In January, we wrote about the potential impact the election of U.S. President Donald Trump may have on the North American Free Trade Agreement (NAFTA).

Within days of taking office, Trump signed an executive order to withdraw from the 12-nation Trans-Pacific Partnership (TPP) free-trade deal. Would he do the same for NAFTA? Would he “tear up” the agreement as per his campaign promise, or renegotiate the longstanding accord between Canada, the U.S., and Mexico?


Background:

Donald Trump has certainly made his feelings about NAFTA well known – both on the campaign trail, and while in office. Calling it “very, very bad for [U.S.] companies and workers” and “the worst trade deal ever signed in this country,” Trump even campaigned on the promise to tear up the agreement between the three countries.

Mexico has been the primary target of NAFTA critics, who blame it for lost manufacturing jobs and widening U.S. trade deficits. However, in late April, the Trump administration attacked Ottawa over support for dairy farmers, and threatened preliminary duties on softwood lumber imports.

On April 26, Politico reported that Trump was planning to sign an executive order to withdraw the U.S. from NAFTA. Shortly after this report, however, Trump backed off, tweeting that he will seek to renegotiate, rather than cancel the agreement, provided a “fair deal for all” can be reached with Canada and Mexico. According to CBC, Trump agreed to renegotiate the deal after phone calls with Prime Minister Justin Trudeau and Mexican President Enrique Pena Nieto.

Trump’s promise to negotiate didn’t come without a warning, however. In a follow-up tweet, he declared that if renegotiation falls through, he will move to cancel the agreement.


Looking Ahead:

When it comes to terminating NAFTA, the law states that pulling out requires six months’ notice. The White House is also required to give Congress 90 days’ notice before commencing trade deal talks.

Officials believe that if Canada and Mexico stick together during negotiations, it will greatly benefit them both. On Power & Politics on April 27, former Mexican congressman Agustin Barrios Gomez told host Rosemary Barton that “[the U.S. threats are] all very alarming and everybody is on their toes. Among the three countries, the U.S. is the one with the most to lose.” He went on to compare recent behaviour of the Trump administration to a “banana republic.”

Last week, Mexico’s Minister of Tourism, Enrique de la Madrid Cordero, was in Ottawa for meetings concerning the renegotiation of NAFTA. While he feels that it is important to continue to maintain a good relationship with the U.S., he also said that it is now more important than ever to “diversify even more,” suggesting that Mexico and Canada need to look towards new non-American markets, including China, to grow their economies.

The next round of NAFTA talks between the three countries are scheduled to take place this summer.