NAFTA negotiations are heating up so much that even Canada is becoming a tough negotiator. Jokes aside, one of GPF’s major forecasts for 2018 is that NAFTA will remain in place, despite whatever threats are bandied about or whatever letters of intent Trump signs. This chart goes a long way toward explaining why.
The only way we know to analyze highly politicized debates like the one surrounding NAFTA is to tune out the rhetoric. Interests take precedence over words and politics. And the interests here—for all three countries—require that NAFTA stay in place. The chart shows very clearly why this is the case for Canada and Mexico—trade with the US is an overwhelmingly important part of their economies.
But the chart doesn’t quite say everything about the US angle. US trade with NAFTA partners is large, but it doesn’t come close to US trade volumes with the rest of the world. We can’t forget, though, that the US is made up of 50 states, and two of the most influential of those states—California and Texas—are deeply invested in NAFTA’s continued existence. And California and Texas are by no means the only states whose economies rely on trade with NAFTA partners.
As with the Brexit-EU negotiations, expect a good deal of political soap opera performances around NAFTA, especially on the question of whether Trump will try to take the US out of the trade pact unilaterally (a step that is as likely to lead to years of domestic litigation as it is to an actual US exit). Expect also that at the end of the day, NAFTA will remain in place, no matter how badly the three sides insult each other.
These are some of GPF’s best maps and charts of 2017, and each sheds light on what the important stories will be in 2018. China and Japan will compete for power in Asia. Iran will try to reshape the Middle East to suit its interests. Oil prices will remain too low for Iran’s, Saudi Arabia’s, and Russia’s liking. Poland and Germany will square off over who gets to make the rules in Brussels, while the UK will go back to being an outsider, working to balance powers on the Continent. And NAFTA, for all the political drama to come, will remain in place. It should be an interesting year. |