The North American Free Trade Agreement, NAFTA, is being replaced with what is called the United States – Mexico Trade Agreement. Many are applauding the deal but Creighton University Economist Ernie Goss has some reservations.
Goss says, “I’m less enthusiastic than others I’ve heard on it. It is better to have a deal than not have a deal but this is not the best deal.”
The change mainly impacts auto and parts production. The deal would require that 75 percent of manufacturing happen in the U.S., Mexico and Canada and raise the wages of workers to $16 an hour.
Goss says, “I think we should be supporting buying the best and highest quality from whatever nation than restricting that to the North America. The $16 per hour minimum wage, I’m somewhat sympathetic to that but it is intended to focus on Mexico automobile production and that is to encourage those manufacturers that moved south to move back across the line to the U.S. but there are some real costs associated with that.”
The agreement will also impact Nebraska’s largest industry, agriculture. The agreement says there are no agriculture tariffs between the two countries. Goss says Nebraska exports $1.7 billion to Mexico and we have a significant trade surplus with Mexico. There is about a $1.5 billion trade surplus. He says we lose some of those customers with tariffs in place and once they are gone it is hard to get them back.
The next challenge for the U.S. is to strike a trade deal with Canada. Goss says the U.S. also runs a trade surplus with Canada and there will be net losses to the U.S. if we don’t get a good deal.
Canada is the United States second largest trading partner with China taking the first place slot.