Amidst all the fuss and furor over markets today, the US gave formal notice it intends to renegotiate NAFTA – the trade treaty that binds together the US, Mexico and Canada. Now begins a 90-day consultation process within the United States. The Mexican economy minister told me last week he expects real live talks to get underway possibly by the end of August.
Donald Trump has repeatedly described NAFTA as a disaster and the worst trade treaty he’s ever seen. However, getting agreement from the other parties on the extent of any renegotiation will be a battle in itself, even before the talks begin.
Mexico (and Canada) both recognize a need to modernize or update the 23-year old treaty to account for the digital age. Trump wants to use the talks to rebalance the terms of trade and the trade deficit – a non starter for the Mexicans.
Irony of ironies: Many of the changes Trump wants were actually included in the much wider Trans Pacific Partnership trade treaty…yes, the one he withdrew from on Day One of his presidency.