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Running head: RENEGOTIATING THE NORTH AMERICAN FREE TRADE AGREEMENT

(NAFTA) 1

Renegotiating the North American Free Trade Agreement (NAFTA)


RENEGOTIATING THE NORTH AMERICAN FREE TRADE AGREEMENT (NAFTA) 2

Renegotiating the North American Free Trade Agreement (NAFTA)

Essentially, trade agreements are meant to benefit all parties involved. They are effective

in fostering favorable working conditions between partner nations. However, if one party feels

that the agreement is not favoring its citizens they are bound to opt out as in the case of United

States’ withdrawal from the Trans-Pacific Partnership (TPP). Similar challenges are facing

renewed effort for renegotiating the North American Free Trade Agreement (NAFTA). This

paper supports the need to United States effort to renegotiate NFTA.

The North American Free Trade Agreement (NAFTA) came into effect in 1994 following

a successful negotiation and singing of the agreement by United States, Canada and Mexico.

This agreement contains “rules of origin, customs procedures, agriculture and sanitary and

phytosanitary measures, government procurement, investment, trade in services, protection of

intellectual property rights, and dispute settlement procedure” (Office of the United States Trade

Representative, 2018). This 24-years old agreement is outdated considering that member states

have experienced political and economic changes including the recent economic down turn.

These changes have not been taken into consideration in the current quarter a century old

agreement. In this case, there are two options to deal with NAFTA. First is to renegotiate this

agreement and somewhat upgrade it to meet the present trade challenges. The second option

would be to terminate this deal altogether and institute a new agreement in the near future.

However, at the moment quitting NAFTA is not feasible especially from the agriculture

and industrial point of view. Currently, United States’ agriculture and industrial sectors enjoys

favorable tariffs when they sell produce and products to Mexico and Canada. Therefore,

terminating the agreement would give Mexico the go ahead to impose a major tariff on

agricultural produce such as corn. Even President Donald Trump knew this when he was making
RENEGOTIATING THE NORTH AMERICAN FREE TRADE AGREEMENT (NAFTA) 3

his statement of terminating NAFTA during an interview with Reuters in January, 17 2018

(Mason & Lawder, 2018). However, he had stated a week earlier on Wall Street Journal (2018)

that he would not have a rigid stand on the issue an indication that he knew the gravity of

terminating the agreement.

The favorable option would be to try and renegotiate NFTA between member states. On

May 18, 2017, United States Trade Representative and lead negotiator Robert Lighthizer

informed congress after deliberate consultation with all stakeholders of president’s intent to

commended negations with member states with respect to the agreement. This was a step in the

right direction and United States has highlighted several things that they would like to put on the

table. This include invigorating United States manufacturing, protection of workers, settling

disputes and sunset clause. The “sunset clause” clause is relatively new, which calls for renewal

or termination of the agreement after every five years (Swanson, 2017).

This are highly contentious issues that have stalled talks since October, 2017. To ensure

that this deal goes through, it would be import for President Trump administration to revise some

its hardline demands and bring forward a preliminary deal. This will allow Mexico and Canada

to respond. Much of what is required during these negotiations is to simply update the

agreement. Updates can be drawn from the recent TPP deal. This include updating things written

and signed 24 years ago such digital trade and telecommunication regulations, custom process

regulations, and ensuring that all these regulations among the member states are in step. This

calls for leaders to set aside their quest to gain political mileage during this exercise and focus on

safeguarding the welfare of its citizens.

In conclusion, terminating NAFTA is not a feasible step at the moment. Leaders must

focus on engaging in negotiation aimed at updating the agreement.


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References
Mason, J., & Lawder, D. (2018, January 18). Exclusive: Trump says terminating NAFTA would

yield the 'best deal' in renegotiations. Retrieved from Reuters:

https://www.reuters.com/article/us-usa-trump-nafta-exclusive/exclusive-trump-says-

terminating-nafta-would-yield-the-best-deal-in-renegotiations-idUSKBN1F703Y

Office of the United States Trade Representative. (2018). North American Free Trade Agreement

(NAFTA). Retrieved April 06, 2018, from Office of the United States Trade

Representative.

Swanson, A. (2017, September 28). How the Trump Administration Is Doing Renegotiating

NAFTA. Retrieved from The New York times:

https://www.nytimes.com/2017/09/28/business/how-the-trump-administration-is-doing-

renegotiating-nafta.html

Swanson, A. (2018, April 5). White House Tries to Pull NAFTA Back From Brink as Deadlines

Loom. Retrieved from The New York Times:

https://www.nytimes.com/2018/04/05/us/politics/nafta-negotiations-trump-canada-

mexico.html

The Wall Street Journal. (2018, January 14). Transcript of Donald Trump Interview with the

Wall Street Journal. Retrieved from The Wall Street Journal:

https://www.wsj.com/articles/transcript-of-donald-trump-interview-with-the-wall-street-

journal-1515715481