Here’s what you need to know about NAFTA’s ‘rollercoaster’ negotiations
September 4th, 2017 12:52 pm | By admin | Posted In Corporate, Credit
NAFTA is like that coach that has always been around, and even though it doesn’t look nearly as good as you would like, everyone is just too used to it to change it.
The acronym stands for “North American Free Trade Agreement,” somehow an ironic name, since it doesn’t mention Mexico and Canada.
It was signed by the three countries in 1994, and it has been operating ‘successfully’ since then, even though there have been some disagreements and claims along the way. But think about it, is like a 23 years old marriage, you can’t just agree on everything to make it work, you have to compromise! Don’t you?
Recently, President Trump shared his perspective about it, which was something like: I don’t care that it has been 23 years, we either fix it or finish it! This is something that you can read between the lines of his Arizona rally speech where he stated: “Personally, I don’t think we can make a deal because we have been so badly taken advantage of.”
But, what are the crucial points that have brought such a strong position on the disadvantages that the treaty has for the U.S.?
Well, here are a few things you need to know about NAFTA before you make your own judgment:
• NAFTA was created to benefit the three North American countries in a way that not only goods but also jobs were created through it.
• Mexico and Canada seem to have benefited the most out of it, since they have trade surpluses with the U.S., meaning that they sell more than what they actually buy from U.S. companies.
• Chinese companies, along with other cheap manufacturing countries, had devised several ‘back-door’ strategies to use, mostly via Mexico, to take advantage of the agreement’s preferential tariffs, allowing these countries to gain direct benefits from a relationship they are not supposed to be a part of. Kind of like the male lover who buys a Ferrari by using the still-unaware husband’s bank account.
Now, what do the Canadians and Mexicans think about the agreement? Of course, they think it should continue to operate, with a few minor adjustments. Who wouldn’t, right?
Nevertheless, Trump is resolved to disrupt the current state of affairs as he continues to unfold his ‘America First’ agenda.
His remarks about putting an end to the agreement where cautiously received by investors, and the Mexican Peso lost some ground for a while after the comments were issued. Nonetheless, it seems that the actual change will take a little bit more time. Negotiators are still accommodating in their seats and it seems unlikely that after a few days have passed, the White House suddenly decides to put an end to everything.
Either way, Trump’s remark serve as a reminder that he’s not joking about the matter and they probably caused a few nervous laughs among the main beneficiaries.
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