Who runs the North American economy
The NAFTA Negotiations - Where is US Trade Policy Heading? –
Since the new US administration under President Trump took office in early 2017, two regional trade agreements have been at the center of a sharp correction in US trade policy. The Trans-Pacific Partnership (TPP), which had been negotiated but not yet ratified, was immediately terminated by the new government. In addition, the agreement on the North American Free Trade Area (NAFTA) between Canada, Mexico and the USA, which came into force in early 1994, is being fundamentally called into question. Donald Trump had already announced during his election campaign that he wanted to end the agreement. Negotiations have been under way to modernize the trade agreement since August 2016.
NAFTA has led to significant changes in the division of labor and trade flows between the three countries involved. While a need for modernization is obvious in a trade agreement negotiated almost 30 years ago, an exit by the USA would entail considerable upheaval in North American trade and investment relations. What goals the USA, Canada and Mexico are pursuing in the new and modernization negotiations under the impression of integration and what changes are conceivable will be examined here.
The economic integration of North America
With twelve chapters on more than 2000 pages, the 1993 NAFTA agreement is still one of the most extensive free trade agreements in the world and is considered to have paved the way for deep regional trade agreements. Expressed in figures, NAFTA has an impressive record: The regional trade volume (exports and imports of goods and services) between the three participating countries rose from US $ 341 billion (1993) to US $ 1,217 billion (2016). 1
US trade in goods and services in the NAFTA area
Source: US Bureau of Economic Analysis, Office of the United States Trade Representative
It almost quadrupled and made NAFTA, with 476 million inhabitants (6.7% of the world population) and an export share of 14% in world trade in goods, one of the largest free trade areas in the world.2 The increase in the volume of trade between the NAFTA partners since 1993 was in large part driven by the increase in US trade in goods with Mexico (see Figure 1).
The picture is mixed when it comes to the importance of the NAFTA rules for trade. For example, only 46% of total US imports from Canada and 56% of total US imports from Mexico are imported under NAFTA rules. The trade in goods between the NAFTA partners is concentrated in a few sectors: More than half of the total trade in goods (55%) in the NAFTA area is concentrated in four groups of goods: vehicles (19%), machines (14%), electrical machines (14 %) and fuels and mineral oils (9%). It is noteworthy that in some of these sectors in particular, NAFTA preferences are not used in a significant proportion of trade flows. While the USA almost completely imports vehicles and vehicle parts from Mexico and Canada based on NAFTA preferences (97% of vehicle imports from Canada, 93% of vehicle imports from Mexico), B. only 32% of the mineral oil imports from Canada or 29% of the machine imports from Mexico handled under the NAFTA agreement. Companies state that the reason for this is that the obligation to provide evidence is too time-consuming
The division of labor has deepened considerably as a result of the NAFTA agreement. A significant proportion of trade between the NAFTA partners is based on intermediate goods. For example, 65% of US exports to Mexico and 56% of US imports from Canada are intermediate goods. The end products from Canada and Mexico delivered to the USA also contain a significant share of US added value (see Figure 2) .4
- Imports from Mexico contain an average of 12% US added value, with vehicles it is almost 20%.
- Imports from Canada contain an average of 10% US added value, compared to 26% for vehicles.
These figures impressively demonstrate the extent to which NAFTA has contributed to a deepening of the regional division of labor. Curbing Mexican motor vehicle exports to the USA via tariffs, for example, would affect at least a quarter of the US suppliers themselves, according to the value added data.
Share of intermediate goods in US trade with NAFTA partners
Source: UN Comtrade. Data refer to the year 2016. Intermediate goods are defined according to the UN proposed classification of Basic Economic Categories.
The three economies are also closely intertwined through direct investment: Canada and the USA are linked by one of the world's largest investment partnerships.5 The mutual investment volume in 2015 amounted to just under US $ 670 billion. Canadian and Mexican companies have invested a total of US $ 488 billion in the US.6 That is 13% of total foreign direct investment in the US. Most of this investment comes from Canada, at $ 454 billion. In total, Canadian and Mexican subsidiaries have created more than 700,000 jobs in the US - mostly in the industrial sector. In Mexico, direct investment from Canada now amounts to just under US $ 12 billion - in 1993 it was still US $ 423 million. The US has invested US $ 88 billion in Mexico. That is just under 40% of all foreign direct investment in Mexico.
