Last week, the Trump administration submitted formal notice that they intend to renegotiate the North American Free Trade Agreement (NAFTA). In a letter to congressional leaders, U.S. Trade Representative Robert Lighthizer said that the administration wants NAFTA to be "modernized" and that it was vital to update NAFTA to “address the challenges” of “an increasingly global economy.”
NAFTA fundamentally reshaped North American economic relations, driving an unprecedented integration between the developed economies of Canada and the United States and the developing economy of Mexico.
In the years since NAFTA, U.S. trade with its North American neighbors has more than tripled, growing more rapidly than U.S. trade with the rest of the world. Canada and Mexico are the two largest destinations for U.S. exports, accounting for more than a third of the total.
The recent U.S Presidential election highlighted the perception by some Americans that historically NAFTA had a damaging impact on American jobs with fair wages. The perception was enflamed during campaigns and has led to the political debate unfolding today.
The Economic Policy Institute argued that in the United States, NAFTA displaced 850,000 American manufacturing jobs and suppressed wages by throwing U.S. workers into unmitigated wage competition with low-income Mexican laborers. However, we are told that over 31 million Americans lost jobs from 1994 to 2002, making the losses from NAFTA seem small by comparison. Supporters of NAFTA argue that over fourteen million U.S jobs rely on trade with Canada and Mexico, while the nearly two hundred thousand export-related jobs created annually by the pact pay 15 to 20 percent more on average than the jobs that were lost.
The communication to the U.S Congress by U.S. Trade Representative Robert Lighthizer means that in less than 90 days, the United States can start renegotiating the agreement with its partners -- Mexico and Canada. The idea is for Congress and the White House to spend these next three months conferring about how to change NAFTA in order to benefit American workers.
Discussion among Arizona business groups this week stressed the importance of contacting key influencers to the Trump administration and ensuring industry leaders in Arizona had a conduit to provide input into the negotiation. This same discussion is reflected across many states in the U.S. who have their key industry sectors top of mind and understand the impact of new tariffs or regulations on their economy. Rather than think of Mexico as a competitor, the United States should think of Mexico as a partner in our national manufacturing supply chain.
We have less than 90 days to communicate to our federal elected officials in the U.S and in Mexico about the potential “modernization” of NAFTA. In a worst-case scenario, the erection of new trade barriers could disrupt key U.S. and Mexican industries for years to come and force consumers to pay more for big-ticket items. Many in our Arizona-Sonora region believe that we can and must influence the “modernized” NAFTA agreement to produce a win-win for our industries and our two nations.
Lea Marquez Peterson is the President/CEO of the Tucson Hispanic Chamber and its affiliate chambers in Ambos Nogales, Sierra Vista and Douglas. Please email her your thoughts on the NAFTA modernization at email@example.com.
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