Economists: NAFTA to Survive Renegotiation Process with Only Minor Changes

 

NAFTA

Barcelona, Spain, May 3, 2018 – The economists surveyed for a new special report by FocusEconomics released Monday unanimously expect the North American Free Trade Agreement (NAFTA) to survive the renegotiation process underway since August 2017 between trade representatives from Mexico, Canada and the United States.

 While they are split on the specifics of a revised NAFTA agreement, they mostly agree that “any changes [to the deal’s structure] would likely be relatively minor”, according to Christopher Thomas, Canada Economist at FocusEconomics.

On the major issues under discussion, most analysts believe that existing rules of origin will be updated; other items likely to be revised are intellectual and digital property rights.

The contentious sunset clause is, however, seen by most experts surveyed as ultimately being excluded from a revised deal, while they expect the current dispute resolution mechanism to be maintained broadly unchanged. Most respondents cited the automotive sector as the most likely to experience changes to existing trade rules.

The experts polled are divided about when negotiations will conclude. Approximately half see the process ending ahead of general elections in Mexico, which are set for 1 July.

They largely agree that Mexico is the country that has the most to lose if NAFTA talks fail, as its “economy is much more dependent on exports than the other two”, according to Jesse Wheeler, Country Risk Analyst at BMI Research.

However, the unraveling of NAFTA would hit all three countries and “the impact would be negative all around”, said Wheeler.

The negotiating “landscape has changed considerably from […] when Donald Trump assumed the presidency promising to shake up his country’s existing trade deals”, according to Christopher Thomas. Negotiators from the U.S. are now, Thomas said, “pushing to wrap up talks quickly”.
Nearly three-quarters of respondents saw an update to NAFTA as “somewhat necessary” or “very necessary”.

The FocusEconomics NAFTA survey was conducted from 6 to 12 April and polled 15 economists from leading global economics institutions, including BMI Research, Capital Economics and Euromonitor International.
African Eye Report

Leave a Reply

*