True to fashion, President Donald Trump’s newest proclamation on the North American Free Trade Agreement offers more questions than answers.
On Monday, Trump announced that Mexico and the U.S. would enter into a new trade deal called the United States-Mexico trade agreement, presumably to replace NAFTA, the 24-year-old trade pact between the U.S., Mexico and Canada. The one member left out in the cold would be our neighbor to the north. The president says Canada could still be shoehorned into this deal, but count us skeptical that would happen without a new round of talks.
Here’s the problem with the president’s approach. It does little to reverse the uncertainty that the president’s condemnation of the trade pact had caused. NAFTA’s strength was as a North American economic alliance that reduced tariffs and other barriers to free market trade. But in announcing his deal, Trump also threatened to increase tariffs to Canadian car imports, injecting more uncertainty.
As it stands now, the bilateral agreement is a confusing mishmash of policies that run counter to a seamless North American trading partnership. The bilateral deal with Mexico would revamp rules for building cars, requiring more vehicles to be built in the United States with domestically produced steel. The deal also would increase content requirements for chemicals, textile and apparel.
There also are unresolved questions, such as whether energy policy, a major omission from the original trade pact, has been addressed. Nor is it clear whether this plan has the juice to win ratification in Congress, where the prevailing sentiment has been to retain a three-way pact.
The influential Business Roundtable already is warning that bilateral agreements would create more regulatory burdens, disrupt North American supply chains and hurt U.S. workers and businesses. A complete withdrawal from NAFTA would likely jettison millions of U.S. jobs and harm the competitiveness of U.S. companies, they say.
NAFTA has room for improvement. However, the point of all of this should be to expand trade, not reduce the strengths of the existing pact. Without Canada, this new agreement fails to meet that basic test.
— The Dallas Morning News