Trade with Canada
A quarter of all international trade in the USA in 20167 took place with the NAFTA partners: Canada was involved with a trade volume (exports and imports of goods and services) of US $ 635 billion (of which US $ 45 billion) in the agricultural sector)
- largest export market for US companies (15% of all goods and services exports are exported to Canada),
- second largest trading partner of the USA (after China),
- largest export market for US agricultural products,
- second largest foreign supplier of agricultural products to the US market,
- third largest country of origin of US imports.
From the perspective of the USA, the trade balance in goods with Canada was slightly in deficit in 2016 (-16 billion US $). The US had a surplus of US $ 24 billion in trade in services. The Canadian economy is also heavily dependent on trade with the USA: 70% of all international trade (exports and imports of goods and services) takes place with NAFTA partners. With a share of 2%, Mexico is only of minor importance.8 Canada is also the most important trading partner for 35 of the 50 US states.
Trade with Mexico
Mexico was in 2016 with a trade volume (exports and imports of goods and services) of 587 billion US dollars (of which 41 billion US dollars in the agricultural sector):
- second largest export market for US companies (12% of all goods and services exports are exported to Mexico),
- third largest trading partner of the USA,
- third largest export market for US agricultural products,
- largest foreign supplier of agricultural products to the US market,
- second largest country of origin of US imports.
With Mexico, the US recorded a deficit of US $ 71 billion in 2016, making it the second largest bilateral trade deficit in the goods sector (behind China), but the trade balance in services is positive (US $ 7 billion).
Overall, the US trade deficit in goods with the NAFTA partners amounts to US $ 87 billion. Just under three-quarters of this US deficit can be traced back to the automotive sector. The majority of this (US $ 53 billion) is in trade with Mexico. This bilateral trade deficit between the US and Mexico in the automotive sector was and is a widely used argument to criticize NAFTA as a bad agreement from the US perspective. The goal of reducing this deficit has a strong influence on US activities to modernize and revise the NAFTA agreement. Since the NAFTA agreement was in place, the Mexican economy has focused on industrial production (approx. 25% of gross domestic product - GDP). The USA is by far the largest export destination for Mexico. More than 80% of Mexican exports go to the USA.9 Canada only accounts for just under 3%. In addition, Mexico obtains 47% of its imported goods from the USA. These figures clearly show how important the NAFTA Agreement is for trade flows in all member states. A termination of the free trade agreement would destroy cross-border supply and production chains and would likely have serious effects on the trade flows of the NAFTA partners.
Criticism of the USA at the NAFTA integration
The impressive economic integration between the NAFTA partners and the resulting growth in trade and investment relationships is by no means viewed politically as a mere success. Rather, there is an intense dispute in the USA about the advantages and disadvantages and the winners and losers of the NAFTA agreement, which has intensified with the presidential candidacy and the assumption of office of Donald Trump
To be at the center of the US debate
- the trade deficit, particularly with Mexico,
- the employment effects of NAFTA and the effects on wage levels,
- the reduction of regulatory room for maneuver for the state and politics.
At least since the new US administration took office, bilateral trade deficits and their reduction have become the focus of US trade policy. The high trade deficit of the USA, especially with Mexico, is often used in the political discussion as evidence that NAFTA is disadvantageous for the USA.11 In economic terms, however, this perspective is misleading. If one sees the cause in the savings gap in the USA, one has to come to the conclusion that the deficit with Mexico without NAFTA might be lower, but the trade deficit of the USA would remain unchanged and only regionally and would be bilaterally distributed differently. 12
If one looks at the US goods trade deficit with the NAFTA partners by product group, 13 it can be seen that different flows of goods trade have contributed very differently to the US trade deficit. The US deficit for crude oil and other energy products in NAFTA trade rose from US $ 15 billion in 1993 to 2012 to almost US $ 101 billion. The US balance for goods of the manufacturing sector, however, shows a more differentiated picture in the same period: Compared to Mexico, the surplus of 4.6 billion US $ (1993) turned into a deficit of 49.5 billion US $ ( 2012). Compared to Canada, on the other hand, exports rose from US $ 5.7 billion (1993) to US $ 55.7 billion (2013) .14 This example shows how misleading it is to look at aggregated bilateral balances in foreign trade statistics. Nevertheless, a political argument based on such balances develops a high suggestive persuasive power, as not only the example of the USA shows.
Job losses due to NAFTA?
