The US-Mexico trade deal a threat for others, Trump to single out China, Europe

President Donald J. Trump signs Executive Order Promoting Agriculture and Rural Prosperity in America with Secretary of Agriculture, Sonny Perdue, in the Roosevelt Room of the White House in Washington, D.C., Tuesday, April 25th, 2017. It’s questionable though if in the long run the new NAFTA deal leaves the US farmers better off. (Official White House photo by Shealah Craighead).

The North American Free Trade Agreement (NAFTA) between US, Mexico and Canada is reborn. It was discarded and denounced by the American President Donald Trump since the first days of his campaign to conquer the White House, and now it returns almost undamaged, just under another name. Last Monday, after more than one year of negotiations, the US and Mexico concluded a full free trade deal to replace the NAFTA and Canada is expected to forcibly join soon. Despite Trump’s rhetoric against NAFTA during the past few years, the Agreement is to return having undergone just light cosmetic adjustments. Let’s see the details.

The most criticized by the ‘America First’ President provision of NAFTA was the arrangement for cars produced in Mexico and imported to the US. Trump had condemned it as a ‘disaster’ for American workers. Under the previous Agreement, automobiles produced in Mexico by American, German and other automotive companies could be exported to the US without difficulties, if they contained added value of 62.5% created in the NAFTA region. Now, under the new deal, the White House accepted that this percentage be increased to 75%. Understandably this is an insignificant increase, which can be offset by creative accounting. The new arrangement also demands that 40% to 45% of the value of the car be produced by workers earning at least $16 an hour.

Cosmetic modifications

Last but not least, the new deal doesn’t contain a ‘sunset clause’ or automatic expiration as the American President had repeatedly demanded and advertised. The US, Mexico and Canada have been negotiating for more than one year now to replace the 1994 NAFTA. However, Canada has only five days until this Friday to agree to the terms and join the US-Mexico deal. Otherwise, the White House is expected to solemnly notify the Congress that the President is to sign the new deal with Mexico.

If Canada doesn’t sign until tomorrow Friday, the country will be obliged to negotiate her terms of adherence right from article one and may not get what is on offer today. Trump didn’t miss the opportunity to threaten Canadian made automobiles with more tariffs, if the country doesn’t join the US-Mexico deal now. Obviously, this is an open threat to Canada also intended by the White House to be disparaging.

A full U-Turn

In reality then, the Trump administration is clearly making a full 180 degrees U-Turn vis-à-vis Mexico. In place of statements like the one about ‘the Mexicans stealing hundreds of thousands American jobs’, Trump is now making a favor to the southern neighbor. To make it sound as a good deal, Trump said the Mexicans promised to buy more American soybeans and maize. In this way, he is caressing the ears of republican voters in the agricultural mid West without guaranteeing anything.

Is this full favorable change of Trump attitude to be repeated in the other trade fronts the US has opened all over the world? Let’s count the wars; with China the US is reaching the point of no return, Washington has abandoned the Trans-Pacific Partnership on trade and now threatens Europe with 25% super tariffs on car imports. Is the White House to retreat on all those accounts and show the favorable attitude it adopted towards Mexico? Rather not, and since it’s more possible that Trump has struck this deal with Mexico to corner Canada, he is more likely to do worse in the cases of China and Europe.

China and Europe on the spot

Only last week, Trump repeated his threat of levying 25% super tariffs the cars made in Europe and imported in the US. He also actively prepares a mammoth package of tariffs on imports from China of a value of $200 billion. Add to that the $50bn of Chinese goods being super levied so far and one arrives at half of the Chinese exports to America, amounting to $500bn. It would have been a wonderful surprise for the entire world, if Trump backed down on all those fronts. The global order would have been restored within hours and the stock markets would have reached new historical highs. But no, this is not going to happen.

What the Trump administration did with Mexico is a perfect move to create a solid economic zone in North America. Not to forget, the three NAFTA countries exchange goods of a value of one trillion dollars every year, covering each other’s needs. It’s more likely, then, that Trump is to raise the stakes in confronting both China and Europe.

