Did NAFTA help Mexico
government: Free trade agreement NAFTA: economic engine or job killer?
Mexico City (AP) - US President considers the North American Free Trade Agreement (NAFTA) to be the "worst deal of all time". He believes that the treaty brought Mexico and Canada primarily advantages and the United States primarily disadvantages.
Now he wants to renegotiate the agreement and get better conditions for the USA. If that doesn't work, he threatens to drop out.
What is NAFTA?
The USA, Canada and Mexico have been linked by the North American Free Trade Agreement (NAFTA) since 1994. By 2008 almost all tariffs had gradually fallen. The single market comprises 444 million people and has a combined economic output of around 17 trillion US dollars. Trilateral trade is nearly $ 1 trillion.
What does NAFTA mean for US-Mexico trade?
Between 1994 and 2016, US exports to Mexico increased six-fold, and Mexican imports to the US more than seven-fold. Mexico is the United States' third largest trading partner. The trading volume is over $ 500 billion. Overall, trade has grown strongly, from which the USA is also benefiting.
Can Trump just get out of NAFTA?
Yes. However, there is a six-month notice period. The US president does not even need the approval of Congress to terminate the free trade agreement. Half a year after the termination, the US would be out.
What would an exit mean for trade with Mexico and Canada?
The rules of the World Trade Organization (WTO) would then apply to customs duties. According to the so-called most-favored-nation principle, they are 3.5 percent for most products. However, under a 1974 law, Trump could also set higher tariffs to defend himself against "unfair" business practices by trading partners. US companies relocating their production to Mexico are already threatening Trump with punitive tariffs of 35 percent.
What consequences would that have for companies?
High tariffs would disrupt the supply chain. Almost 60 percent of the goods imported into the US from Canada and Mexico are supplier parts for US industry. Companies in the United States would have to pay significantly higher prices for the preliminary products. The strongly export-oriented companies in Mexico could lose important customers.
What would an end of NAFTA mean for Mexico's auto industry?
Mexico is also an attractive location for automotive companies because of its proximity to the US market and the free trade agreement. Last year, 3.46 million vehicles rolled off the assembly line in around 20 plants. Almost 80 percent of auto exports go to the United States. Mexico also produces many parts for car factories in the USA and vice versa.
Would German car companies also be affected by an end to NAFTA?
Yes. Volkswagen operates its second largest plant in the world in Puebla, and Audi recently opened its most modern plant nearby. Mercedes builds a company together with Nissan in Aguascalientes. BMW is also currently building a plant in Mexico. In addition, numerous supplier companies are based in Mexico.
Would Mexico be uninteresting as a production location without NAFTA?
Incomplete. Mexico has a total of over 40 free trade agreements with states and regions around the world. The country also has a good infrastructure, a solid network of suppliers and relatively well-trained workers. The low wage costs also make Mexico an attractive location.
Would Trump help the US economy by leaving NAFTA?
Economists doubt it. According to the Wilson Center, six million jobs in the US depend on trade with Mexico. Experts also say that outsourcing parts of production to Mexico, for example, even helped the US auto industry to remain competitive.
Is Nafta really the "worst deal ever"?
The free trade agreement in the United States and Mexico benefited some industries and harmed others. A study by the scientific service of the US Congress comes to the conclusion: "NAFTA did not lead to the massive job losses feared by the critics and not to the great economic growth as predicted by the supporters. The net effect of NAFTA for the US Economy seems to be relatively moderate. "
Trump's positions on trade
Statistics US exports to Mexico
Statistics US imports from Mexico
Statistics US exports to Canada
Statistics US imports from Canada
USA trade balance
Statistics workers in US industries
CAR report on the auto industry
Study Congressional Research Service
Politifact to NAFTA
Wilson USA-Mexico Trade Center
This message is part of the automated news feed of the German Press Agency (dpa). The dpa is a news agency that supplies the media with self-researched and formulated reports on current events.
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