A major feature of the North American Free Trade Agreement was facilitating trade between Mexico and Canada, allowing freight trucks and trains to use U.S. roads and rail lines to get from border to border. President Trump’s insistence on replacing NAFTA with two “America First” deals has raised questions about the future of Mexico-Canada trade.
It’s a big deal. According to the United National COMTRADE Database on International Trade, Canada imported $27.38 billion U.S. worth of goods from Mexico and exported $9.79 billion U.S. to Mexico worth in 2017.
That trade ranges from fruits and vegetables to electronics to cars and trucks — even nuclear reactors.
Most of it came through the Texas-Mexico border, primarily the Rio Grande Valley and Laredo. And it fed many support services in the Valley and all along the way between the two countries, such as customs and insurance brokers, rail line fees and the truck stops that provide fuel, food and dry goods to the cross-country truckers.
Will breaking the Mexico-Canada link affect that trade, and the benefits to our economy?
Nelson Balido, founder of the Border Commerce and Security Council and former president of the Border Trade Alliance, is confident a new version of NAFTA remains possible if not likely.
Trump and Mexican President Enrique Peña Nieto signed a preliminary two-country deal to replace NAFTA on Aug. 27. From that date Congress has 90 days to review the deal before it deliberates, amends and votes to accept or reject it. Balido said he’s talked to Congress members from states bordering Canada and that they insist on another trilateral agreement.
“I do not see this moving forward without Canada,” he told us Friday.
Balido noted that many of the provisions in the new U.S.-Mexico agreement actually were negotiated as part of the Trans Pacific Partnership, from which Trump bailed out last year.
Mexico and Canada have both signed on to the TPP and also are linked through membership in the World Trade Organization. The post-NAFTA question largely regards the ability to access each other through the United States. Balido said trucks could cross “in bond,” where cargo is inspected when it enters the United States and sealed, but security remains an issue.
“How do you know (a rig) doesn’t take a left turn someplace?” he asked rhetorically.
Another variable in the U.S.-Mexico agreement is the Dec. 1 change in Mexico’s government. President-elect Andres Lopez Obrador could bring the deal back to the table and insist on a trilateral agreement.
Then again, so could U.S. Congress members who have seen the benefits NAFTA brought to all the countries involved.
“No one’s there to stifle economic development,” Balido said, noting that NAFTA currently governs some $1.5 billion in monthly trade.
To be sure, the 1993 trade agreement needs updating; Balido notes that when it went into effect, e-commerce and Internet sales weren’t such a big part of international trade. But he still sees a three-way deal in the cards.
“We want to move forward, not back,” he said. “Otherwise, why would we want to do it?”