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Interesting, NAFTA certainly needs to be updated but I am not sure pissing off our trading partners with nonspecific threats is the best way to start. America is not, in fact, on the losing end of everything. A bad negotiator with a belligerent attitude coupled with the desire to fulfill a campaign promise could very well result in a worse trade agreement. For example, the current healthcare reform mess is very likely going to result in a more dysfunctional and expensive system.
If an agreement isn’t reached before the end of this month, it appears likely Mexico’s current senate and president, as well as the U.S. Congress, would not have a chance to approve or reject a deal. The U.S. administration is required to give Congress 90 days’ notice about a new deal. The House is meant to be given 60 legislative days and the Senate 30 to approve any new agreement. Last week, Trump tweeted that Mexico and the U.S. were close to eliminating their differences in ongoing negotiations to renew the U.S.-Mexico-Canada North American Free Trade Agreement. “Deal with Mexico is coming along nicely,” the president said in the Friday tweet, which also called president-elect Andres Manuel Lopez Obrador “an absolute gentleman.”
The president’s optimism was echoed by Moises Kalach, an international negotiations advisor to the Mexico City business chamber, CCE. He told Bloomberg News Tuesday that a deal between Mexico and the U.S. has a good chance of being wrapped up by the end of this month. If not, however, negotiators would be looking at a completely “new calendar” for a completion to the talks, Kalach warned. Mexico’s economic secretary Ildefonso Guajardo also noted that if the talks aren’t finalized by the end of this month, it would be the responsibility of the new administration of Lopez Obrador, who takes office in December, to sign off on any agreement.
Key unresolved issues include questions about the percentage of parts used in auto manufacturing that have to be made in North America, and a demand by the U.S. that any new agreement include a sunset clause, Guajardo said in an interview last month. The proposed sunset clause, which both Mexico and Canada oppose, would open the agreement to renegotiation every five years. “To be quite frank, I just don’t see how we get any NAFTA deal any time soon,” Monica de Bolle, a senior fellow at the Peterson Institute for International Economics, told CNSNews.com. The Trump administration had hoped to get a new NAFTA deal approved during the lame duck session of Congress after November’s mid-term elections. “That December timeline just doesn’t apply anymore,” de Bolle said.
Given the uncertainly of the outcome of the mid-term elections, political constraints on the signing of a new NAFTA deal now apply primarily to the U.S., since Lopez Obrador has signaled his support for reaching a new deal. The sunset clause proposal is “floating in ether and hasn’t progressed in any direction,” she said. A compromise suggested by Mexico that the wording be softened to require only a “review” – rather than a renegotiation – is unlikely to be approved by the U.S. side, de Bolle said. Meanwhile trade disputes with China and Turkey have taken the administration’s focus off NAFTA.
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