5 Ways Trump Could Improve NAFTA

1/23/2017 Forbes, Mexico Institute Blog

trump-inaugurationBy Christopher Wilson, Deputy Director, Mexico Institute

President Trump’s road to victory was built on a promise to fight on behalf of the American worker to keep manufacturing jobs in the United States. Rightly or wrongly, Donald Trump and many other Americans put much of the blame for the immense challenges being faced by the working class on NAFTA and other free trade agreements.

The newly updated White House website states, “President Trump is committed to renegotiating NAFTA.” However, “if our partners refuse a renegotiation that gives American workers a fair deal, then the President will give notice of the United States’ intent to withdraw from NAFTA.” Media reports suggest an executive order for a NAFTA renegotiation may be imminent.

An outright withdrawal from NAFTA would be incredibly costly. A Wilson Center study recently found that nearly five million U.S. jobs depend on trade with Mexico, and a good number of them would be put at risk were the agreement to be scrapped. At this point, U.S. and Mexican companies have invested many billions of dollars in each other’s economies to build up a globally competitive regional manufacturing platform upon which cars and other products are jointly manufactured with parts and materials from suppliers dispersed across the continent.

Renegotiation, on the other hand, could be beneficial if the political minefield along the way to its completion can be successfully navigated. Realistically, there are no changes to NAFTA that can stop the slow decline of manufacturing employment in the United States, which is caused much more by automation and technological advance than anything else. But, as an agreement negotiated a quarter-century ago, there is plenty of space for the Trump administration to propose an update to NAFTA that would favor U.S. workers and competitiveness.

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When Will Mexico’s Peso Finally Start To Recover?

1/23/17 Forbes

peso by Guanatos GwynMexico’s peso has been hit hard by Trump’s anti-trade rhetoric. During his inauguration speech President Donald Trump said, “From this day forward, it’s going to be only America first, America first. Every decision on trade, on taxes, on immigration, on foreign affairs will be made to benefit American workers and American families.”

Trump has criticized companies for investing in Mexico and promises to move quickly to work to re-negotiate NAFTA and re-calibrate the U.S.’s relationship with its southern neighbor. Trump’s vision appears to be simple. “We want to bring manufacturing back to our country,” he has said.

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Mexico set to ‘mirror’ policy on any U.S. trade tax change: minister

1/23/17 Reuters

Idelfonso-GuajardoMexico’s economy minister said his country was ready to renegotiate trade rules with the United States and that any change in U.S. tax policy that affected imports would have to be countered with a “mirror action” in Mexico.

U.S. President Donald Trump told a meeting with U.S. executives on Monday that companies would face a “major border tax” if they shifted jobs outside the United States. Such a measure could affect Mexico’s exports to the United States, its top trading partner.

“If there is any action that punishes imports to the North American market and encourages U.S. exports, you have to reflect it in a mirror action to counteract the change of incentives that this would make for activity and investment in Mexico,” Economy Minister Ildefonso Guajardo said in an interview in the newspaper El Universal on Monday.

Trump to Meet With Detroit Auto CEOs Over Cars From Mexico

1/24/17 NBC News

Bulletproof-CarsPresident Donald Trump will meet with the CEOs of the Detroit Three automakers in the Oval Office Tuesday morning, and it’s expected there will be plenty on the agenda.

Trump has put a lot of emphasis on the auto industry since launching his campaign in 2015, notably taking shots at the largest of the two domestic makers for importing cars from Mexico. He has threatened to enact a “big border tax,” according to a tweet fired at General Motors earlier this month, scuttled the Trans-Pacific trade pact, and advised both Mexico and Canada of his plan to renegotiate the NAFTA deal.

While industry officials worry about the impact of new trade barriers, they’re also hoping to get a sympathetic ear from the new president on a variety of their own concerns, including corporate taxes and government regulations like the tough Corporate Average Fuel Economy, or CAFE, mandate the EPA reaffirmed in the final hours of the Obama administration.

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Mexico may leave NAFTA if renegotiation unfavorable

1/24/17 Reuters

NAFTAMexico could pull out of the North American Free Trade Agreement if a renegotiation of its terms does not benefit Latin America’s second largest economy, Economy Minister Ildefonso Guajardo said on Tuesday.

“There could be no other option. Go for something that is less than what we already have? It would not make sense to stay,” Guajardo said when asked on local television if Mexico could pull out of the trade deal with Canada and the United States.

U.S. President Donald Trump has vowed to withdraw from NAFTA, which took effect in 1994, if he cannot renegotiate it to benefit American interests.

Trump formally withdrew the United States from the Trans-Pacific Partnership on Monday and said he would renegotiate NAFTA “at the appropriate time.”

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Mexico’s bloody cartel realignment is intensifying in one of the country’s smallest states

1/23/17 Business Insider

colimaSpiraling violence in Mexico has largely been driven by the shifting dynamics of the drug trade, as large organizations break apart and new groups fight for territory and market share.

While levels of violence are high in many places, perhaps nowhere has the rise been as dramatic as in Colima, a small state tucked in the middle of Mexico’s Pacific coast, between Michoacan and Jalisco states.

According to official statistics, Colima, home to a little over 700,000 people, had 607 homicide victims in 2016 — a 221% increase over 2015’s 189 homicide victims.

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America Can Compete Successfully

1/23/2017 Medium

By Earl Anthony Wayne, Public Policy Fellow & Advisory Board Member, Mexico Institute

Much national debate over the last year has been about how the United States, its companies and its workers can compete successfully in the world. The theme was clear in President Trump’s inaugural speech. And, most observers agree that America has what it takes to succeed, but it needs to deploy an array of improved policies and tools to face global competition. We must draw on the best ideas from across the political spectrum and agree on a comprehensive strategy.

Some seek to push ahead aggressively on select reforms without trying to build a broader coalition. Yet there is clear potential for President Trump and his allies to forge wider agreement around an ambitious agenda for making the United States more competitive globally. Agreements that cross party lines would make it more likely that the programs America needs to excel in global markets are enacted, funded and well implemented.

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