US president Donald Trump has confirmed that he plans to make an early start on renegotiating the terms of the North American Free Trade Agreement (NAFTA) that came into effect between the US, Canada and Mexico in 1994.
Trump pledged during his election campaign to change the terms of what he calls the worst trade deal ever signed by the US. A meeting with Mexican president Enrique Peña Nieto has been scheduled for January 31 and Trump said that he also has an early meeting lined up with Canadian prime minister Justin Trudeau.
During his inauguration speech last week, the new US president said: “We must protect our borders from the ravages of other countries making our products, stealing our companies and destroying our jobs. We will follow two simple rules: Buy American and Hire American.”
The following statement appeared shortly afterwards on White House website: “President Trump is committed to renegotiating NAFTA. If our partners refuse a renegotiation that gives American workers a fair deal, then the president will give notice of the United States’ intent to withdraw from NAFTA.”
Trump’s predecessor, former president Barack Obama, also had criticisms of NAFTA as evidenced in the US’s involvement in the Trans-Pacific Partnership (TPP), a 12-country agreement that has yet to be enacted and which Trump has pledged that the US will withdraw from.
The new White House press secretary, Sean Spicer, has said that Trump will not wait for his cabinet to be confirmed before acting on two priorities: pulling out of the TPP and renegotiating NAFTA, with the threat of issuing six months’ notice of termination if Canada and Mexico prove unwilling to cooperate.
The latter pledge may prove difficult to fulfil, as a majority of Republicans in Congress have long been supporters of free trade.
Moves to amend the terms of NAFTA to the benefit of the US or withdraw from the deal also risks triggering retaliatory tariff hikes in other countries, which could in turn raise the cost of goods shipped to the US and deny American companies’ access to key foreign markets.
The 23-year old agreement between the US, Canada and Mexico came into effect 23 years ago, midway through Bill Clinton’s first term as US president. It created one of the world’s largest free trade zones by reducing or eliminating tariffs on most products.
The aim of NAFTA to benefit small businesses by lowering costs and cutting red tape to facilitate buying and selling abroad. There has been much debate over whether it has been of benefit or detrimental to US businesses and job security.
President Trump’s first overseas visitor, later this week, will be UK prime minister Theresa May, amid reports that the two will hold preliminary talks on a US-UK trade deal that cuts tariffs and makes it easier for workers to move between the two countries.
According to a weekend press report, Trump’s team is also considering a deal to reduce barriers between US and British banks.
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