What Happens to Nafta?

Trade officials from Canada and Mexico met in Montreal recently to begin laying out proposals aimed at convincing the United States not to pull out of the North American Free Trade Agreement (NAFTA).

Representatives from Canada and Mexico will discuss an array of factors and responses to the Trump administration’s demands for altering the trade pact. The initial focus will be on the U.S.’s demands for increased U.S.-made content for cars made in North America. Since the summer of 2017, the United States, Canada, and Mexico have been locked in negotiations to reconstruct the old trade pact.

“The U.S.’s goal lies in improving the NAFTA agreement. The current administration has made it very clear that they are willing to go in a different direction if that can’t be done” said Keith Knutsson of Integrale Advisors.

Tensions continued to arise this month after Canada filed a complaint with the World Trade Organization against the U.S. trade regime and how it unfairly applies tariffs. Nafta Dispute Resolution panels started on recently, with a focus on energy and agriculture. These discussions were scheduled to end with a meeting of top U.S., Canadian, and Mexican trade officials.

Even if there are adjustments to how the automobile industry trades, there will still be large differences between the three nations as to how trade disputes are handled. The United States administration is trying to come out on top in these negotiations. However, it would be in everyone’s best interest to have a commitment ensuring “mutually beneficial trade.”