U.S. Trade Representative Robert Lighthizer said the Trump administration`s goal was to “stop the haemorrhages” of trade deficits, plant closures and job losses, pushing for tougher labor and environmental protection measures in Mexico and removing “Chapter 19 of the Dispute Settlement Mechanism” – a Canadian favorite and a thorn in the side of the U.S. wood industry. Free trade advocates generally refer to lower consumer commodity prices as one of the main benefits of lower tariffs for U.S. citizens. Supporters of the agreement say the average American has benefited from a price drop due to NAFTA. Lower prices are good for American households and increase our purchasing power. NAFTA has created winners and losers. If you think the trade agreement has resulted in a net loss to the United States, you probably refuse it and similar agreements. If you think NAFTA has generated a net benefit to the economy, you could support NAFTA, even if you criticize parts of the agreement. Wherever you are, it`s worth remembering that the trade flows that can be attributed to NAFTA pale in comparison to U.S. trade with China, and the impact of NAFTA on the U.S.
economy as a whole has been relatively small, although some communities have really felt pain. Despite these benefits, the United States, Mexico and Canada renegotiated on September 30, 2018. The new agreement is referred to as the agreement between the United States, Mexico-Canada and ratified by the legislative branches of each country. Mexico was the first country to ratify the agreement in 2019. The U.S. Congress approved the agreement in mid-January and Donald Trump officially signed it on January 29, 2020. Canada ratified it on March 13, 2020. While thousands of U.S. auto workers have undoubtedly lost their jobs as a result of NAFTA, they may have done worse without them. By integrating supply chains throughout North America, maintaining a significant portion of U.S. production has become an option for automakers. Otherwise, they may not have been able to compete with their Asian rivals, resulting in the loss of additional jobs.
“Without the ability to relocate low-wage jobs to Mexico, we would have lost the entire industry,” UC San Diego economist Gordon Hanson told the New York Times in March 2016. On the other hand, it may not be possible to know what would have happened in a hypothetical scenario. Canada is the second largest U.S. trading partner with US$578.6 billion crossing the border in both directions in 2016, resulting in a trade deficit of $US 12.1 billion. The United States is the sole buyer of Canadian products and a supplier of imports to Canada. Canada`s share of its exports to the United States continued to increase in the 1980s, from 60.6% in 1980 to 70.7% in 1989, the first year of the free trade agreement. Canada`s share of total exports to the United States continued to increase, reaching 87.7% in 2002. However, the relative importance of the value of trade between the United States and Canada has declined in recent years. Since 2002, this percentage has fallen to 76.4% in 2016. The U.S. share of Canada`s total imports, which peaked at 70.0% in 1983, continued to decline to 52.1% in 2015 (Figure 6).
Canada is pleased to note that it is the top export destination for 35 U.S. states.77 The United States and Canada have not explicitly stated publicly what they can ask for from each other in a possible NAFTA renegotiation.