Baku, Azerbaijan, August 23
By Leman Zeynalova – Trend:
The White House will face a huge pressure to stay in the North American Free Trade Agreement (NAFTA), Richard G. Miles, Director, US-Mexico Futures Initiative at the Center for Strategic and International Studies (CSIS), told Trend.
“An exit from NAFTA would be damaging to the United States. Canada and Mexico are the country’s number 1 and 2 trading partners. More importantly, NAFTA has effectively created a system of shared rules and expectations in North America, making it more competitive as a continent versus the rest of the world,” he added.
Miles said he believes that the odds are very much in favor of the US remaining in NAFTA.
“States that are large exporters, for example Texas, will exert enormous pressure on the White House and Congress to remain part of the agreement,” said the expert.
He noted that the Mexican economy is heavily dependent on exports to the US and most likely will suffer the most if the US withdraws.
“However, if it were to retaliate with punitive tariffs, US industries, especially the automotive industry and agriculture sector, would be hit hard. In a total withdrawal scenario followed by high tariff barriers, the automotive industry (including parts), the agriculture sector, and the energy sector could all see significant declines in sales,” Miles believes.
US President Donald Trump has revived a threat to pull the US out of the North American Free Trade Agreement with Canada and Mexico just days after officials from the three countries began the process of renegotiating the deal.
“Personally, I don’t think we can make a deal. I think we’ll end up probably terminating NAFTA at some point,” he told supporters in Arizona.
The United States commenced bilateral trade negotiations with Canada more than 30 years ago, resulting in the US-Canada Free Trade Agreement, which entered into force on January 1, 1989. In 1991, bilateral talks began with Mexico, which Canada joined. The NAFTA followed, entering into force on January 1, 1994. Tariffs were eliminated progressively and all duties and quantitative restrictions, with the exception of those on a limited number of agricultural products traded with Canada, were eliminated by 2008.
NAFTA also includes chapters covering rules of origin, customs procedures, agriculture and sanitary and phytosanitary measures, government procurement, investment, trade in services, protection of intellectual property rights, and dispute settlement procedures.
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