NAFTA Rewrite Case Study

Economics

economics

Temple University

Question Description

SUMMARY: Mexico made concessions on cars, while Canada made concessions on cheese to pave the way for a new regional trade agreement between the United States, Mexico and Canada. After President Donald Trump's threat to move ahead with a revised agreement with Mexico but without Canada, it left Canada only a few days to negotiate a new trade deal. Canada's key negotiator was given advice by her Mexican counterpart to offer a critical concession to break the logjam with the United States. After presenting detailed plans for easing curbs on American milk and cheese products, Canada and the United States engaged in several days of nearly round-the-clock negotiations to reach Mr. Trump's negotiation deadline. The result was the new U.S.-Mexico-Canada Agreement (USMCA). The member countries recently signed the new pact, but it still requires ratification by legislators in all three countries before it can take effect.

QUESTIONS:

  1. What concessions did Mexico and Canada need to offer to reach an agreement with the United States to replace Nafta?
  2. What challenges exist for the USMCA to be ratified and go into effect?
  3. Should Mexico and Canada have offered the concessions that they did to renegotiate Nafta? Explain your position.
  4. The U.S. goal of increasing local content requirement percentages and adding a requirement that a certain amount of content has to be performed by high-cost labor in the automotive industry in USMCA is to bring automotive jobs back to the United States. Do you think these requirements will achieve this goal? Explain your point of view.

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