Economy - - Dec 05,2016
NAFTA, a free trade deal amongst United States, Canada and Mexico, on the verge of being torn down as trump holds office
US President elect Donald Trump’s pledge to scrap old trade agreements with Mexico and China, dropping the Mexican government in a fit. Trump in his ‘Transition Memo’ clearly stated that he would scrap or reform all the old global deals and make America’s economy the strongest.
The ‘Transition Memo’ lays out a 200-day plan majorly governed by five objectives: renegotiation or withdrawal from the North American Free Trade Agreement or NAFTA; stop the Trans-Pacific Partnership deal (TPP); stop “unfair imports”; end “unfair trade practices”; and pursue bilateral trade deals with other countries. The document also encloses Trump’s promise of retaining and returning manufacturing jobs in America by imposing strong regulations and lowering taxes on business.
Making it absolutely clear that transformation or scrapping of NAFTA, the free trade agreement between the United States, Canada and Mexico signed by Bill Clinton in 1993, will be the very first order of business. Trump plans to launch a study intended at measuring the process and its consequences for the American trade, following which there would be a withdrawal notice on the first day and a formal withdrawal on the 200th day.
Analysts believe that scrapping NAFTA would cause heavy losses not only for Mexico and Canada but for the US as well, bringing down both the economies substantially.
Annual trade happening between the three countries is worth over half a trillion dollars, equaling over $1.6bn of trade each day. Mexican exports to the US have soared six-fold since NAFTA took effect in 1994, crossing a huge $320bn threshold last year. Almost 80% of Mexican exports head towards the US.
Though, some analysts believe that scrapping the NAFTA would prove to be beneficial for the two countries, as Canada has paid over $160 million to firms, almost entirely American, since 1994. While Mexico has paid somewhere around $204 million, according to the Canadian Centre for Policy Alternatives.