Donald Trump Suggests Remaining in NAFTA, with Some Reforms

US President Donald Trump presented a draft of possible changes he could make to the North American Free Trade Agreement (NAFTA) to begin its renegotiation.

The document reflects that the president “will try to maintain and expand access to the current market” between the United States, Mexico, and Canada. Among its proposals is the creation of a general safeguard mechanism as well as the establishment of a specific regulation known as a “snap back” that allows the increase of tariffs in situations of unexpected increases in imports that go beyond a certain volume and if the domestic price falls. This tariff is already applied among 154 members of the World Trade Organization (WTO).

Donald Trump is also calling for the removal of a clause of NAFTA that allows Mexico, Canada, and the United States to challenge trade remedy measures that include antidumping installments or countervailing duties for prohibited subsidies.

Another important change is that the American president is suggesting is that the government currently has to consider offers from the three countries. However, the new draft submitted states that purchases would be carried out consistently with policies that privilege national purchases.

This reform would make way for policies that incentivize the “buy American” that has been championed by Donald Trump. However, American trade could be negatively impacted in Mexico and Canada since these measures could restrict the participation of Mexican and Canadian companies in US public biddings.

This was revealed in a draft notice that was sent to members of the United States Senate Finance Committees as well as to the House of Representatives.

Source: El Economista