Tuesday, 29 August 2017

A big question: NAFTA on or off?

Posted by Valentine at 13:09 Labels:

The North American Free Trade Agreement or simply NAFTA is now a hot topic around media as President Donald Trump has anticipated its end due to unfavorable conditions for the US.

The deal was set in motion back in 1994 and it is considered to be one of former President Bill Clinton’s key achievements. NAFTA is nowadays the largest free trade agreement in the world and over the last two decades it has contributed enormously to the expansion of the three economies that take part on it - the United States, Canada and Mexico.

The idea behind this agreement was not only to boost trade between its members, but also to increase competitiveness of these countries in the international markets.

Only three days after the Republican magnate officially became President of the United States, he signed an executive order aimed at renegotiating NAFTA. Trump believes this deal is responsible for taking American jobs to Mexico, where labor costs are considerably lower.

Trump’s goals with the renegotiation are not one, in fact a seventeen-page document has been recently released by the White House stating all its intentions with this new process. In many ways, we could say it’s all about bringing back jobs to the US and reducing trade deficit.

If you’ve time: https://ustr.gov/sites/default/files/files/Press/Releases/NAFTAObjectives.pdf

“Personally, I don’t think we can make a deal … I think we’ll end up probably terminating NAFTA at some point,” Trump said at a rally with his supporters in Arizona last week, hinting that people shouldn’t get excited about a new deal coming any sooner.

“I personally don’t think you can make a deal without a termination but we’re going to see what happens, OK? You’re in good hands, I can tell you,” he added.

But even members of his own administration recognized that ending NAFTA wouldn’t particularly be in US interests by any means. While the deal has increased trade deficit, it has also promoted lower grocery and oil prices.

So… could Trump really terminate Nafta?

The answer is yes. But the cost of doing such thing is extremely high and if he’s such a great business person as he pledges to be, reason would take him to other side. Ending Nafta would be consider a very bold move and it could be interpreted as an unconstitutional due to the fact he would be imposing regulation on commerce without Congress go-ahead.

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