The trade agreement between Canada, the United States and Mexico has been established in 1994 (NAFTA). The intention of the trade agreement is to eliminate tariffs and trade barriers between the three countries. After 24 years, the conditions of the trade agreement are on the table to in hopes modernize the deal. According to Jean-Francois Perrault, chief economist at Scotiabank, says that updating NAFTA was part of Trump’s election strategy (Abedi). Trump called NAFTA the “worst trade deal” in the history during a pre-election debate with Democratic party candidate Hillary Clinton (Knightley et.al.). He promised that the revised deal will put “America first”. Trump stated that the current terms is responsible for the country’s decline in manufacturing
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However, the Trudeau government has signaled that they intend to keep it (Joseph). Trump also wants to end the dispute resolution panel so that it does not restrict the ability of the United States to apply measures in future investigations (Bown). These arbitration panels determine whether a NAFTA country treated their overseas investments unfairly. The Trump administration claims that it weakens the sovereignty of United States’ courts. For example, the United States Commerce Department has accused western Canadian provinces of subsidizing their lumber exports. That allows them to sell low-cost lumber into the American market. Although, the resolution panel has ruled in favour of Canada. The Commerce Department has threatened to impose a 20 percent tariff on Canadian lumber imports …show more content…
Lighthizer, the United States Trade Representative, has introduced controversial proposals. They included a sunset clause that would require the renewal of the trade agreement every five years; rules of origin that would toughen the United States requirements for domestic distribution, especially for automobiles, to qualify for zero-tariff treatment; and to put an end to the transnational courts that settle international business disputes (Mufson, et.al.). Wilbur Ross, United States Commerce Secretary, suggested to update the rule of origins. It says that 62 percent of the parts of a car sold in North America must come from one of the three NAFTA countries (Amadeo). Finally, Trump has asked Mexico to end the Maquiladora program. This program allows American companies to set up low-cost manufactory across the border of Mexico to assemble finished products (Amadeo). Then, they export the goods back to the United States. As an outcome, the Maquiladora factories are responsible for the 65 percent of Mexico's exports and employ 30 percent of its workforce (Offshore International). Trump threatened to withdraw from NAFTA if Canada and Mexico rejected to renegotiate his demands. He would also enforce a 35 percent tariff on Mexican imports
However, the Trudeau government has signaled that they intend to keep it (Joseph). Trump also wants to end the dispute resolution panel so that it does not restrict the ability of the United States to apply measures in future investigations (Bown). These arbitration panels determine whether a NAFTA country treated their overseas investments unfairly. The Trump administration claims that it weakens the sovereignty of United States’ courts. For example, the United States Commerce Department has accused western Canadian provinces of subsidizing their lumber exports. That allows them to sell low-cost lumber into the American market. Although, the resolution panel has ruled in favour of Canada. The Commerce Department has threatened to impose a 20 percent tariff on Canadian lumber imports …show more content…
Lighthizer, the United States Trade Representative, has introduced controversial proposals. They included a sunset clause that would require the renewal of the trade agreement every five years; rules of origin that would toughen the United States requirements for domestic distribution, especially for automobiles, to qualify for zero-tariff treatment; and to put an end to the transnational courts that settle international business disputes (Mufson, et.al.). Wilbur Ross, United States Commerce Secretary, suggested to update the rule of origins. It says that 62 percent of the parts of a car sold in North America must come from one of the three NAFTA countries (Amadeo). Finally, Trump has asked Mexico to end the Maquiladora program. This program allows American companies to set up low-cost manufactory across the border of Mexico to assemble finished products (Amadeo). Then, they export the goods back to the United States. As an outcome, the Maquiladora factories are responsible for the 65 percent of Mexico's exports and employ 30 percent of its workforce (Offshore International). Trump threatened to withdraw from NAFTA if Canada and Mexico rejected to renegotiate his demands. He would also enforce a 35 percent tariff on Mexican imports