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Friday, December 8, 2023

NAFTA in Jeopardy?


Chief U.S. negotiator John Melle has laid the Trump administration’s most aggressive NAFTA demands to date on the table. It appears after several rounds of benign negotiations the trade agreement may be in jeopardy.

The fourth round of negotiations comes to an end with tensions rising after the U.S. presented proposals that could be impossible for Canada and Mexico to go along with. U.S. industry representatives and Congress, meanwhile, are becoming vocal about preserving the regional trade ties built over the years as they sense the discussions could be in trouble.

NAFTA’s fate may now hang on how flexible the U.S. is about its demands heading into the fifth round of talks, scheduled for Mexico City around the first week of November. While the parties had wanted to reach a deal by December, officials familiar with the negotiations say the talks are likely to drag on for months.

Hanging over negotiations are Donald Trump’s regular threats to walk away. One official familiar with the proceedings, who wasn’t authorized to speak publicly, said on Oct. 15 that it seems more likely Trump will give the mandatory six months’ notice required to leave NAFTA, though not necessarily end up backing out. Others were less sure.

“He’s unpredictable, so I don’t know,” said Stephen Moore, a senior economic adviser during Trump’s campaign and chief economist at the Heritage Foundation. “I do feel, though, that his bark has been worse than his bite on trade. That doesn’t mean that he’s retreating. But I think we’re going to see a NAFTA 2.0 that will find areas that will give the U.S. even greater benefits, while protecting American workers.”

Mexico has signalled that it won’t negotiate during the six-month window if Trump announces he’ll walk away, and it’s unclear what the next steps would be were that to happen. Congress and others are vowing legal and political fights if the president tries to pull out.