Will NAFTA expire after five years?

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Will NAFTA expire after five years?

As you may recall, now-​President Trump went to Mex­ico dur­ing last year’s cam­paign, and, after he took over the press con­fer­ence, both Pres. Peña Nieto and he stated that NAFTA should be renegotiated.

If you look up the his­tory of NAFTA, you find:

The United States com­menced bilat­eral trade nego­ti­a­tions with Canada more than 30 years ago, result­ing in the U.S.-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.

Con­sid­er­ing the changes in tech­nol­ogy and global mar­kets that have taken place dur­ing the past 23 years, it’s not unrea­son­able to take a sec­ond look at the treaty.

The next round of talks starts today (empha­sis added)

One pro­vi­sion designed with that objec­tive is a “sun­set” clause that would force Nafta’s expi­ra­tion in five years unless all three coun­tries act to renew it, said peo­ple briefed on the plan.

Other pro­pos­als, these peo­ple said, would weaken or elim­i­nate the mech­a­nisms aimed at set­tling dis­putes between the three coun­tries and curb­ing the uni­lat­eral threats and sanc­tions that fre­quently roiled trade ties in ear­lier years.

More impor­tantly,

None of the U.S. pro­pos­als would alter the spe­cific trade terms that have spurred a quarter-​century of com­mer­cial inte­gra­tion between the U.S., Mex­ico and Canada, such as tax-​free trade across borders.

The Trump administration’s goal appears to be to reduce the incen­tive to out­source by water­ing down the pact and reduce its influ­ence on Amer­i­can com­pa­nies through mea­sures such as undo­ing the cur­rent pol­icy of treat­ing the three economies — Canada, U.S, Mex­ico — as one, nar­row­ing the amount of U.S. fed­eral spend­ing to the same dol­lar amount as the trad­ing part­ners (“dol­lar for dol­lar”), and requir­ing that some prod­ucts con­tain not just a cer­tain level of Nafta-​regional con­tent, but U.S.-specific content.

This goal goes hand-​in-​hand with the administration’s dereg­u­la­tion strat­egy to improve U.S. man­u­fac­tur­ing. And, as the WSJ said in the above arti­cle, “None of the U.S. pro­pos­als would alter the spe­cific trade terms.”

Since the new round of talks starts today, this of course does not mean that is what NAFTA will look like at the end.

How­ever, I would love to see — if only once — an inter­na­tional treaty with an actual sun­set clause.

A woman can dream.

Fausta Rodríguez Wertz writes on U. S. and Latin Amer­ica at Fausta’s blog

As you may recall, now-President Trump went to Mexico during last year’s campaign, and, after he took over the press conference, both Pres. Peña Nieto and he stated that NAFTA should be renegotiated.

If you look up the history of NAFTA, you find:

The United States commenced bilateral trade negotiations with Canada more than 30 years ago, resulting in the U.S.-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.

Considering the changes in technology and global markets that have taken place during the past 23 years, it’s not unreasonable to take a second look at the treaty.

The next round of talks starts today (emphasis added)

One provision designed with that objective is a “sunset” clause that would force Nafta’s expiration in five years unless all three countries act to renew it, said people briefed on the plan.

Other proposals, these people said, would weaken or eliminate the mechanisms aimed at settling disputes between the three countries and curbing the unilateral threats and sanctions that frequently roiled trade ties in earlier years.

More importantly,

None of the U.S. proposals would alter the specific trade terms that have spurred a quarter-century of commercial integration between the U.S., Mexico and Canada, such as tax-free trade across borders.

The Trump administration’s goal appears to be to reduce the incentive to outsource by watering down the pact and reduce its influence on American companies through measures such as undoing the current policy of treating the three economies – Canada, U.S, Mexico – as one, narrowing the amount of U.S. federal spending to the same dollar amount as the trading partners (“dollar for dollar”), and requiring that some products contain not just a certain level of Nafta-regional content, but U.S.-specific content.

This goal goes hand-in-hand with the administration’s deregulation strategy to improve U.S. manufacturing. And, as the WSJ said in the above article, “None of the U.S. proposals would alter the specific trade terms.”

Since the new round of talks starts today, this of course does not mean that is what NAFTA will look like at the end.

However, I would love to see – if only once – an international treaty with an actual sunset clause.

A woman can dream.

Fausta Rodríguez Wertz writes on U. S. and Latin America at Fausta’s blog