Even after twenty years, the North American Free Trade Agreement remains highly controversial. Donald Trump claims that NAFTA has “destroyed this country economically,” apparently unaware that the U.S. economy is still pretty fantastic. He has promised to pull out of the landmark free trade agreement between the United States, Mexico, and Canada unless he can renegotiate it.
Hillary Clinton has also promised to renegotiate NAFTA. Trump has erroneously claimed that Clinton only came out against NAFTA after he made an issue of it. She made the same promise during her 2008 presidential campaign. Trumps also claims (much less erroneously) that Clinton will probably back out of any promise to renegotiate NAFTA after she’s elected.
If you ask the Obama administration, however, they’ll say they’ve already renegotiated NAFTA by creating the Trans-Pacific Partnership, which includes Canada and Mexico. The idea behind that claim is that the TPP includes stronger and more enforceable labor and environment rules than NAFTA. NAFTA’s critics on the Left have complained since its inception that NAFTA’s rules are inadequate. Obama’s claim to have fixed that “problem” through the TPP is a bit comical, even if nominally true, since those same critics also despise the TPP for largely the same reasons.
Clinton has raised the labor and environment complaint in her own condemnations of NAFTA, along with concern over investment rules and dispute settlement procedures.
Trump’s criticisms of NAFTA have been characteristically vague. He seems to be caught up in an economically misguided concern for bilateral trade deficits. Presumably, Trump would want to raise tariffs on goods from Mexico and somehow have Mexico agree to that within NAFTA.
The reason no one is going to renegotiate NAFTA is that Mexico and Canada are not interested. Most likely, their trade officials understand that U.S. elections bring out a lot of protectionist saber-rattling that gets lost in the shuffle once new Presidents get to work crafting and implementing their international economic policy, which presumably doesn’t involve impoverishing the United States and its neighbors.
Two way trade between the United States and Mexico rounds out to about $1.4 billion per day. That figure includes well-established cross-border supply chains that enable integrated North American industries. The economic consequences of disrupting that trade are serious, and pulling out of NAFTA might actually accomplish all the horrible things Trump has blamed NAFTA for doing.
