A World without NAFTA?

February 7th, 2018 | Written by GT Staff Global Trade
The Trump administration’s efforts to re-negotiate NAFTA continue amidst uncertainty and growing concern whether the parties will be able to conclude talks successfully. Several major issues are still pending resolution, so the NAFTA talks have been extended through the first quarter of 2018, including a negotiating round in Montreal in late January.

With such significant conceptual gaps between the parties, the future of the agreement is in question—but what is truly at stake? What would a post-NAFTA world look like? To analyze the potential impact of withdrawal on job growth, competitiveness, and geopolitics, the Wilson Center partnered with the Council of the Americas to co-host a discussion with city mayors, former ambassadors and business leaders from the three NAFTA countries.

“If the world cannot trust the United States to uphold an international agreement that was negotiated by a Republican administration and passed under a Democratic administration, with both bipartisan and bicameral support, the credibility of the United States in highly sensitive trade matters would be suspect from now until long into the future,” said Eric Farnsworth, Vice President, Americas Society/Council of the Americas.

“NAFTA is a story of success, of growth, of jobs,” said Kevin Faulconer, mayor of San Diego. “Free trade works. It works for our country, it works for our city. Oftentimes a product will cross the border two or three times before it’s finished. What a great example of NAFTA.

“There is now a $2.5 billion supply chain, this didn’t exist back in 1994,” he added.

“We are in this together,” said Don Iveson, mayor of Edmonton. “All three North American countries constantly work together on trade. Edmonton does $1 billion in trade with Houston alone, in oil and gas, intellectual property, advanced manufacturing.”

“It would be devastating to lose NAFTA because it would put American businesses at a disadvantage,” said Paola Avila, vice president of the San Diego Regional Chamber of Commerce. “It’s more than NAFTA supply chains that are integrated, it’s our economies. When one catches a cold, the others get a fever.”

“The potential tariff increases themselves from a NAFTA withdrawal aren’t the primary issue,” said Karan Bhatia, vice president for government affairs and policy at General Electric. “The resulting uncertainty is the real problem. We at GE support an updated and strengthened NAFTA.”

“Beyond the economic numbers is the more compelling story of how NAFTA changed the geopolitical landscape of all North America for the better,” said Arturo Sarukhan, former Mexican ambassador to the US. “With a presidential election coming up and plummeting perceptions of the United State in Mexico, the wiggle room a Mexican administration may have to accept deals that make or break NAFTA in four to eight months may be zero.”

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