New Terms for Nafta?
Last week, President Trump made good on his promise to oppose the Trans-Pacific Partnership, formally abandoning the 12-nation trade agreement. During his campaign, he also ran against the North American Free Trade Agreement (Nafta) between the U.S., Mexico and Canada, calling it the ¡°worst trade deal ever.¡± Pulling out of the 25-year-old trade agreement would be an arduous process and risky for the U.S., but experts say there is room to renegotiate the terms of the deal. If the Trump administration is going to renegotiate Nafta, what should and shouldn¡¯t be on the table?
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1. Nafta¡¯s Corporate Goodies Are Its Biggest Problem
A replacement would have to avoid benefits that help companies without helping American workers.
2. Improved Workers¡¯ Rights for Mexicans Will Benefit U.S.
Nafta gains bypassed Mexican workers and the fallout damaged workers and communities in both countries.
3. End Patent and Copyright Requirements
These are forms of protectionism that can raise the price of the protected items, which is especially pernicious
in the case of prescription drugs.
4. Don¡¯t Renegotiate Nafta
Rather than risk the possibility that one or more of the parties will walk away, it would be better to work together
to update and improve certain elements of the agreement.
5. Eliminate Provisions That Protect Polluters
Nafta has put the natural resources -- especially energy supplies and water -- of Canada, Mexico and in the United States in danger.
6. Keep the Trade Deal; the U.S. Needs Mexico to Prosper
Nafta needs upgrading and updating, but it is crucial to regional stability, which is in the U.S.¡¯s interests.
Sample Essay
President Trump Should Not Renegotiate Nafta
There is no reason to renegotiate Nafta. The agreement is not perfect, nor was it perfect in 1994, but if you consider all the evidence of the impact of Nafta on the U.S. economy, it turns out the agreement has achieved its intended objectives and is actually a very good deal.
Although the agreement did lead to some plant closings and layoffs in some industries, it also led to expansions in others. It did not increase unemployment in the long run and actually increased productivity. Although Nafta did not stop the decline in manufacturing output and jobs in the U.S., the decline has more to do with a shift to service-based economies than with the trade deal. Strong and productive value chains require low trade barriers between countries and Nafta facilitated that.
An outright withdrawal from Nafta would be extremely disruptive and damaging to the U.S. and to the North American economies. It would damage American manufacturing and service sectors and significantly disrupt financial markets. About five million American jobs are directly tied to trade with Mexico. And nine million American jobs are tied to trade with Canada.
Renegotiating a complex agreement like Nafta will lead to considerable uncertainty during the negotiations and involve too much time and effort dealing with all the gripes and grievances among the three countries. And remember, the previous negotiations on Nafta took over three years to complete.
Rather than open up that can of worms – and risk the possibility that one or more of the parties will walk away – it would be better to work together to update and improve certain elements of the agreement.
And actually, all three countries just completed an extensive negotiation that did precisely this. It also involved nine other countries. The Trans-Pacific Partnership was an ambitious agreement that brought provisions in Nafta up to date and improved upon the agreement. The T.P.P. was exactly what we needed to address some of the outdated and poorly conceived aspects of Nafta. President Trump made a grave mistake in pulling out of that deal. Let¡¯s hope he doesn¡¯t do the same with Nafta.