So, both those economic entities have better prepare for the worse. Even the French President Emmanuel Macron, probably the best friend of Trump in mainland Europe, is not at all at ease with what is happening in the US. Last week, while addressing the annual conference of the French ambassadors, he accused the US of ‘aggressive isolationism’. At the same time, Germany is increasing her openings to Putin’s Russia. Unfortunately, all those signs do not indicate peaceful and calm prospects for the entire world. In conclusion it’s not a wild guess to say the powerful agents are out in search of victims to pay the cost of the next financial crisis.

 

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

Reforms in a few countries drive a decline in average OECD labour taxes

What have the banks done to the markets making them unable to bear cheap oil?

Eurozone: GDP development heads to naught; the expensive euro serves only Germany

We need a reskilling revolution. Here’s how to make it happen

Managers’ pay under fire

European Commission adopts rules to ensure a smooth transition to its next President and the next College of Commissioners

Delhi Declaration: Countries agree to make ‘land degradation neutrality’ by 2030, a national target for action

Trade Committee MEPs give greenlight to landmark EU-Japan trade agreement

Main results of G20 summit in Buenos Aires, Argentina

How can batteries become more sustainable? This young scientist might have the answer

New skills needed for medical students in Industry 4.0

What happiness can teach us about how we measure human development

European markets itchy with short-term disturbances

Where is Egypt leading the Middle East and the Mediterranean economy?

Countries must invest at least 1% more of GDP on primary healthcare to eliminate glaring coverage gaps

Guterres condemns killing of Bangladeshi peacekeeper in South Sudan, during armed attack on UN convoy

European Banking Union: Like the issue of a Eurobond?

Why the euro may rise with the dollar even at lower interest rates

This is why Dutch teenagers are among the happiest in the world

Currency Union might not let an independent Scotland join the EU as the “Yes” front now leads

Sassoli: Meals for homeless and key workers a “good example of Parliament’s public spirit”

Speeches of Vice Premier LIU He and Vice President of the European Commission Jyrki Katainen at the Press Conference of the Seventh China-EU High-level Economic and Trade Dialogue

Vaccine hesitancy: a pregnancy related issue?

MWC 2016 LIVE: GTI shifts to phase two – 5G – after hitting milestones

How to push out of our comfort zones – an extract

Commission presents review of EU economic governance and launches debate on its future

The Commission calls for a climate neutral Europe by 2050*

Youth unemployment: think out of the box

UN climate panel says ‘unprecedented changes’ needed to limit global warming to 1.5°C

Governments should renew efforts to reform support to agriculture

How this one change can help people fight poverty

Factories are no longer the sure route to prosperity. Here’s why

Trump’s denial of Paris climate agreement; the US Republicans lash out against the world

Final vote on European Solidarity Corps

Budget MEPs approve €104.2 m in EU aid to Greece, Spain, France and Portugal

Why Climate Change Matters for Future Health Professionals

How digital infrastructure can help us through the COVID-19 crisis

Merkel, Mercedes and Volkswagen to abolish European democracy

“For my children Italy will be an innovation lab and not a museum”; the Sting reports live from World Economic Forum 2015 in Davos

Bilbao’s city parks offer brain-training games for the elderly

Turkey to let EU alone struggle with the migrant crisis while enhancing its economic ties with Russia instead?

European Investment Advisory Hub sends projects worth €34 billion to European Investment Bank pipeline

Tax revenues have reached a plateau

Syria: At least seven children killed in yet another airstrike

Responsible Artificial Intelligence

The hottest new craze for German millennials? Gardening

Parliament adopts new rules for short-stay visas

EU Parliament and Council: Close to agreement on the bank resolution mechanism

The cuts on 2014 Budget will divide deeply the EU

Aviation Safety: Commission adopts new EU Air Safety List

Cultural tolerance is a must: “No sir, I’m not inferior!”

Attempt to defy international law over Golan Heights sovereignty ‘doomed to failure’ Security Council hears

Cyprus President urges collective leadership to address ‘root causes’ of world’s crises

Trying to cure bank cancer with analgesics

Conflict prevention, mediation: among ‘most important tools’ to reduce human suffering, Guterres tells Security Council

The Ultimate Career Choice: General Practice Specialist

Light at the end of the Eurozone tunnel

From fishing village to futuristic metropolis: Dubai’s remarkable transformation

How close is the new financial Armageddon? IMF gives some hints

Ukraine: Is there a political force able to undo the division?

More Stings?

Advertising

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s