Panel, Conference Presentation
The Future of NAFTA
Milken InstituteTony Fratto, Navdeep Bains, Gerónimo Gutiérrez, Jodi Hanson Bond, Moisés R. Kalach B.
- Panelists anticipate a discussion focused on future adaptation, automation, and technological displacement rather than solely past events or resisting change, with a timeline suggesting a need for an overarching agreement by the end of the year.
- Adjustments to the current 23-year NAFTA framework are viewed as largely already completed, though concerns remain regarding the integration of small and medium-sized firms into supply chains.
- Future negotiations are expected to prioritize regional competitiveness, the inclusion of intellectual property provisions similar to the TPP, and the enforcement of free and fair trade, rather than specific demands from the current US administration.
- Economic risks include a potential 20% border adjustment tax increasing light vehicle prices by $2,000 and causing significant job losses, alongside a "chilling effect" on investors that has already caused some to withhold future investments.
- Uncertainty regarding the negotiation process and the potential for populist political backlash poses a risk of withdrawal considerations, with specific concern that unresolved negotiations during Mexico's presidential election next year could be detrimental.
- Public trust metrics in the United States among Mexicans are noted to have improved, with distrust falling from approximately 45% six years ago to the low 30%, though "Gringo bashing" remains a historical factor.
- Proposed solutions involve addressing underlying labor and educational policies to mitigate job displacement, with the expectation that incorporating technology and education into the discourse would reduce public anxiety.
- Business and agricultural sectors are expected to urge the administration to avoid political timing and social media influence in favor of institutional handling to ensure certainty for investors.
- There is an expectation that the US administration aims to conclude negotiations quickly, with communication efforts from business leaders and legislators aiming to influence this timeline and prevent damage to the bilateral relationship.