The pitfalls of renegotiating NAFTA

DONALD TRUMP called the North American Free-Trade Agreement (NAFTA) with Mexico and Canada the “worst trade deal ever approved in this country”. Soon it will become clearer what he intends to do about it. He has three choices: tear it up, bully the United States’ partners into making concessions that merely damage the agreement or go for a renegotiation that benefits all three. 

The process for making big changes to NAFTA has started. On February 3rd the Mexican government began a 90-day consultation with businesses on what its negotiating position should be. Wilbur Ross, who will lead the American negotiators after the Senate confirms him as commerce secretary, says NAFTA is “logically the first thing for us to deal with”. Notification to Congress, which must happen 90 days before talks can start, could come soon.

NAFTA is not the failure Mr Trump claims it is. Trade in goods among its three partners has more than trebled since it took effect in 1994; 14% of world trade in goods takes place under its rules. Cross-border supply chains have made American firms more competitive. The manufacturing jobs it has created in Mexico have...Continue reading