The North American Free Trade Agreement will most likely be renegotiated successfully with only marginal changes, said a large majority of economists, from the United States, Mexico, and Canada, in a recent Reuters poll. This is despite President Trump’s repeated warnings that he wants the United States to withdraw from the pact, saying NAFTA is unfair to American businesses.
Only four out of 45 economist polled this week said they thought the deal would be terminated, with the rest anticipating an updated trilateral agreement that would not differ radically from the current one.
“We expect a modernized agreement after a bumpy and lengthy negotiation and approval process,” said Carlos Capistran, head of Canada and Mexico economics at Bank of American Merrill Lynch. “It will be an update with marginal changes. The bulk of it will remain the same.”
The sixth round, and next to last, of talks to revamp the agreement underpinning more than $1 trillion per year in trade among the U.S., Canada, and Mexico will begin on January 21 through January 29.
Meanwhile, the United States is reportedly running out of patience with Canadian and Mexican resistance to key American proposals ahead of talks scheduled next week.
“The U.S. is serious about its threat to withdraw from NAFTA if there is no breakthrough on proposals the Trump administration has made that are intended to rebalance trade,” a person familiar with the matter said, who spoke to Bloomberg on condition of anonymity because the negotiations are not public.
U.S. negotiators want tangible movement from their trading partners on issues such as Mexican labor conditions, which the U.S. says keeps the nation’s wages artificially low and a “sunset” clause that would cause the agreement to expire in five years unless the contries agaree to renew the agreement.
“As is natural during negotiations, there are issues where we do not all see eye-to-eye, said Adam Austen, a spokesman for Canada’s Foreign Minister Chrystia Freeland. “We will continue to work hard and negotiate constructively to modernize NAFA so it is a win-win-win for everyone.”
President Trump has repeatedly threatened to pull out of the deal, which he blames for America’s $63 billion deficit in goods and services with Mexico. In a tweet yesterday, the president called NAFTA a “bad joke” and reaffirmed his plan to build a wall with Mexico.
