In the 1990s the United States, Mexico, and Canada linked hands in a trade partnership known as the North American Free Trade Agreement. The main perk of the agreement for all three nations was that it significantly reduced or eliminated trade tariffs that were seen as stifling to the free movement of goods, services, and capital at the time that NAFTA was originally drafted and ratified (1994).
Earlier this week representatives from all three nations met to discuss where to take NAFTA from this point onward. President Trump avowed repeatedly on the campaign trail to rip up NAFTA and create something much better in its place. Up to this point President Trump has been decidedly more tepid in his hostility towards the free-trade deal. That could all change, though, as a new NAFTA timeline is slowly emerging.
With opening round talks that started Wednesday still not yet concluded as of Friday, August 18th all three nations have agreed upon the next two stages for the NAFTA negotiations. Mexico City will host the second round of trade talks over five days starting on September 1st. Then things will head over to Canada where Prime Minister Justin Trudeau and his trade ministers will take over hosting duties on September 23rd.
The United States, Mexico, and Canada are in something of a mad scramble right now to finalize a deal before the Mexican presidential race gets under way next year. Leaders and trade leaders from all three nations hope to hammer out a deal by the end of this year or, at the very latest, the beginning of 2018. Incredibly, sources say that rewritten portions of NAFTA will appear for review right after the third round of talks in Canada. That’s a mere one month away.
The reason that this seems so incredible to many economists is that there’s a lot of balls being juggled right now. Ripe for debate is how each of the three nations are going to regulate the cross-border commerce of biologic medications, food and clothing imports, and something known as the rules-of-origin rule. This last item relates to how you go about determining where a product originated when constituent parts came from more than one country.
Also at issue is how trade disputes will be settled. The floundering TPP had what’s known as a investor-state dispute settlement, and NAFTA has a similar mechanism. Round two begins next month.