After calls with Canadian Prime Minster Justin Trudeau and Mexican President Enrique Peña Nieto, President Trump has “agreed not to terminate NAFTA at this time and the leaders agreed to proceed swiftly, according to their required internal procedures, to enable the renegotiation of the NAFTA deal to the benefit of all three countries,” according to the White House.
The calls took place on April 26, just days after the White House stated that the president was considering fulfilling one of his campaign promises and backing out of the agreement altogether.
Some Republicans urged the president to be cautious about a withdrawal from the agreement.
“Scrapping NAFTA would be a disastrously bad idea. It would hurt American families at the checkout, and it would cripple American producers in the field and the office,” Nebraska Senator Ben Sasse said in a statement. “Yes, there are places where our agreements could be modernized but here’s the bottom line: trade lowers prices for American consumers and it expands markets for American goods. Risking trade wars is reckless, not wise.”
Senator John McCain of Arizona, never one to mince words, said, “[Withdrawing from NAFTA] will devastate the economy in my state. I hope he doesn’t do that.”
According to the New York Times, it is still not clear whether President Trump will sign an executive order authorizing renegotiation of the North American Free Trade Agreement, which he once called the worst trade deal ever signed by the United States.
Both Mexican and Canadian officials have said they are ready to negotiate changes, and the Obama administration had laid the groundwork for renegotiation of NAFTA as part of joining the Trans-Pacific Partnership.
Although Trump has pulled out of TPP, renegotiation of NAFTA is still on the table. The agreement is outdated in a number of ways: it was written in the early 1990s and it didn’t foresee the technology boom and the rise of the internet, for example.
U.S. Commerce Secretary Wilbur Ross told CNBC that “conceptual flaws” in the treaty need to be addressed in order to ensure that all participants in the agreement have a trade advantage over other countries.
Trump’s turnabout on NAFTA comes just two days after he attacked Canada’s decision to change the pricing of some milk products. “Canada has made business for our dairy farmers in Wisconsin and other border states very difficult,” Trump tweeted. “We will not stand for this. Watch!”
On the other hand, relationships between the U.S. and Mexico seem to have improved. “We have generated a respectful dynamic through dialogue,” Mexican Foreign Minister Luis Videgaray told local broadcaster Televisa. “We’ve advanced enormously in the correct direction.”
Whatever the case, disruptions in NAFTA could cause big problems in the auto, agricultural, and other industries and generally wreak havoc with the economies of Canada, the U.S., and Mexico. About 14 million U.S. jobs depend on trade with Mexico and Canada, according to the U.S. Chamber of Commerce.