Renegociando o NAFTA: o mercantilismo americano reaparece - The Economist

Seconds out 

The North American Free-Trade Agreement renegotiation begins

Rewriting North America’s trade rules will not be easy

The Economist, August 17, 2017

Print edition | Finance and economics

Aug 17th 2017

 

THE North American Free-Trade Agreement (NAFTA), a 23-year-old trade deal between America, Mexico and Canada, is being revamped. On August 16th, after months of threats, taunts and tweets, the first round of talks started in Washington. The negotiators face a daunting challenge, straddling domestic and foreign policy. They must please their political masters while grappling with devilishly detailed policy problems. If they fail, it will not be for lack of experience. The professionals are in the room.

This negotiation will be more tense than most. Participation in trade talks is usually by mutual consent. In this one, President Donald Trump is trying to hold his trade partners hostage, by threatening to withdraw from the original deal if a better one cannot be agreed on. That such an outcome would also hurt America does not make the exercise any easier.
 

Pressure is added by a desperately tight, if unacknowledged, deadline, set by the presidential-election timetable in Mexico. If no deal is agreed by early 2018, talks must pause to restart a year later. By then, Andrés Manuel López Obrador, a fiercely anti-American Mexican candidate, may be in power. Ildefonso Guajardo (pictured, right), Mexico’s economy minister, reckons there is a 60% chance that the deal will be renegotiated this year. The original NAFTA talks took three years.The first round of negotiations is when each side sets out its priorities. At the opening press conference the Mexicans and the Canadians both emphasised the importance of keeping the benefits of the existing deal. Less promisingly, Robert Lighthizer (pictured, left), the United States Trade Representative, said he wanted assurances that America’s huge trade deficits would not continue. Making the deal hinge on this would cross the others’ red lines.
Mr Lighthizer also spoke of making a pact that respects sovereignty, a swipe at Chapter 19 of the original deal. This sets out a process for resolving disputes over defensive tariffs, arbitrated by a panel of judges picked by the three partners. Mexico and Canada are open to making this process faster. But ditching it is unacceptable to the Canadians, who do not want to be vulnerable to American anti-dumping measures.
The talks will be split into groups covering specific negotiating areas. Labour standards and dispute settlement were on the agenda for the first day. Each side usually brings along some proposed text, often lifted from another agreement. On labour standards, American trade veterans may recognise some text negotiated for the Trans-Pacific Partnership, the Obama administration’s attempt—jettisoned by Mr Trump—to update NAFTA, and bring in nine other Pacific Rim countries. The Mexicans say they will find it difficult to agree to anything stronger.
The Canadians have the advantage of ready-made text from a recent deal with the EU. Its dispute-settlement rules watered down investors’ rights in favour of governments’ freedom to regulate. The Americans may reject that in the face of fierce resistance from corporate lobbyists.
Given the time pressure, tricky topics will be broached early. Procurement was on the agenda for day two. Chrystia Freeland (centre), Canada’s foreign minister, held up pictures of firefighters from the other NAFTA partners tackling Canadian forest fires as a symbol of co-operation. In other comments she was less friendly, declaring that “local-content provisions for major government contracts are political junk-food: superficially appetising, but unhealthy in the long run.” Yet to ease Canadian contractors’ access to American government business would irk Mr Trump, a staunch advocate of “Buy American”.

The bracket bulge

After the first round of meetings, the proposals will be merged into a single document. Uncontroversial items—a prohibition on customs duties for digital products, say—can be slotted in. Disagreements will be in brackets, indicating which side holds which position. The objective then is to remove as many brackets as possible.
Such talks make grubby mercantilist horse-traders of even high-minded negotiators. Perhaps the Canadians could parlay opening their dairy market for better access to American government contracts. Trickier decisions will require “political direction”, said Canada’s chief negotiator, Steve Verheul, who has set up a system to get speedy sign-offs from his superiors.
Rules relating to the car industry will be particularly contentious. Without that trade, America would have no deficit in goods with Mexico. At issue are the rules that set the amount of regional content a product must have for it to count within the deal. Without such rules other countries could exploit the pact to export tariff-free through a NAFTA member. Enticingly for the Trump administration, tight rules (and those in NAFTA are fairly tight) reduce imports from non-NAFTA countries.
Mr Lighthizer says that the rules of origin should require higher NAFTA content and “substantial” American content. The Mexicans will balk at any asymmetry in favour of America, arguing that it violates the spirit of a regional deal. Companies will resist too, and where non-NAFTA tariffs are low, they have the option of simply operating outside the parameters of the agreement. Tariffs on cars entering America are a mere 2.5%. For products where non-NAFTA tariffs are even lower, more than a quarter flowing into America from Mexico bypass the deal entirely.
The need for speed will probably oblige negotiators to sacrifice some of their ambitions. Complicated areas such as services or intellectual property may be jettisoned, or shallow agreements reached. Resolutions for historically difficult disputes, such as between America and Mexico on sugar, or between America and Canada on softwood lumber, may have to wait.
Ms Freeland predicted “some dramatic moments ahead”. Trade negotiators are inured to screaming, yelling, walkouts and all-nighters. Wendy Cutler, a negotiator under the Obama administration, says the tension is sometimes staged for the benefit of a domestic audience: “It’s not always what it looks like to the public.”