Furthermore, the critics blame NAFTA for the loss of jobs in the USA. According to some estimates, the loss of almost 1 million jobs can be traced back to NAFTA.15 According to other calculations, around 4 million jobs were lost in the USA between 2009 and 2011 as a result of technical progress and competitive pressure. According to these estimates, however, at most 5% of this is due to import pressure from Mexico.16 Such job losses are often nevertheless blamed on NAFTA across the board.
The relatively low weight that trade-related job losses have in relation to the movements in the US labor market as a whole is shown by some studies with data that result from the use of the Trade Adjustment Assistance Program (TAA ).17 The TAA finances retraining or additional unemployment benefits for groups of workers who can demonstrate to the US Department of Labor that they have lost their jobs as a result of import competition. In 2011, 104,000 employees were given access to the TAA. That was 2.4% of employees in the US who - for whatever reason - lost their jobs in 2011.
In addition, it is often overlooked that in the export-oriented sectors, in which new jobs have been created, people are paid better on average than in the sectors that are exposed to import competition from Mexico, so that the NAFTA agreement also has positive (wage) effects for American workers.18 The new, productive jobs in industries that benefit from the NAFTA division of labor are contrasted with jobs in industries that - not only as a result of NAFTA - have come under increased international competitive pressure and therefore stagnate or disappear in wage developments .
The convergence of wages between the USA and Mexico, which some NAFTA proponents expected, did not materialize. However, the influencing factors are hardly dependent on NAFTA. The statistical decline in real wages in Mexico from 1995 to 1997 by almost 20% can be traced back to the effects of a financial crisis (“tequila crisis”) in Mexico, which coincidentally coincided with the entry into force of NAFTA.19 Also for the depressed wage development in the USA since 1994 there has been no evidence of a robust connection to higher imports from Mexico - despite the enormous increase in trade volumes in the manufacturing sector. This is not least due to the fact that this trade - unlike z. B. Trade with China - has a strong intra-industrial component, i. H. has a complementary character. 20
Loss of National Sovereignty?
The last point of criticism, that NAFTA leads to the loss of national sovereignty and national room for maneuver, 21 is ultimately not a specific feature of international trade agreements. The conclusion of international treaties is an expression of national sovereignty. The associated binding effect is a logical characteristic of all international contracts. The nation-state is seen here by the critics as the loser of integration because it can no longer act autonomously in certain areas, for example it can no longer so easily issue national regulations and also has to submit to a dispute settlement mechanism in trade agreements.
This point of view can be countered by the fact that own regulatory approaches, transparency or legal certainty can only be transferred to other countries via international treaties and that newer treaties also regularly and comprehensively safeguard the “right to regulate”. It is a characteristic of all newer free trade agreements that they attempt to establish a certain framework for trade-related regulatory practices and for cooperation. In this respect, it is a question of weighing up whether and how much leeway a contracting state gives up in order to gain a little more - direct or indirect - influence on the regulatory practice of important trading partners. The fact that the political balance in the USA has shifted in favor of the idea of autonomy after this consideration is shown by both the USA's exit from the TPP and the criticism of NAFTA.
The interests of the NAFTA partners
The entry into force of NAFTA has never meant that trade disputes between the three partners have automatically subsided. So there were always disputes between the partners on dumping and regulatory issues. In addition to overarching modernization concerns that are often thematically congruent, each country therefore has its own specific interests in updating the trade agreement.
In terms of overarching interests, a distinction must be made between two subject areas: classic modernization and country-specific interests, which, at least for the USA, reflect a general political reformulation of foreign trade policy guidelines.
The classic modernization topics include:
- Protection of intellectual property,
- Expansions in trade in services,
- regulatory coherence,
- certain non-tariff trade barriers,
- Rules on state-owned companies,
- Opening up to government contracts,
- better border clearance,
- Anchoring modern labor and environmental standards.
The positioning of the USA is largely determined by the political criticism of NAFTA, which was a central element of Donald Trump's election campaign. The focus is on reducing the trade deficit with Mexico. As a result, production in Mexico is to be made more difficult and previous supply chains are to be changed ("reshoring"). At his Senate hearing on March 14, 2017, the future US Trade Representative Robert Lighthizer said that in the negotiations with Mexico there was a balance between the areas of industry (NAFTA should be completely renegotiated for the benefit of US industry) and agriculture (with the aim of positive effects of NAFTA for many US agricultural products) must be produced. 22
In order to achieve this goal, the USA is striving above all for stricter rules of origin.23 So far, with a few exceptions, the share of added value required for duty-free in the NAFTA area is 60% (transaction value method) or 50% (net cost method), and for motor vehicles even 62.5 %.The USA wants to tighten these rules in order to exclude mainly Asian suppliers of preliminary products in favor of US suppliers.
