and services -- sectors in which the US has most to gain -- and by making labor and environmental standards easier to enforce. A Nafta modernized along those lines would indeed be a better deal than the good one that’s already in force.
Canada and Mexico supported TPP, and so they might be open to renegotiating Nafta in that way. Admittedly, they expected TPP to help them mainly by granting better access to Asian export markets -- something that Nafta-plus can’t give them. This shows the benefits to the US of pursuing big multilateral trade deals, where bargains of that kind can be struck, rather than the narrow or bilateral agreements that Trump says he prefers. Even so, a modernized Nafta seems achievable.
Recently the Trump administration announced a mini-deal with China on trade -- the first fruits of a larger effort to renegotiate the US-China trade relationship. Small as it was, and despite Trump’s campaign promises, that agreement expanded trade. With luck, the Nafta renegotiation might do the same.
(Bloomberg)
So Nafta is as good as doomed? Maybe not. The agreement can easily be changed in ways that enlarge rather than shrink opportunities for mutually beneficial trade -- and there’s reason to hope that this might actually happen.
US Trade Representative Robert Lighthizer’s letter to Congress is far from belligerent. It proposes “modernization” of the agreement, with new provisions on digital trade, intellectual-property rights, labor and environmental standards, regulatory measures and so on. There’s no suggestion of higher tariffs. Lighthizer told reporters, “As a starting point for negotiations, we should build on what has worked in Nafta and change and improve what has not.”
Good idea! And it so happens that a convenient template for most of those changes already exists in the abandoned Trans-Pacific Partnership, which the US stupidly failed to close last year. TPP’s purpose was precisely to establish a modern approach to free trade by encompassing new products and services -- sectors in which the US has most to gain -- and by making labor and environmental standards easier to enforce. A Nafta modernized along those lines would indeed be a better deal than the good one that’s already in force.
Canada and Mexico supported TPP, and so they might be open to renegotiating Nafta in that way. Admittedly, they expected TPP to help them mainly by granting better access to Asian export markets -- something that Nafta-plus can’t give them. This shows the benefits to the US of pursuing big multilateral trade deals, where bargains of that kind can be struck, rather than the narrow or bilateral agreements that Trump says he prefers. Even so, a modernized Nafta seems achievable.
Recently the Trump administration announced a mini-deal with China on trade -- the first fruits of a larger effort to renegotiate the US-China trade relationship. Small as it was, and despite Trump’s campaign promises, that agreement expanded trade. With luck, the Nafta renegotiation might do the same.
(Bloomberg)
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Articles by Korea Herald
