The negotiators of the US, Mexico and Canada on Wednesday are launching a first round of talks on changes to the free trade agreement in North America (Nafta), which will last until August 20th. The second round of negotiations on the treaty, which Donald Trump called the worst agreement in history for the United States, will be hosting Mexico from 10th September.
The Nafta Agreement, which in fact, from the existing US-Canada agreement was extended to Mexico, was enacted by democratic president Bill Clinton in 1993 and entered into force in the following year. Today, it is an area of around 480 million inhabitants, which generates a total of just over 21,000 billion dollars a year. Out of those 21,000 billion dollars, almost 90 percent goes to the United States.
Since 1994, the value of annual trade between countries has more than tripled to almost $ 1,000 billion. Canada has tripled the value of its exports to the United States to $ 278 billion since the beginning of the "Nafta" , while Mexico has increased them sevenfold to $ 294 billion. Last year, the United States had a surplus of $ 12.5 billion in trade with Canada, and a $ 63 billion deficit in trade with Mexico.
Economic analysts in all three countries agree that all three countries have benefited from Nafta so far, but the benefits are unevenly distributed in certain areas. In general, Mexico had the greatest benefit, which is also the least developed of the three countries.
For US and Canada, the biggest problem with Nafta, are those large corporations, opening up factories in Mexico where the workforce is cheaper to earn profits. Trade unions, which are the main base of the Democrats in the US, agree and here is a large part of Trump's electoral success.
DID YOU KNOW: 70% OF UNITED STATES EXPORTS GO TO CANADA?
Last year's presidential campaign in the United States attracted to the surface of the most extraordinary worker rights advocate in the US, the billionaire Donald Trump, who did not come up with the fight for labour rights, but the main driving force behind capitalism, a desire for profit. Trump immediately invaded the Democratic Election Camp at the beginning of the campaign, saying, among other things, that Mexico is shutting down the US jobs and will therefore abolish Nafta. He later agreed to negotiate the changes.
He changed the opinion for the consultants he circled with. These are billionaires who are aware that they are benefiting from Nafta. There should be two camps of counselors in the White House. On the one hand, such as Finance Minister Steve Mnuchin and Zara Jared Kushner, who want to preserve and increase the benefits for Nafta companies, and ideologues like Steve Bannon, who advocate protectionism. Trump mostly bent over Nafta during the campaign, but did not have a plan for change, and his government only arrived in the middle of July with a list of around 100 requests.
In the first place, the requirement is to reduce the US trade deficit, which should not be a problem with Canada, but it is. The United States is attacking the Canadian support system for the dairy and forestry / wood-processing sectors. Nafta has a special dispute settlement body, which has so far been granted to Canada in the above cases, and Trump demands that the body should be abolished and transfer jurisdiction over disputes to US courts. For Canada, the abolition of the body listed in Chapter 19 of the Agreement is a red line through which it does not go.
The US wants to facilitate the operation of US banks and telecommunications companies in Canada and Mexico; from Canada and Mexico, Washington demands greater access to public procurement, while at the same time it wants to disable them in the United States. Washington also seeks to eliminate non-tariff barriers to exports of agricultural products. Trump also wants to increase the amount by which Canadians from the US without customs duties can buy online.
Canada and the US want to formalize reform of the Mexican energy sector with the new Nafta for the purpose of facilitating the access of their companies. Trump wants to increase customs duties on cars, depending on where their parts are being produced, and that criticism is directed at Mexico, where the US automotive factories moved a large portion of production.
As these are three countries, various coalitions are likely to be drawn up for various issues. Mexico and Canada may be caught around about chapter 19 and agriculture, the US and Canada regarding environmental and social standards reforms, and Mexico and the US maybe even nowhere. Trump repeated several times at the beginning of the year that Canada is not a problem and that the US will agree with the northern neighbour, and that the biggest problem is Mexico. However, this year's 27% increase in customs duties on imports of timber from Canada in Ottawa has not gained allies.
In the worst case, Canada and Mexico will turn elsewhere. Canada is already turning to EU, which is its second largest trading partner for the United States. The Ceta Agreement has been concluded but not yet ratified in EU member states.