Another lever to reduce the trade deficit with Mexico, in particular, is the abolition of Chapter 8 of the NAFTA Treaty, which makes the application of safeguard clauses for domestic industry in the event of high imports from other NAFTA countries extremely difficult (“global safeguard exclusion”). 24 If this were to happen, according to Sec. 201 US Trade Act will in future also issue import restrictions in the event of sudden increases in imports from NAFTA countries, which the government believes will cause serious damage to the US economy, as it does with all other trading partners. The USA is also hoping for more protectionist room for maneuver if Chapter 19 of the NAFTA Treaty, which regulates the dispute settlement procedure, is repealed, which will enable every country to deal with binational panels with anti-dumping and countervailing duties cases. This replaces or at least so far delays a unilateral and final determination of anti-dumping measures by the authorities or courts of a NAFTA state.
A lever for the enforcement of US trade interests that should not be underestimated is the demand that conformity assessment institutions from all NAFTA countries be treated equally. If one takes into account the relative weight of the three partners, this amounts to a de facto dominance of US conformity assessors and thus to a dominance of US rules for the regulation of product approval in the NAFTA area.
In theory, the US demand to create a mechanism to prevent the NAFTA partners from manipulating exchange rates could also help the US to reduce its trade deficit. Apart from the considerable practical difficulties, neither Canada nor Mexico have recently been accused of such manipulation.
For public procurement, the US is demanding very extensive exemption rules for all types of Buy American regulations. They want to generally exempt the sub-federal level from market opening obligations and enforce extensive exceptions also in the event of the maintenance of national security or public morality and order. This would de facto leave access to the US procurement market at the discretion of the US government.
Even for the dispute settlement mechanisms, the US wants to reserve the right to deviate from an arbitration award if a panel has made a mistake in its assessment - whatever that means.
The US demands in the area of market access for services can be assigned to the classic modernization goals. So the US wants direct and indirect discrimination z. B. prohibit by restricting the number of foreign providers or establishment requirements and ensure transparent regulation, independent regulatory authorities and adequate access to networks in the telecommunications sector. In digital commerce, the US wants to prevent tariffs, restrictions on cross-border data traffic and government obligations to domestic data processing. The inappropriate use of protected designations of origin should also be prevented. Demands for further dismantling of import tariffs and non-tariff barriers, especially in the agricultural sector with a view to Canada, and for closer cooperation between the NAFTA partners in the field of sanitary and phytosanitary measures and the raising of the minimum values for customs clearance procedures to 800 are also to be classified as modernization U.S.- $. 25
Even if they can indirectly serve the goal of reducing the trade deficit, the demand to strengthen the role of labor and environmental standards in the agreement is a modernization goal. These standards are intended to be subject to the same dispute settlement mechanism as the other justiciable parts of the agreement. In addition, the NAFTA partners should adopt the core standards of the International Labor Organization (ILO) and create or tighten certain labor market regulations (minimum wage, working hours, occupational safety).
Canadian and Mexican interests
From a Canadian perspective26, too, there is a need for modernization, particularly in the areas of e-commerce, rules on state-owned companies, better border clearance (e.g. criticism of a possible introduction of the collection of biometric data when crossing the border into the USA) and the facilitation of the temporary posting of workers. Overall, Canada accepts the need to adjust the content of NAFTA and has therefore relatively quickly agreed to modernize the agreement.
There are, however, some significant content-related points of conflict with the USA: First of all, decades-old points of contention between Canada and the USA have flared up again in the context of the NAFTA talks. The supply control system in Canadian agriculture has been the focus of US criticism for decades. Another ongoing dispute is the public aid for the aircraft manufacturer Bombardier. There is also a dispute on the subject of wood exports.
In addition, there are some recent controversial issues: From a Canadian perspective, an internationally staffed, publicly appointed commercial court based on the model of the CETA trade agreement concluded with the EU would be the suitable replacement for the investor-state arbitration, which is also attacked by the US for other reasons ( ISDS). The US has repeatedly made it clear that it rejects this model. Buy-American requirements in the USA particularly affect Canadian companies, such as the Keystone XL pipeline, which has now been approved, through which Canadian oil is to flow to the Texan coast. Their relaxation is therefore the subject of Canadian demands.
