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Is NAFTA’s Replacement Doomed?

Prof. James Cooper

The absence of President Donald Trump and his acting chief of staff, Mick Mulvaney, at the White House’s annual Cinco de Mayo celebration may have signaled what many believe: the United States-Mexico-Canada Agreement (USMCA), a replacement for NAFTA, is doomed, writes California Western’s Professor James Cooper in a recent op-ed published in The Hill.

The deal that could govern some $1 trillion in regional trade is not likely to pass any of the legislatures of the partner countries, continues Cooper.

Trump, who promised in his presidential campaign to replace NAFTA, which he called “the worst trade deal in history,” has had his U.S. trade representative, Robert Lighthizer, and son-in-law/adviser Jared Kushner spend months reworking the agreement to get all three countries on board.

However, writes Cooper, a recent report from the United States International Trade Commission confirmed the deal would bring about minimal economic gains for the United States.

Since NAFTA went into force in 1994, trade among the three partner countries has quadrupled. The pact has worked so well with duty drawback provisions and harmonized customs procedures that companies have been able to take advantage of a truly integrated continent-wide supply chain.

Notwithstanding these productivity gains, the NAFTA partners have been playing a dangerous game of “beggar thy neighbor” in escalating tit-for-tat tariff spats. Tariffs on steel and aluminum imports from Canada and Mexico remain in force as Canada and Mexico respond against U.S. products.

Legislators from both sides of the aisle are increasingly skeptical that the impugned agreement does enough to protect U.S. workers and other interests. With the apparent breakdown in negotiations to end the simmering trade war with China, the Trump administration needs to secure the ratification of the USMCA in Congress. Our continent’s economic future may depend on it.

Read Professor Cooper’s complete op-ed here: