Skip to main content

The Journal Gazette

Thursday, October 12, 2017 1:00 am

Another round of NAFTA talks start

PAUL WISEMAN | Associated Press

WASHINGTON – The North American Free Trade Agreement is in its 23rd year. But there are growing doubts that it will survive through its 24th.

President Donald Trump has threatened to withdraw from the agreement if he can't get what he wants in a renegotiation. But what he wants – from requiring that more auto production be made-in-America to shifting more government contracts to U.S. companies – will likely be unacceptable to America's two NAFTA partners, Mexico and Canada.

Round 4 of NAFTA talks began Wednesday in Arlington, Virginia.

“What is the administration going to do? Are they going to be patient and work through these things?” asks Phil Levy, senior fellow at the Chicago Council on Global Affairs. “Or are they going to take this as a pretext and say, 'We tried negotiations; they failed. Now we need to blow this up?'”

Blowing up the deal appears to be Trump's favored choice. On the campaign trail, he called NAFTA a job-killing disaster. And in an interview with Forbes magazine published Tuesday, Trump said: “I happen to think that NAFTA will have to be terminated if we're going to make it good.”

Levy pegs the chance of NAFTA's survival at less than 50 percent.

The end of NAFTA would send economic tremors across the continent. American farmers depend on Mexico's market. Manufacturers have built complicated supply chains that cross NAFTA borders. Consumers have benefited from lower costs.

NAFTA erased most trade barriers and led to an explosion in trade between the three countries. But critics say the pact sent hundreds of thousands of U.S. manufacturing jobs to Mexico, where corporations took advantage of low-wage labor.

Before the renegotiation began in August, many business and farm groups hoped the administration would settle for tweaking rather than abandoning the trade deal – updating it, for example, to reflect the rise of e-commerce. But Trade Rep. Robert Lighthizer declared at the outset the U.S. wouldn't be satisfied with anything but a major overhaul.