Mexico, too, would like to modernize NAFTA so that new areas such as e-commerce, telecommunications, deeper mutual market access for services and cooperation in the energy sector are included in NAFTA.27 Mexico has a particular interest in the duty-free transport of goods between the USA and Mexico to maintain. If tariffs were high, the business model of many companies would collapse, especially in the automotive and electronics sectors.
In September 2017, at the fourth NAFTA negotiation round, the USA submitted proposals that are obviously unacceptable to the negotiating partners Canada and Mexico, but which, interestingly, were included in the summary of the US goals for the NAFTA negotiations published in November by the United States Trade Representative were not included. 28
For example, the USA demanded the agreement of a sunset clause, according to which the partners could decide autonomously every five years whether they would like to let the NAFTA treaty run for themselves.29 According to the trade policy logic of the new US administration, the bilateral trade balances would become one Play a key role. Since no trade agreement can achieve the desired positive effects in such a short period of time and the uncertainty built into the US proposal to expire NAFTA slows down investment intentions, this proposal - if it is meant seriously - de facto completely devalues the NAFTA agreement unacceptable and at best suitable to force the failure of the negotiations.
The USA also called for Mexico and Canada's access to the US procurement market to be limited to the combined amount of the procurement markets open to US companies in Mexico and Canada (the so-called dollar-for-dollar approach) .30 This is a conceptual departure of the USA from its previous approach in trade agreements, which pursued the reciprocity of the opening of the procurement markets by setting common tender thresholds for the opening of registered facilities and permitted exception areas. The new proposal would probably only affect Mexican access to the US procurement market, since Mexico - unlike Canada and the US - is not a party to the WTO Agreement on Government Procurement (GPA). Canadian access to the US market would thus continue to be guaranteed, since NAFTA would not affect the obligations under the GPA.31 However, this proposal would be an explosive device for NAFTA at the latest if the USA fundamentally questioned its obligations under the GPA and thus also created a conflict would conjure up with Canada.
Finally, the USA refined and tightened its ideas for adapting the rules of origin in the NAFTA area by proposing not only to increase the already comparatively high minimum share of origin for motor vehicles from 62.5% to over 80% and at the same time to increase a US added value share of 35 % to 50% demanded.32 The requirement to provide for a national value added share within a free trade area as a prerequisite for exemption from customs duties runs diametrically against the purpose of such a free trade area. Because the concept of a free trade area is based on the fact that the parties involved promise each other duty-free trade if a certain share of added value is generated and verified within the free trade area as a whole. The US proposal would not only de facto destroy the established value chains of the auto industry in the NAFTA area, but also say goodbye to a basic idea of a regional free trade agreement.
While conflicting interests are the usual starting point for all negotiations, proposals that run counter to the basic requirements of long-term reliable trade relationships, such as: B. a "sunset clause" that provides for an automatic expiry of the contract every five years, the undermining of duty-free trade or the questioning of the results of orderly, contractually agreed dispute settlement procedures are the ax to commercial contracts as a whole. The high level of integration that has been achieved in NAFTA's 24 years of existence suggests that the economic costs of an end to NAFTA would be very high for all three partners. Sober consideration speaks against the fact that the US will let it get this far, even though a conclusion of the talks before the Mexican elections in July 2018 appears unlikely. Therefore, if you look soberly, a hanging game that extends beyond the US midterm elections in November 2018 is currently the most likely scenario. The high negative political symbolism that the NAFTA agreement has in the USA does not allow - despite all economic disadvantages or rational considerations - to completely rule out a failure of NAFTA.
- 1 Cf. on the data Office of the United States Trade Representative Resource Center, https://ustr.gov/ (12.1.2018).
- 2 See WTO: Trade Statistics - World Trade Statistical Review 2016, https://www.wto.org/english/res_e/statis_e/wts2016_e/wts2016_e.pdf (2.1.2018).
- 3 C. Freund: Streamlining Rules of Origin in NAFTA, https: //piie.com/publications/policy-briefs/streamlining-rules-origin-nafta (12.1.2018).
- 4 See OECD: Trade in Value Added, December 2016, https://stats.oecd.org/index.aspx?queryid=75537 (12.1.2018).
- 5 See Government of Canada: North American Free Trade Agreement (NAFTA) - Fast Facts, January 22, 2018, http://international.gc.ca/trade-commerce/trade-agreements-accords-commerciaux/agr-acc/nafta -alena / fta-ale / facts.aspx? lang = eng (2.1.2018).
- 6 See Bureau of Economic Analysis (bea): International Data, U.S. Department of Commerce, https://www.bea.gov/iTable/index_ita.cfm (8.1.2018).
- 7 All trade data refer to the year 2016 and come from the Bureau of Economic Analysis and the US Census Bureau, see https://usatrade.census.gov/ (16.1.2018).
- 8 All trade data for Canada comes from Statistics Canada, CANSIM Database, http://www5.statcan.gc.ca/cansim/home-accueil?lang=eng (9.1.2018) and relates to 2016.
- 9 All trade data for Mexico come from the OECD: Trade in Value Added, a. a. O., https://stats.oecd.org/index.aspx?queryid=75537# (9.1.2018).
- 10 A good up-to-date overview of the points of criticism is provided by the statement of the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) on a hearing in the US Congress on December 12, 2017, see Foreign Affairs Committee: The Future of the North American Free Trade Agreement, 12.12.2017, https://foreignaffairs.house.gov/hearing/subcommittee-hearing-future-north-american-free-trade-agreement/ (14.12.2017); to Mexico z. B. M. Weisbrot, S. Lefebvre, J. Sammut: Did NAFTA Help Mexico? An Assessment After 20 Years, Center for Economic and Policy Research, February 2014, see http://cepr.net/documents/nafta-20-years-2014-02.pdf (December 15, 2017); and on the benefits GC Hufbauer, C. Cimino-Isaacs, T. Moran: NAFTA at 20: Misleading Charges and Positive Achievements, Peterson Institute for International Economics, Policy Brief14-13, May 2014, https://piie.com/publications / policy-briefs / nafta-20-misleading-charges-and-positive-achievements (January 31, 2018).
- 11 On the sometimes very idiosyncratic discussion in the USA, see, for example, the speech by Peter Navarro, Director National Trade Council at the White House on March 6, 2017 at the National Association of Business Economists, https://www.c-span.org/video /? 424924-3 / peter-navarro-outlines-trump-administrations-trade-policy-economic-policy-conference (23.3.2017). For further discussion see also M. Pettis: Is Peter Navarro wrong on Trade ?, February 2, 2017, http://carnegieendowment.org/chinafinancialmarkets/67867 (March 23, 2017); M. Schneider-Petsinger: Trade Policy under President Trump, Chatham House, The Royal Institute of International Affairs, November 3, 2017, https://www.chathamhouse.org/publication/trade-policy-under-president-trump-implications- us-and-world (November 15, 2017).
- 12 Cf. J. Schott, G. Hufbauer: NAFTA Revisited, October 2007, http://irpp.org/wp-content/uploads/sites/2/assets/po/free-trade-20/schott.pdf (27.12 .2017), p. 5.
- 13 According to the international list of goods for foreign trade, Standard International Trade Classification (SITC).
- 14 Cf. M. Wiekert: Controversies over the 20-year NAFTA balance sheet influence current US trade policy, http://www.gtai.de/GTAI/Navigation/DE/Trade/maerkte,did=958526.html (11.2 .2014).
- 15 Cf. R. E. Scott: The Effects of NAFTA on US trade, jobs and investment, 1993 - 2013, in: Review of Keynesian Economics, 2nd year (2014), no. 4, p. 429 ff.
- 16 See G. C. Hufbauer, C. Cimino-Isaacs, T. Moran, op. a. Cit., P. 5.
- 17 See ibid., P. 6 f.
- 18 See ibid.
- 19 cf. B. J. Schott, G. Hufbauer, op. a. O.
- 20 See G. C. Hufbauer, C. Cimino-Isaacs, T. Moran, op. a. Cit., P. 11.
- 21 See, for example, Foreign Affairs Committee, op. a. O.
- 22 See US Committee on Finance: Hearing to Consider the Nomination of Robert Lighthizer, of Florida, to be United States Trade Representative, with the rank of Ambassador Extraordinary and Plenipotentiary, March 14, 2017, https: //www.finance.senate .gov / hearings / hearing-to-consider-the-nomination-of-robert-lighthizer-of-florida-to-be-united-states-trade-representative-with-the-rank-of-ambassador-extraordinary-and -plenipotentiary (March 16, 2017); on the US goals in detail see Office of the United States Trade Representative: Summary of Objectives for the NAFTA Renegotiations, July 17, 2017, https://ustr.gov/sites/default/files/files/Press/Releases/NAFTAObjectives .pdf (25.11.2017). The overlaps with the AFL-CIO's catalog of requirements are considerable.
