Spotlight: Where is global trade heading amid NAFTA renegotiation?

Source: Xinhua| 2017-08-20 17:24:36|Editor: Lu Hui
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by Xinhua writers Wang Wen, Yang Shilong

NEW YORK, Aug. 20 (Xinhua) -- Countries should seriously consider negotiating international agreements to address major concerns such as trade protectionism, and lead the talks even if the United States walks away from them, said experts.

The United States, Canada and Mexico started the first round of the North American Free Trade Agreement (NAFTA) renegotiation on Wednesday in Washington D.C.

U.S. President Donald Trump has previously called NAFTA "the worst trade deal ever signed" in the country and attempted to quit the pact. Although he softened his position later on, Trump still considered the pact, and the idea of free trade and globalization the pact embodies, the job destroyer.

While economists are divided in determining whether the trade pact has been good or bad for American workers, most of them believe free trade has been beneficial to all the participants in it.


Edward Alden, senior fellow at the Council on Foreign Relations, said that NAFTA negotiation will "set the template for what this administration does on trade."

"If it can be concluded successfully, then some of these other negotiations may go forward. But if not the whole U.S. trade agenda will be stalled," said Alden in a recent interview with Xinhua.

Describing the U.S.-South Korean FTA as a "horrible deal," Trump has called for a renegotiation of the five-year-old pact to narrow the trade deficit. In mid July, South Korea accepted a U.S. request to convene a special session of the joint committee on their bilateral agreement.

"I do think the NAFTA renegotiation will set certain limits for a renegotiation with South Korea," said Justin Fendos, professor at Dongseo University in South Korea and an associate director of the Tan School at Fudan University.

He anticipated that the renegotiation will only bring about "superficial changes to the current terms, something Trump can tote as a victory publicly."

John Manzella, CEO of the World Trade Center Buffalo Niagara, said certain areas of focus under the NAFTA should be improved to make sure the pact stays relevant today.

"Back when it was implemented in 1994, we didn't have the export of services like we have today. E-commerce was in its infancy, while intellectual property was not nearly as important as it is today. These are three areas that can be improved," Manzella said.

He said the three countries only talk about peripheral changes around the edges, instead of changing the agreement on a massive scale.


Experts have noted free trade will benefit all in general and it's high time that countries start renegotiate international trade agreements.

"The U.S. manufactures have a tremendous trade deficit with the world, but U.S. manufactures actually have a large surplus with our free trade partners, which means if you eliminate tariffs and non-tariff barriers, the U.S. can compete with anybody," said Manzella, who believed free trade benefits American companies to a great extent.

Alden said it is important for members of the World Trade Organization (WTO) to restart negotiations.

"Unfortunately it's been impossible to negotiate a new agreement in the WTO, so with each passing year, WTO rules become less and less relevant because they haven't been updated and improved," he said.

He said regional negotiations have been the second best option. But the Trump Administration has obviously walked away from the Trans-Pacific Partnership.

"If the Trump administration can't renegotiate NAFTA, there is no prospect for significant further trade negotiations under this administration," said Alden.

The danger of that for other countries is that it increases the temptation for the United States not to abide by WTO rules, according to Alden.

The more those trade negotiations come to be seen as futile, the more likely the United States is to act unilaterally, he said, adding that he thinks other countries will respond in kind and also respond unilaterally, which will be harmful to everyone.

Talking about rising protectionism in the United States and around the world, Alden said the only way to resist protectionism is to have international negotiations that address some of the concerns.


Some experts are optimistic that even without U.S. leadership, free trade is still going to go forward.

Alden said that under the current administration, the United States is no longer the champion of free trade.

"Increasingly, the United States is going to be looking more narrowly at its economic self-interest in these negotiations and I think that will make it harder to arrive at deals," he said.

He said that without U.S. leadership, it will be difficult to make progress in WTO negotiations.

"But on the other hand, for many years the world has left it to the United States to lead these efforts, and there's no reason it seems to me that other countries can't at least attempt to step into the vacuum that the United States is currently left," said Alden.

He said a lot of the countries will be interested in leading the efforts as many governments in the world are quite strongly committed to freer trade.

"It's not impossible to imagine that you could have a coalition of countries that could jump start new negotiations even if the United States were skeptical," he added.


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