Impact of US and Mexico agreement in Borderland
WASHINGTON – The Trump administration and Mexico have reached a preliminary accord to end the North American Free Trade Agreement and replace it with a deal that the administration wants to be more favorable to the United States.
President Donald Trump, in announcing the tentative agreement Monday at the White House, said a new deal would be called the United States-Mexico Trade Agreement, a name which he described as “elegant.”
Trump has frequently condemned the 24-year-old NAFTA trade pact as a job-killing “disaster” for the United States.
Tom Fullerton, an Economics professor at the University of Texas at El Paso, said the president had a point.
“It’s true that there have been jobs lost in all three countries,said Fullerton. “Mexico can complain about all the agriculture jobs lost. The United States and Canada complain about the labor-intensive manufacturing jobs lost.”
Fullerton said NAFTA was enacted to get rid of taxes on goods among the three North American countries, describing the economic switch in a sweet way.
“If you’re in Juarez you can get a Snickers if you go into a convenience store or grocery store,” said Fullerton. “If you’re in El Paso you can buy a Carlos V.”
The trade agreement also kept the three countries competitive on a global scale dominated by Asian markets.
“They would have been replaced with companies headquartered in Tokyo or Osaka with manufacturing facilities in Malaysia,” Fullerton said about jobs if NAFTA weren’t enacted. “They would have taken the share away from U.S. and Canadian firms, and those companies would have gone out ogf business.”
Talks to overhaul the agreement began a year ago and have proved contentious, and the uncertainty of NAFTA’s future slowed down economic growth.
U.S. and Mexican negotiators worked over the weekend to narrow their differences. The Office of the U.S. Trade Representative said Monday that Mexico had agreed to ensure that 75 percent of automotive content be produced within the trade bloc (up from a current 62.5 percent) to receive duty-free benefits and that 40 percent to 45 percent be made by workers earning at least $16 an hour.
“Mexico and Ciudad Juarez should accelerate in the next few months,” said Fullerton. From a regional perspective that’s also going to benefit the north side of the border because whenever manufacturing expands in Ciudad Juarez it always has multiple affects on this side of the border in terms of additional transportation, warehousing, business opportunities.”
Still, any new agreement is far from final. The administration still needs to negotiate with the third partner in NAFTA, Canada, to become part of any new trade accord. Without Canada, America’s No. 2 trading partner, it’s unclear whether any new U.S. trade agreement with Mexico would be possible.
The president said that he will be calling Canadian Prime Minister Justin Trudeau.
The No. 2 Senate Republican, John Cornyn of Texas, hailed the “positive step” but said Canada needs to be party to a final deal. “A trilateral agreement is the best path forward,” he said, adding that millions of jobs are at stake.
The Associated Press Contributed to the article.
