Tuesday, August 28, 2018

A Problem With Yesterday's US/Mexico Trade News

Well, there's a problem with yesterday's announced trade deal with Mexico. 

You see, NAFTA was crafted with a few rules; one of which eliminates the possibility of the very thing the White House announced yesterday. Plus, per the last sentence of the first quote below (emphasis mine) -- unlike the tariffing of the world's products at will (or whim) -- the Administration is at Congress's mercy on this one.

Per Bespoke this morning:
.....Mexico and the US are not allowed by NAFTA to make bilateral trade changes without enshrining them in NAFTA. Part One, Chapter One, Article 103.2 of NAFTA reads as follows (bold emphasis ours, link to text): “In the event of any inconsistency between this Agreement and such other agreements, this Agreement shall prevail to the extent of the inconsistency, except as otherwise provided in this Agreement.” In other words, NAFTA’s text is pretty explicit that bilateral agreements between countries that are party to the treaty require changes to NAFTA.
.....if the Trump Administration wants to change NAFTA, all three countries must agree in addition to Congress approving. Withdrawal is possible only if Congress approves.
Now I have to believe that the White House negotiators are fully aware of the above, so there must be a window for yesterday's action in there somewhere. We'll see....

Personally, I'm with the U.S. Chamber of Commerce on this one:
“In order to do no harm to the 14 million U.S. jobs that depend on trade with Canada and Mexico, the agreement must remain trilateral,” was the explicit statement on trilateral versus bilateral by the US Chamber of Commerce.

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