This article appeared in the Finance and economics section of the print edition under the headline "Seconds out"

NAFTA: 30 anos do acordo de livre comercio da America do Norte - paper Luiz Maria de la Mora

NAFTA at 30: A Mexican Perspective
by Luz María de la Mora
Director Mexico Program
WEConnect International
Mexico City, Mexico
June 10, 2015

Since its inception, NAFTA (North American Free Trade Agreement) has been a force for change and deep transformation of Mexico’s key economic structures and institutions. Without question, NAFTA has been and will continue to be one of Mexico’s most important engines of economic growth given the country’s great integration in world markets.
After more than 20 years in place, NAFTA has delivered economic results beyond the most optimistic expectations, creating a U.S. $19 trillion regional market with close to 500 million consumers. During these years, regional trade quadrupled to reach $1.1 trillion in 2012, while Mexico’s exports to North America increased sevenfold. U.S.-Mexico trade expanded almost six times, increasing from U.S. $88 bn in 1993 to U.S. $515 bn in 2014. NAFTA also created a market for Mexico in Canada that previously did not exist, making it Mexico's third-largest export destination and accounting for 2.7% of its exports in 2013. At the same time, Mexico became Canada’s fifth-largest export market and fourth-largest source of imports (2014).

Leiam o texto completo neste link.

Foreign Affairs: differing views on Nafta

NAFTA's Economic Upsides The View From the United States By Carla A. Hills In the 20 years since the North American Free Trade Agreement entered into force, the agreement has proved to be an economic boon. But if North America is to remain a uniquely competitive region, it will need to build on NAFTA's success by opening markets beyond its... NAFTA's Unfinished Business The View From Canada By Michael Wilson Although the North American Free Trade Agreement succeeded in liberalizing trade, over the 20 years since the treaty entered into force, it has failed to deepen links between the Canadian, U.S., and Mexican economies. It's not too late to play catch-up, so policymakers... NAFTA's Mixed Record The View From Mexico By Jorge G. Castañeda Twenty years after the North American Free Trade Agreement came into effect, the deal has brought neither the huge gains its proponents promised nor the dramatic losses its adversaries warned of. For Mexico, NAFTA did increase exports, but its impact on spurring economic...

Nafta, 20 anos depois: nem sucesso, nem fracasso - BusinessWeek

Nafta 20 Years After: Neither Miracle nor Disaster

By Mark Glassman BusinessWeek, December 30, 2013

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Photograph by David Maung/Bloomberg

Cargo trucks entering the United States from Mexico in 2011

Bill Clinton made the North American Free Trade Agreement a cornerstone of his 1992 presidential campaign, saying it would help level the playing field for U.S. businesses trying to sell their products abroad. Candidate Ross Perot predicted Nafta would result in “a giant sucking sound going south”—the sound of American manufacturing jobs and factories being funneled into Mexico.

Nafta went into effect on Jan. 1, 1994, which now gives us 20 years’ worth of data on economic growth, trade volume, and employment to figure out who was right. The bottom line? Nafta has been neither as good as Clinton promised nor as bad as Perot warned.

Let’s start with the most basic measure of economic growth: gross domestic product. Since 1993, the year before Nafta was enacted, U.S. GDP has grown about 63 percent, while Canadian and Mexican GDP have grown 66 percent and 65 percent, respectively, according to data compiled by the Organization for Economic Cooperation and Development. Those tightly clustered growth rates are significantly better than the industrialized nations of the Organization for Economic Cooperation and Development as a whole; their composite GDP has grown about 53 percent since Nafta.

Of course, plenty of factors have contributed to North American economic growth, and Nafta’s direct impact on GDP is difficult to measure. However, the Congressional Budget Office estimated (PDF) in 2003 that the impact had probably been positive, if slight, and that it had grown consistently since the agreement was enacted.

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Let’s move on to what Nafta was specifically designed to do: encourage trade. In the early ’90s, the Clintonites promised that free trade would create a more favorable environment for the U.S. to sell its goods and services. Since 1993, U.S. exports to Canada and Mexico have climbed 201 percent and 370 percent, respectively.

Exports are only half of the trade equation. Nafta’s supporters said it would also trigger a rise in imports, leading to lower-priced goods and services for consumers and more competitive companies. Since 1993, the value of imports into the U.S. from Canada and Mexico has jumped by 194 percent and 621 percent, respectively.

Protectionists argued that the disparity between imports and exports was cause for concern because it could put pressure on U.S. companies to lower prices in order to compete in an oversaturated market.

The U.S. trade deficit with Mexico has grown dramatically since Nafta—from a trade surplus of $4 billion in 1993 to a deficit of $54 billion in 2012. Yet in most industries, corporate profit margins have risen over that period. Recently, the U.S.’s deficits with Mexico and Canada have contracted as export growth has accelerated.

As with economic growth, it’s difficult to say with certainty how much of the rise in trade between the U.S. and the other nations is directly attributable to Nafta. Trade liberalization among the U.S., Canada, and Mexico was already underway, and economists say the economic cycle plays a significantly larger role in determining trade volume than Nafta does. In its 2003 report, the CBO found Nafta’s effect on trade had been positive and that had grown in each year since the agreement was enacted. The CBO also concluded that Nafta had wielded a larger effect on U.S. exports than imports.

So what about Perot’s big fear, the labor market? Estimates of Nafta’s effect on U.S. payrolls vary wildly and depend on methodology. Here’s an unfavorable statistic: Today, there are 12 million manufacturing jobs in the U.S., down from about 17 million when Nafta was enacted.

Of course, to lay all the blame on Nafta would be to ignore a fundamental shift in the makeup of the global labor force. Relatively lax labor laws and lower wage requirements have moved a significant portion of the world’s factories to China and India since Nafta.

The Economic Policy Institute, a left-leaning think tank based in Washington, estimates that Nafta was responsible for the loss or displacement of more than half a million American jobs, mainly in manufacturing. Some Nafta supporters say certain job losses were inevitable but that the agreement was so broadly stimulative that the net effect on employment was either negligible or positive. (For what it’s worth, total U.S. employment is up about 22 percent since Nafta was enacted.)

What do you think? Was Nafta good or bad for the U.S.? Share your thoughts in the comments below.