NAFTA Renegotiation Talks Enter Fifth Round

Published November 6, 2017

Representatives from the United States, Canada, and Mexico will meet again in November to continue renegotiating the North American Free Trade Agreement (NAFTA), a trilateral trade bloc created in 1994.

Standing with Canadian Foreign Minister Chrystia Freeland and Mexican Economy Secretary Ildefonso Guajardo on October 17, U.S. Trade Representative Robert Lighthizer said he was “surprised and disappointed by the resistance to change from our negotiating partners on both fronts,” citing resistance to U.S. proposals.

In the fourth round, U.S. trade representatives proposed mandating the agreement’s reauthorization every 5 years and requiring all automobiles manufactured and sold to consumers in member countries contain at least 85 percent U.S.-made parts, in order to be sold without tariffs.

Representatives from the three countries will meet for a fifth round of talks scheduled for November 14 in Mexico City, Mexico.

Concern over Trade Deficits

Simon Lester, a trade policy analyst with the Cato Institute, says President Donald Trump’s negotiators believe NAFTA is a net loss for America.

“Trump is looking at these issues very differently than most economists, or anyone else,” Lester said. “I think it’s fair to say he is pretty narrowly focused on whether there is or is not a trade deficit. When he sees a trade deficit, he thinks that there’s something unfair going on, that the U.S. is being treated badly, and he wants a new deal.”

Mastering the Art of the Deal

U.S. trade negotiators need to be forthright and realistic if NAFTA is to survive, Lester said.

“At this point, to me, it still seems possible,” Lester said. “I don’t want to say it’s likely, but I think it is possible. Behind the scenes, negotiators need to have some sort of direct conversations about ‘what is it you really want,’ ‘here’s what we can actually accept, and we’ll see if there’s a middle ground where everyone can meet.'”

Workers’ Worst-Case Scenario?

Claude Barfield, a resident scholar at the American Enterprise Institute, says dissolving NAFTA or leaving the bloc would reduce the competitiveness of U.S.-made products, as well as the competiveness of products made in the other two countries..

“Because you have raised tariffs on parts and components, or made them more expensive, it would mean that U.S. automobiles produced in North America, whether you end up with the final product in the United States or in Mexico, would be less competitive vis-a-vis the rest of the world.”