US President Donald Trump and Mexican President Enrique Peña Nieto on Monday, agreed to overhaul major parts of the North American Free Trade Agreement (NAFTA), which was concretized more than 20 years ago by the US, Mexico, and Canada. The current leaders of Mexico and US made a bilateral decision to revise the agreement, but still await Canada’s consent on the matter.
NAFTA is the largest and among the most important free trade treaties and it has played a crucial role in dictating the economies of the three countries. It helped eliminate several tariffs that were seen as an obstacle to free trade, and also tripled combined trade value of the member states.
The move to revamp the treaty has been a part Trump’s campaign – he once called it the worst deal for America ever. It looks like he is finally making some progress on renegotiating to create a more fair and balanced deal for Americans.
On Monday, Trump announced in a joint conference that the US and Mexico had agreed to revise important parts of the treaty, and would finalize the details in just a few days. The revised agreement, which Trump dubbed the “United States-Mexico Trade Agreement”, contains updates to laws on digital economy, automobiles, agriculture and labor unions.
This decision is seen as a hostile one to Canada, who has been largely left out of negotiations and have been given an ultimatum to agree with the terms or risk being ousted from the agreement altogether.
Economists and analysts warned of the illegality and impracticality of booting Canada from the agreement.
While Mexico originally chose to stand by Canada, and wanted to ensure that they had a say in the a matter, they quickly changed their tune as well. Luis Caso, the Mexican Foreign Minister, stated “Not having a trade agreement with the US, that’s a substantial risk to the Mexican economy.”
Although both US and Mexico would prefer to have Canada on board, the lack of discussions between President Trump and PM Trudeau make it seem very tough. Chrystia Freeland, the Canadian foreign minister, is expected travel to Washington on Tuesday to restart negotiations.