Consider this a kick-off to my official NAFTA watch. Readers will note my earlier spidey-sense prediction of NAFTA withdrawal announcement in/around the end of February through March. I cannot see a delay in an announcement extending beyond March 2018. Ergo, CTH is fine-tuning the radar to watch closely.
The fatal flaw within NAFTA has not been addressed. Neither Canada nor Mexico has even slightly indicated a willingness to engage talks over the fatal flaw.
Exactly the opposite happened earlier this month when Canada signed up to the TPP deal.
The agreement has yet to be ratified by Canadian Parliament, and many are nervous, but it will likely get done.
The NAFTA decision will be the biggest political and economic decision in the Trump administration so far, and the corporate GOPe response is anticipated to be beyond ugly. Additionally, it would be intellectually dishonest not to accept there are very specific interests watching these pages as part of their proactive strategy. (Hi, Tom)
That said, if you were Mexican President Enrique Peña Nieto and you noted the specificity of the current trade-policy planetary positions; and you were overlaying the preparatory action taken by Justin from Canada; and you understand there are factually hundreds of billions in play; you would be a fool not to go past past Economy Minister Ildefonso Guarjardo and directly engage the ultimate decision-maker, U.S. President Donald Trump, out of an urgent need to evaluate the survivability of your economic surroundings. It would be imprudent not to prepare yourself:
(White House) President Donald J. Trump spoke today with President Enrique Peña Nieto of Mexico to offer condolences to the families of the victims of the helicopter accident in Oaxaca. President Peña Nieto returned the sentiment and expressed Mexico’s solidarity with the United States following the high school shooting in Parkland, Florida. President Trump underscored his commitment to expanding cooperation between the United States and Mexico on security, trade, and immigration.
The basic issue is a simple one – for the United States NAFTA has a fatal flaw. Canada and Mexico are used by China, Europe and Asian nations as a way to work-around direct trade with the U.S. and those nations use NAFTA as a backdoor into the U.S. market. It works out great for Canada and Mexico, but terrible for the U.S.
It is a structural issue and no amount of negotiation is going to remove the fatal flaw unless Canada and Mexico agreed to terms that are directly against their prior financial interests. Absolutely ZERO action has been taken to address this issue through six rounds of prior NAFTA discussion. Round six ended with VERY terse words from U.S. Trade Representative Robert Lighthizer specifically over this issue.
Justin from Canada recently signed up to the Trans-Pacific Partnership. With that decision the fatal flaw -from a U.S. perspective- just became the final straw to end the U.S. participation in NAFTA.
The U.S. cannot make any bilateral trade deals with TPP nations while those same TPP nations have an alternative access route to the U.S. market through Canada via NAFTA.
Therefore the only way for President Trump to finish a trade agreement with South Korea (current tense negotiations – see Samsung etc.) is to first remove their NAFTA alternative. Anticipating this reality S-Korea also filed a WTO trade challenge earlier today.
Absent of massive last-minute economic concessions (I’m talking full-blown acquiescence) by Canada and Mexico there is no alternative other than for President Trump to withdraw.
Understandably, South Korea is currently hosting the U.S. Olympics and it would have been extremely poor form, very impolite, and economically very destabilizing for Moon Jae-in if POTUS Trump had made the NAFTA announcement in the months/weeks leading up to their international spotlight event. [It’s not only CTH who follow the global tentacles of multinational trade decisions.]
However, with the Olympics ending next week that diplomatic hurdle is removed… the countdown clock now officially begins.
