It’s something both Republicans and Democrats tend to agree on: the North American Free Trade Agreement needs to be updated and modified for the 21st century. The first round of NAFTA renegotiation discussions ended this past Sunday, but not much progress was made by the United States, Canada and Mexico.
The Detroit News reports U.S. officials have taken a tough tone on the trade agreement and reportedly won’t settle for small tweaks. Instead, the Trump administration is pushing for big results.
“I want to be clear that [the president] is not interested in a mere tweaking of few provisions and a couple of updated chapters. We feel that NAFTA has fundamentally failed many, many Americans and needs major improvement,” U.S. Trade Representative Robert Lighthizer said.
However, analysts are unsure what to expect from the renegotiations talks since the talks themselves have never been carried out before.
“The basis for what our side is negotiating is to threaten them with the possibility of pulling out of NAFTA altogether,” Alan Deardorff, professor of public policy and economics at the University of Michigan, said. “They’re hoping that no matter how bad the deal we insist on is for Canada and Mexico, it will be better for them than it is to let it go completely. The gains from NAFTA are such that they can probably push them quite a ways.”
Some have pushed the talks to include a larger made in America parts requirement. Currently, the threshold sits at 62.5 percent of parts to qualify for duty-free status. Critics want the number to be as high as 90 percent. However, analysts such as Deardorff believe such a change won’t guarantee more jobs.
“For imports that are coming from China, the cheapest place in North America to get them would probably be Mexico,” Deardorff said.
The next round of renegotiations talks is scheduled to take place September 1-5 in Mexico.