GeoPolitics: Canada, Mexico ready to talk about NAFTA with US
Mexican
Foreign Minister Claudia Ruiz Massieu said Mexico is willing to
"modernize" the North American Free Trade Agreement with Canada and the
US
Ottawa
(AFP) - Canada and Mexico agreed Thursday to US President-elect Donald
Trump's demand to have a fresh look at their tripartite 22-year-old free
trade pact, fearing they could be shut out of the US market.
But
the two US allies diverged on the level of changes to the North
American Free Trade Agreement (NAFTA) each was willing to accept, with
Mexico taking a harder line.
The
1994 trade pact became a source of friction with America's neighbors
during the campaign when Trump called NAFTA the worst trade deal the
United States has ever signed.
The
Republican president-elect's protectionist notions to repatriate
American jobs lost to free trade sent shockwaves through Canada and
Mexico's economies, which both rely heavily on exports to the United
States.
"I
think it's important that we be open to talking about trade deals,"
Canadian Prime Minister Justin Trudeau -- a fierce defender of free
trade -- said Thursday.
"If the Americans want to talk about NAFTA, I'm more than happy to talk about it," he said.
Mexico's
Foreign Minister Claudia Ruiz Massieu, meanwhile, said her government
was willing to seek to "modernize" NAFTA with Trump's incoming
administration and Canada, but not ready to start from scratch.
"We are willing to talk about this with the new government and with Canada as well," Ruiz Massieu told CNN.
"We think it is an opportunity to think if we should modernize it -- not renegotiate it, but to modernize it," she insisted.
Ruiz Massieu said NAFTA would be discussed with Trump's transition team in the coming months.
Trump
has also agreed to meet with Mexican President Enrique Pena Nieto,
possibly before the New York billionaire's inauguration in January.
Trudeau has meanwhile pledged to work closely with the new US leader.
- 530 million consumers -
NAFTA created a continental market with 530 million consumers in Canada, the United States and Mexico.
Two-way
trade in goods between Mexico and the United States totalled about
US$1.5 billion daily in 2015, while bilateral trade crossing the
US-Canadian border amounted to $1.8 billion daily.
The
United States, however, is a net loser in both cases, posting $15
billion and $58 billion trade deficits with Canada and Mexico,
respectively, last year.
Ruiz
Massieu said Mexico "believes in free trade" and the governments "have
the challenge to make sure that the opportunities created by NAFTA are
more inclusive and that more people in the three countries feel the
benefit of this integration agreement."
Trudeau
said also that it was important to periodically reassess trade deals to
ensure that they continue to be of benefit to the middle class.
Some
analysts predict a drop in trade if Trump follows through with
protectionist measures, and even possibly a recession in Canada, whose
exports to the United States account for 20 percent of its GDP.
Others
insist the United States would never seek to curb trade with Canada and
Mexico since their economies are so heavily intertwined.
Whether
or not NAFTA actually helped generate thousands of jobs and reduce
income disparities across North America, or caused huge job losses in
the United States as companies moved production to lower cost Mexico --
as Trump has suggested -- is up for debate.
In
2015, the US Congressional Research Service summarized several studies
this way: "In reality, NAFTA did not cause the huge job losses feared by
the critics or the large economic gains predicted by supporters."
"The
net overall effect of NAFTA on the US economy," it concluded, "appears
to have been relatively modest, primarily because trade with Canada and
Mexico accounts for a small percentage of US GDP."
The report acknowledged there were corporate and employee costs associated with the transition to more open trade.
It also noted that NAFTA has served as a template for all subsequent free trade agreements negotiated by the United States.