NAFTA renegotiations and its impact on workers

September 11, 2018

The Trump Administration’s renegotiating of NAFTA, a trade deal signed in 1994 between the United States, Mexico and Canada, could impact Toledo-area workers.


“Too many Americans have been hurt by closed factories, exported jobs and broken political promises,” said United States Trade Representative Robert Lighthizer in an official statement.


“Under President Trump’s leadership, the Office of the United States Trade Representative will negotiate a fair deal.”


But definitions of “fair” and consequences for workers if NAFTA’s current order is upended vary. 


So far, Trump has threatened the agreement, expressed interest in a deal with Mexico and tweeted it was not “politically necessary” to include Canada.


But, according to two trade policy experts and an international development executive, the trilateral agreement largely improves the economic relationship between the neighboring countries and benefits workers, including those in Toledo.


“For the U.S. as a whole, foreign direct investment tripled since 1994,” said Paul Zito, vice president of International Development at Northwest Ohio’s Regional Growth Partnership.


“We in the Toledo region have seen a lot of that.”


He referenced Magna, a large tier-one Canadian automotive supplier.


“Magna itself employs over a thousand people in this region.”


Therefore, “if NAFTA is jeopardized, it will make foreign investment more difficult so these Canadian companies and Mexican companies will not have an incentive to invest in this area,” Zito said.


As of publication, there is no indication that the U.S. and Canada  will reach a deal as a U.S imposed deadline approaches.


Canada’s Foreign Affairs Minister Chrystia Freeland spent time working toward an agreement with her American counterparts in Washington.


Speaking with reporters on the steps of the office of the U.S. Trade Representative after closed-door talks, Freeland conveyed a hopeful point: The U.S. and Canada engaged in “constructive talks,” and both parties seem to understand the necessity of a deal.


But, as she told Global News, a Canadian media outlet, reaching an agreement will require more flexibility.


Talks are “difficult [because of the] dispute settlement chapter” (a provision allowing one country to challenge another over tariffs or dumping cheap goods below market value). 


“Dairy market access and Canada’s cultural provisions” also complicate matters.


Lucy Lu, research analyst at the Peterson Institute for International Economics, explained the points of contention in an email to the Independent Collegian.


She added that the Trump Administration's imposition of tariffs on Canadian steel and aluminum enacted on grounds of national security also complicates a tentative deal between the two longtime free trade allies.


The renegotiations and grievances are part of a larger theme within the administration.


In Trump’s bid to fulfill a campaign promise of tending to the “forgotten men and women” - his ode to blue-collar workers - he has shifted a conservative system of free trade.


“One of the ironies of what’s going on now is that the trade agreement with Canada was never particularly controversial,” said Edward Alden, a senior fellow at the Council on Fore­­­ign Relations in a phone call interview with the Independent Collegian.


“That’s because Canada is a similar wealthy country with high wages; it was the addition of Mexico that made it controversial.”


To Alden, the fact that the president is now saying, ‘Oh, we’ll just do a deal with Mexico, and we’ll leave Canada out’ is not an outcome anyone anticipated.


“If you want to be kind you can say it’s negotiating strategy. [Trump’s] playing the tough cop: ‘We’re willing to do it without Canada so Canada has to make concessions.’ But, I think Canada will be part of this [agreement],” Alden said.


An official agreement requires Congressional approval.


While debate exists on how to renegotiate NAFTA and whom to include, there is a general consensus that the deal itself needs revisions.


“I think most people would agree that [a deal] from 1994 needs to be updated and needs to be modernized,” Zito siad.







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