NAFTA

CSG members had the privilege of hearing from U.S. Ambassador to Canada Kelly Craft during the 2018 National Conference in Northern Kentucky/Greater Cincinnati on Dec. 6. 

Ambassador Craft and other speakers looked at the current relations between the U.S.A. and Canada, including the negotiations of the North American Free Trade Agreement, or NAFTA, and subnational relations involving American states and Canadian provinces. 

CSG Midwest
Negotiators from Canada, Mexico and the United States have begun their seventh round of discussions for a new, or modernized, North American Free Trade Agreement. And while the dissolution of NAFTA seemed very likely several months ago, negotiations are still alive.
CSG Midwest
What’s at stake for the Midwest’s food and agriculture sectors when it comes to the future of the North American Free Trade Agreement? A whole lot of jobs and economic activity, according to a letter signed in November by nearly 170 agriculture organizations and companies and sent to all 50 U.S. governors.
“Withdrawal from the accord would have adverse impacts,” the letter states before detailing why, as well as the economic consequences in various sectors.
For instance, Canada and Mexico account for 40 percent of the volume of U.S. pork exports (seven of the 10 leading states for pork production are in the Midwest) and 27 percent of U.S. beef exports (five of the 10 states with the most cattle are in the Midwest).
CSG Midwest
When the North American Free Trade Agreement took effect in 1994, it created the largest free trade area in the world at that time. By increasing trade and investment, reducing tariffs and addressing non-tariff barriers, the leaders of Canada, Mexico and the United States hoped to grow their countries’ economies and raise living standards across the continent.
“NAFTA worked, fundamentally shaping North American economic relations, driving integration between Canada and the United States’ developed economies and Mexico’s developing economy,” says Colin Robertson, vice president of the Canadian Global Affairs Institute and a former Canadian diplomat.
More trade with neighbors
In many measurable ways, NAFTA has been a major success. U.S. trade with its two neighbors has grown at a faster rate than its economic activity with the rest of the world. The value of U.S. exports to Mexico reached $231 billion last year, with Michigan ranking third among all U.S. states ($12 billion), and for the Midwest, the cross-border relationship with Canada is especially valuable. Canada serves as the largest export market for nine of the 11 states in this region (Kansas and Nebraska are the lone exceptions).
In states such as Michigan and Ohio, much of this cross-border trade centers on the automotive industry, where cars and their various parts are built via supply chains that send components across the border multiple times on their way to completion.
In fact, intermediate goods (not-yet-completed products) from Canada and Mexico accounted for half of all total imports from these countries. Free trade is essential to preserving these cross-border supply chains. According to the Canadian Embassy, trade with Canada supports close to 9 million jobs in the United States. The Mexico Institute estimates that nearly 5 million jobs in the U.S. depend on trade with Mexico.
But from the start, the three-nation agreement has failed to fully recognize how changes in North American trade would negatively affect certain workers and industries, says Christopher Wilson, deputy director of the Mexico Institute.
CSG Midwest
In the 20 years since the North American Free Trade Agreement took effect, trade between the United States and Canada has tripled, but those gains have occurred despite ongoing — and often unnecessary — hurdles to cross-border business, according to a recent study by the Canadian Council of Chief Executives. “The report is striking because it acknowledges that the NAFTA objective of a single market for goods and services hasn’t been achieved,” notes Christopher Sands, a senior fellow at the Hudson Institute.

Titled “Made in North America: A New Agenda to Sharpen Our Competitive Edge,” the study offers several strategies to reach that objective.

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