It has been announced that the Trump administration is in the process of the revision of the North American Free Trade Agreement. NAFTA is the agreement among the United States, Canada and Mexico, which is designed to confiscate tariff barriers between the three. This does not come as a total surprise, as during his Presidential campaign Trump voiced his displeasure with the agreement. Commerce Secretary Wilbur Ross specified that the administration hopes to begin the process and the 90-day window to opening the negotiations between the three nations. Furthermore, it has also been announced that the administration has sent a letter to Capitol Hill outlining the administration’s blueprint for the negotiations.
The letter, which suggests that the administration has overall calmed down from its initial stance on the deal, outlines areas of negotiation, which are surprisingly bipartisan. These bipartisan areas are of investment and labor issues/concerns. Furthermore, “Jeffrey Schott, of the Peterson Institute for International Economics, says the letter provides the basis for constructive negotiations” (NPR). As Jeffrey Schott, had announced “It also contains a few seeds that could poison those talks and disrupt and perhaps blow up those negotiations” (NPR).
Now what specifically are these few seeds that have the potential of souring the negotiations between the United States, Canada, and Mexico one may ask. Well, for one is the reference of tax equality in which many believe is foreshadowing either or both border taxes proposed by President Trump or the border adjustable taxes proposed /supported by the House of Representatives leadership. Both of which are mainly targeting imports from Mexico. Now the border adjustable tax proposal would potentially levy a 20 percent tariff on all imports into the United States. Consequently, it is no wonder why Commerce Secretary Wilbur Ross has indicated that the letter is rather a blueprint for the Administration’s plan of attack in re-negotiations of the NAFTA agreement.
Many farmers and companies that operate on the border between the United States and Mexico have voiced their concern over the possibilities that the renegotiations provide especially under an administration which preaches “America First”. These possibilities for the most part are not positive especially in the eyes of the producer of the products. A major possibility is a trade war between the two states “Tax for a Tax” view. Another possibility is far worse for some produce producers such as Francisco Landell, the general manager of Wholesum Farms Sonora, who has voiced his fear that if Trump does pull the United States out then that act will have a detrimental effect on his company.