Friday, February 10, 2017

Is a big NAFTA debate really coming?


President Trump may find that Mexicans are eager to renegotiate NAFTA after all. The left in Mexico has been against NAFTA since 1993 on the grounds that U.S. agricultural imports have hurt their farmers. Let’s remember that the left almost won the 2006 election and did well in 2012.
President Enrique Pena-Nieto will probably call for negotiation just to show the emboldened Mexican left that he can stand up to President Trump.
Up here, President Trump may may also find that many U.S. companies want NAFTA to stay the way it is.
This is from the New York Times:
The Mexican government said on Wednesday that it was beginning a 90-day consultation with the country’s Senate and private sector before talks with the United States to review the North American Free Trade Agreement.
At the same, the article points out that renegotiating NAFTA may be a bit more complicated:
Job losses in American manufacturing have different causes, and not all industries in the United States have suffered.
Last month, some 130 agricultural organizations sent a letter to Mr. Trump stating that “increased market access under Nafta has been a windfall for U.S. farmers, ranchers and food processors.”
And that’s a problem.
Mr. Trump dismissed NAFTA as a one-way street, a program that only benefits Mexico. In fact, it is a lot more complicated than that, as anyone who works in the U.S.-Mexico market will tell you.
My guess is that the U.S. exporters selling over $200 billion of goods and services understand what I mean. Mexico is a huge market and U.S. exporters don’t want to hear about a trade war that will cost them sales.
So what will happen? Probably not much, especially after both sides come to terms with the reality that a lot of business is going north and south.
Are there problems with Mexico? Yes. We need the wall to stop the “bad hombres” running around the border. We need more cooperation from Mexico on immigration. Mexico needs to reform its energy and agricultural sectors to make itself more competitive worldwide.
NAFTA? With all due respect to President Trump, a man whom I voted for and would love to see succeed, NAFTA is not the terrible deal that we’ve heard about.
My suggestion to President Trump: Tone down the volume with Mexico and start screaming about China! The trade deficit with China was $367 billion!
P.S. You can listen to my show (Canto Talk) and follow me on Twitter.

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