NAFTA Memo

Memorandum

320 Washington St.

Easton MA, 02375

27 April 2017

From: Caitlin Melaugh

Reply to: Caitlin Melaugh

To: US Trade Representative, Robert Lighthizer

Thru: The Office of the United States Trade Representative

Subject: The Importance of the North Atlantic Free Trade Agreement

What is NAFTA?

A.    The North Atlantic Free Trade Agreement is an agreement between Canada, the United States, and Mexico. NAFTA began in 1994, and provides for many tariffs to be eliminated from products traded between the countries. President George HW Bush negotiated the trade agreement and President Clinton implemented it.

B.     NAFTA reshaped economic relations between the three countries, and helped North America be a strong competitor in the global sphere.

a.       This agreement hoped to assist in Mexico’s economic growth in particular. Mexican President at the time Carlos Salinas de Gortiari saw this agreement as a way for Mexico to, “export goods, not people”.[1]

C.     Mexico and Canada have now become the two countries that the United States most commonly exports to.

a.       Estimates conclude that about 200,000 jobs rely on direct trade with Mexico and Canada.[2]

b.      On the other hand, it is estimated that about 600,000 jobs have been lost due to NAFTA’s implementation. However, with the change in times these jobs likely would have disappeared anyways.

What Does Trump Want?

A.    Following his inauguration Trump intended to reopen NAFTA to negotiations with Mexico and Canada. He threatens to withdraw from the agreement for a, “better deal” for US Companies.

B.     Trump has already withdrawn from the Trans Pacific Partnership deal. This deal had not been ratified by congress yet but was negotiated by President Obama. Trump argued that this would be harmful to US workers

a.       Since it was not ratified yet there will be no immediate effect on economic policies upon withdrawal.

b.      Since Trump did not hesitate to withdraw from the TPP he would likely stick to his word and withdraw from NAFTA if he saw necessary.

Why Should We Keep NAFTA?

A.    Economists agree that NAFTA has benefited the North American economies since its creation. Regional trade greatly increased.

a.       Trade increased from $290 billion in 1993 to $1.1 trillion in 2016.[3]

b.      It is difficult to decipher however, what other effects contributed to this increase, such as the influence of technology development.

B.     Economists concluded that manufacturing in the United States was already struggling prior to NAFTA, and it is not because of its implementation that there is trouble.

C.     We need to keep the more open barriers between Canada and Mexico for free trade within North America. Prices of many goods will greatly increase with a withdrawal from NAFTA.

D.    It is also important to keep friendly relations with our two border countries. With NAFTA, we have a block of good relations within North America, but a withdrawal could lead to not needing to keep up these good relationships, and future conflict.

E.     NAFTA should be amended and updated for inclusion of current issues we face today such as energy, border security, and immigration reform, but the United States should not withdraw from NAFTA. The original agreement was created a very long time ago and it should be regularly updated to include more current troubles between the countries, but ultimately, an agreement of some sorts must be kept with our two border countries for stability in the region.

a.       A complete withdraw would upend years of peaceful relations, and destabilize alliances.

Thank you for your time.

Reference

Diamond, Jeremy, and Bash, Dana, “Trump Signs order withdrawing from the TPP, reinstate       ‘Mexico City policy’ on abortion,” CNN Politics, January 24, 2017.  http://www.cnn.com/2017/01/23/politics/trans-pacific-partnership-trade-deal-withdrawal     trumps-first-executive-action-monday-sources-say/

McBride, James, and Aly Sergie, Mohammed, “NAFTA’s Economic Impact,” Council on Foreign          Relations, January 24, 2017. http://www.cfr.org/trade/naftas-economic-impact/p15790

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[1]James McBride, and Mohammed Aly Sergie, “NAFTA’s Economic Impact,” Council on Foreign Relations, January 24, 2017. http://www.cfr.org/trade/naftas-economic-impact/p15790

[2] James McBride, and Mohammed Aly Sergie, “NAFTA’s Economic Impact,” Council on Foreign Relations, January 24, 2017. http://www.cfr.org/trade/naftas-economic-impact/p15790

[3] James McBride, and Mohammed Aly Sergie, “NAFTA’s Economic Impact,” Council on Foreign Relations, January 24, 2017. http://www.cfr.org/trade/naftas-economic-impact/p15790