Leaders from the United States and Mexico agreed on Monday to a revamped North American Free Trade Agreement (NAFTA) after months of disagreement and negotiation on issues including agriculture and the automobile industry.
Gustavo Flores-Macias is an associate professor of government at Cornell University and the former Director of Public Affairs in Mexico’s Consumer Protection Agency. His research focuses on the politics of economic reform, taxation and state capacity, and he says that the bilateral approach to the new trade deal weakened the Mexican negotiating position and signaled victory for Trump.
“Some of the main changes included in the agreement between the U.S. and Mexico are an increase in rules of origin for the automobile industry, from 62.5 percent of North American content to 75 percent; the requirement that 40 percent to 45 percent of auto content be manufactured by workers making at least $16 an hour; a ‘sunset light’ clause that allows reviewing the agreement every 6 years, after an initial 10-year period; and the watering down of existing dispute resolution mechanisms.
“The announcement marks a political victory for President Trump. Even if most of the substance of the trade agreement remains the same, the White House will point to the deal as evidence of his ability to both revamp NAFTA and extract more favorable conditions from Mexico.
“Mexican negotiators seemed pleased that at least some form of bilateral trade deal has been salvaged, but the new terms appear to favor largely the U.S. after Mexico conceded to positions it had originally characterized as unacceptable. Mexico’s strategy of bilateral, rather than trilateral, negotiations reduced Mexico’s leverage to counter the ambitious U.S. proposals.”