Dive Brief:
- Canadian Prime Minister Justin Trudeau has reached out to President-elect Donald Trump to offer congratulations as well as to express interest in discussing the North American Free Trade Agreement, according to an AFP report.
- The 1994 North American Free Trade Agreement (NAFTA) affects 530 million consumers in Canada, the United States and Mexico, with trade between the U.S. and Canada representing $1.8 billion a day.
- Trump had pledged to either renegotiate NAFTA or, if Canada and Mexico refuses, to back out from the decades-old trade deal.
Dive Insight:
Trump's promise to renegotiate or renege from NAFTA on "day one" of his presidency was among one of his most controversial electoral promises, given the importance of the trade agreement to many manufacturers. However, Prime Minister Trudeau's declaration that Canada is willing to renegotiate the trade deal removes much uncertainty to its future; all three leaders now have accepted renegotiation, leaving only a timeline to be set.
When Trump visited Mexico as a nominee to converse with President Enrique Peña Nieto, the two leaders agreed upon five shared goals, two of which included improving the trade deal and avoiding manufacturing flight to other continents. Beyond Trump's promises to put "America First" in regards to trade deals, the August conversations provided the greatest insight so far as to what a renegotiated NAFTA might include.
Renegotiating the deal could reap great benefits for the supply chain both through the facilitation of trade in e-commerce goods and cross-border freight. Mexico may concede greater labor standards (which it had already conceded as a member of the Trans-Pacific Partnership) and improved security collaboration in exchange for continent-wide, non U.S.-centric protections of American manufacturing. Meanwhile, Canada may push back on protectionism in general but could concede in exchange for greater sustainability collaborations, and most importantly, a resolution to the ongoing lumber dispute.
