In the latest episode of Donald Trump’s Art of the Deal meets North American Free Trade Agreement (NAFTA) negotiations, bully and bluster tactics have derailed any hopes of Washington spearheading an enlightened continental economic strategy.
Fortunately, Trump’s “America First” refrain is not in the hymn book of every U.S. business leader.
Some appreciate the realities of NAFTA’s economics and the importance of viewing the free trade agreement from a holistic business perspective rather than as a reality TV script. U.S. chambers of commerce, for example, are tuned into the economic and continental security advantages of a North American free trade deal. In his recent letter to Trump, the president of the U.S. Chamber of Commerce noted that NAFTA and its spirit of co-operation have helped establish North America “as one of the most vibrant and competitive regions in the world.”
Thomas Donohue estimated that his country’s exports to Canada and Mexico generated close to US$37,000 in annual export revenue for every American factory worker and that in 2017’s first eight months the value of U.S. exports to its two NAFTA partners was quadruple that of its exports to China.
Threats to NAFTA, he warned, are “threats to our partnership, our shared economic vibrancy and clearly the national security and safety of all three nations.”
U.S. demands to increase North American content requirements in the auto industry to a reported 85% from the current 62.5%, which is already the highest rule of origin in the global auto sector, would likely drive more automakers offshore. It is another example of negotiation by intimidation that raises more questions about the grasp Trump’s America First forces have on the complexities of global trade. That’s disturbing for Canada and Mexico, but, as the U.S. Chamber of Commerce boss outlines in his letter to his country’s president, it should also be equally, if not more, disturbing for businesses in the United States.
