This article by Christopher Wilson outlines five elements of NAFTA the President could and should address during his eminent renegotiation of the Agreement. Many obstacles faced by the working class (unemployment, job insecurity, etc) have been attributed in part to free trade agreements like NAFTA by the President and many other sources. Therefore, a renegotiation or possible withdrawal from the Agreement is imperative for the Trump Administration. A complete withdrawal from NAFTA would be incredibly costly for the United States; thus, the article explores renegotiation options on a bedrock of liberalizing trade and the necessity for investment in workforce development.
The first item on the list for improvement is a general overhaul encompassing the modern technology we use to do business; issues like transnational flows of data, as well as the exportation of digital products should be included (Wilson). Second, the simplification of customs paperwork, and raising the threshold for the value of shipments before they face customs revisions would encourage small businesses to venture into foreign trade with Canada and Mexico (Wilson). As technology improves, business is becoming more impersonal, this would act as a material incentive for small businesses to increase their gains from trade. Third, the article proposes that the rules of origin for qualifying for tariff benefits to be strengthened in certain regions and industries, resulting in higher job growth and investments. The fourth improvement the President could make to NAFTA would be the strengthening of NAFTA labor rights, maneuvering the issue into NAFTA itself instead of as a side agreement. The North American Agreement on Labor Cooperation stipulates that North American countries should follow their own labor laws; however, the enforcement of labor rights in certain areas is lacking (Wilson). This would incentivize companies to remain in the United States instead of moving to Mexico at the cost of workers’ rights (Wilson). Fifth and finally, emphasis in NAFTA should be placed on eliminating obstacles to services exports; according to the article, the United States already has an advantage in the trade high skill service industries, and has maintained a surplus in this trade with Mexico (Wilson). Overall, the renegotiation of NAFTA allows for the visible hand to make a potential improvement in the policies of our economic system in our increasingly globalized world.
http://www.forbes.com/sites/themexicoinstitute/2017/01/23/trump-to-announce-plans-for-renegotiation-of-nafta-five-ways-to-improve-the-agreement/#5cf6d9f3302b
Wilson, Christopher. "Five Ways Trump Could Improve NAFTA." Forbes. Forbes Magazine, 23 Jan. 2017. Web. 25 Jan. 2017.
4 comments:
This was very insightful Rachel. NAFTA is not a perfect agreement, but Trump seems to be trying to make enemies of the nations we trade with. There seems to be a notion that the liberalization of trade has hurt America, which can be a proven falsehood. I wish that I could say that any of those ideas were realistic, specifically in regards to upgrading labor laws, because that could seriously help lower income Mexican people, and could provide them with access to an entirely new life. With a higher income, they could have access to higher education, and there could be more support for local businesses. But regulation seems to be Trump's enemy at least in these early days. I can only hope that he reads this article and gains some perspective.
Yeah, I would be curious if there could be a cost-benefit analysis done based comparing American companies that benefit from severing ties with NAFTA versus those companies that benefit the most from the agreement. At imagine that there is a disproportionate benefit to the most people if the contract is upheld, though updating it in some ways could be useful. Maybe this is a ploy from Trump to negotiate the deal he wants, that he is call Canada and Mexico's bluff and does't actually plan on taking drastic action. I guess we will see...
With the construction of the border set to begin in the coming months economic ties with Mexico are souring furthermore by the renegotiation of the NAFTA deal. You cannot simply get rid of NAFTA, but if Trump does find a way to scrap it, then based on the US's commitment to the World Trade Organization, there will be higher tariffs, so it will slow business down but it's not going to put a halt to it. In the short term, investments many companies have in Mexico because of NAFTA might see huge losses if the deal was done away. It'll be interesting to see what will happen in the coming months.
I think that this was a very interesting article. it will be interesting to see how trump handles trading with other countries because he wants to try to do everything in house and that is almost if not impossible to do. if we do start to not trade with other countries the prices of our products are going to increase a great amount.
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