- 23 The NAFTA rules of origin are described in chap. 4 (Rules of Origin), in Appendix 401 (Specific Rules of Origin) and in Chap. 5 (Customs Procedures) included. Regional content describes the minimum share of regional added value (i.e. all countries in the NAFTA area) in a product so that it can benefit from the NAFTA advantages. For the calculation methods see Formulas for Calculating NAFTA Regional Value Content (RVC), https://www.census.gov/foreign-trade/aes/exporttraining/videos/rvcformulas.pdf (11.1.2018).
- 24 See J. W. Boscariol et al .: The Art of Trade: Knowing the US Position in NAFTA Negotiations, July 20, 2017, http://www.mccarthy.ca/article_detail.aspx?id=7371 (January 16, 2018).
- 25 The annual report of the United States Trade Representative on trade barriers provides a good overview of the market access demands that the USA is likely to raise against Canada and Mexico in detail, see Office of the United States Trade Representative: 2017 National Trade Estimate Report, https: //ustr.gov/about-us/policy-offices/press-office/reports-and-publications/2017/2017-national-trade-estimate (9.1.2018).
- 26 See: Global Affairs Canada: Address by Foreign Affairs Minister on the modernization of the North American Free Trade Agreement (NAFTA), Ottawa, August 14, 2017, https://www.canada.ca/en/global-affairs/ news / 2017/08 / address_by_foreignaffairsministeronthemodernizationofthenorthame.html (8.1.2018).
- 27 For more details on the Mexican perspective, cf. B. L. M. de la Mora: The NAFTA Negotiations: A Mexican Perspective, Wilson Center, Mexico Institute, September 2017, https://www.wilsoncenter.org/sites/default/files/the_nafta_negotiations_a_mexican_perspective.pdf (8.1.2018).
- 28 See Office of the United States Trade Representative, op. a. O.
- 29 See D. Lawder, D. Graham: U.S. hikes tensions in NAFTA talks with call for 'sunset clause', Reuters, October 12, 2017, https://www.reuters.com/article/us-trade-nafta/us-hikes-tensions-in-nafta-talks-with -call-for-sunset-clause-idUSKBN1CH2EO (31.1.2018); E. Martin, J. Wingrove, A. Mayeda: U.S. Demands Risk Scuttling Nafta Talks, Bloomberg Politics, 29.9.2017, https://www.bloomberg.com/news/articles/2017-09-29/us-demands-on-nafta-are-said-to-risk-scuttling -trade-talks (January 12, 2018).
- 30 P. Murphy, p.Babbage: Billion-dollar government procurement market in NAFTA crosshairs, Bloomberg Government, November 22, 2017, https://about.bgov.com/blog/billion-dollar-government-procurement-market-nafta-crosshairs/ (January 12, 2018) .
- 31 With the Executive Order of April 2017, however, the Department of Commerce and the United States Trade Representative were also commissioned to examine the effects of US membership in the GPA, see Executive orders: Presidential Executive Order on Buy American and Hire American, April 18, 2017, https://www.whitehouse.gov/presidential-actions/presidential-executive-order-buy-american-hire-american/ (15.1.2018.)
- 32 Cf. M. McKeon: NAFTA Renegotiation: State of Play and a Look Ahead, Bertelsmann Stiftung, September 26, 2017, p. 5, http://www.bfna.org/research/nafta-renegotiationstate-of-play-and -a-look-ahead / (October 6, 2017).
Title: NAFTA Negotiations - Where Is US Trade Policy Heading?
Abstract: Since entering into force, NAFTA has contributed to major changes with regard to trade flows, supply chains and foreign investment among Canada, the US and Mexico. But nearly 30 years after the original negotiations, the need for modernization is evident. A possible US exit from the agreement could lead to major turbulence in trade and investment relations within NAFTA. This article starts by looking at data showing the huge amount of trade and investment interdependencies. Next, it examines the objections being raised against NAFTA in the US and the reasons for this criticism, followed by an analysis of the goals the US is pursuing, set against the background of its reformulated, much more protectionist trade policy strategy. Finally, scenarios for an outcome are discussed.
JEL Classification: F13, F14, F15
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