With so much acrimony already between the U.S., Mexico and Canada over various commodities traded across their borders, just imagine how hard it will be for the Trump administration to reshape the 23-year-old North American Free Trade Agreement (NAFTA).
The U.S. and Mexican governments recently averted a potentially nasty trade dispute involving sugar, but what should have been a sweet victory has instead left a sour taste in the mouths of industry on both sides of the border.
Various U.S. sugar lobbies, such as the Coalition for Sugar Reform and American Sugar Alliance, have already stated that they would not support the agreement, no matter how much the Trump administration touts it as a victory.
And similar trade discontent continues along the U.S.-Canadian border, especially involving the long-running battle over trade in softwood lumber, in which both countries remain deadlocked over the best solution to find a compromise. Most recently, the United States said it will conduct antidumping and countervailing investigations into small passenger aircraft manufactured in Canada. Boeing requested the investigation after Delta Air Lines announced an agreement to purchase 75 100-seat planes from Bombardier.
With so much acrimony already between the U.S., Mexico and Canada over various commodities traded across their borders, just imagine how hard it will be to reshape the now 23-year-old North American Free Trade Agreement (NAFTA) as promised by the Trump administration.
NAFTA negotiations are expected to start as early as this summer, and there has been a lot of noise that a new deal could incorporate many elements of the Trans-Pacific Partnership (TPP). TPP took a decade to pull off, including six years of intensive negotiations between the 12 member nations, including the U.S., Mexico and Canada. And all that took place in a much less tense diplomatic climate.
TPP called for a reduction or outright elimination of tariffs and non-tariff barriers, an increase in market access for agricultural products, new binding commitments in e-commerce, stricter controls for state-owned enterprises, strong trade enforcement, good governance standards, streamlined treatment of cross-border shipments, promotion of regulatory transparency, and support for small to mid-sized businesses.
The trade pact was branded as a “bad deal” by both Republican and Democratic candidates during last year’s presidential election. Making good on his campaign promise, President Trump immediately withdrew the United States from TPP on Jan. 23, and U.S. relations with Mexico and Canada have since remained tense.
That being said, U.S. importers and exporters generally agree that NAFTA needs an upgrade, and they’re hopeful this can be done without causing undue harm to their businesses and the American economy.
“A number of [NAFTA’s] provisions affecting ‘old’ ways of doing business need to be updated and modernized to reflect today’s business environment as well as what may come in the future,” National Retail Federation President and CEO Matthew Shay said in a recent letter to U.S. Trade Representative Robert Lighthizer, who will lead the NAFTA negotiations on behalf of the Trump administration.
If negotiations take a turn for the worse, however, American shippers with operations that cross between these three highly integrated trading partners may be forced to retreat to within the borders of a single country, quickly taking apart the already successful supply chains that took more than two decades to create under NAFTA.
Editorial: Summer of trade’s discontent
