As NAFTA Talks Start, Trade Deficit Arguments Prevail

By Rodrigo Cervantes
August 16, 2017

MEXICO CITY — Wednesday was the first day of conversations between the U.S., Mexico and Canada to renegotiate the North American Free Trade Agreement (NAFTA).

The U.S. trade representative, Robert Lighthizer, said in opening remarks that NAFTA "has failed" Americans as a result of trade deficits. This means Americans buy more from its counterparts than vice versa.

But the Mexican and Canadian delegations disagree, as well as some economists and trade organizations. They said the deficit does not impact the continuously growing economy of the region.

Erik Lee is the director of the North American Research Partnership, a non-profit think tank based in Arizona. He thinks the deficit argument is merely political.

“This has been the administration position on NAFTA from the very beginning, they don’t seem to budge on that, which makes me think that the NAFTA renegotiation is more a political event than an economic event,” Lee said.

However, Lee highligted Lighthizer’s comments about the border, and agreed that not everyone has fully benefited from NAFTA in that area.

“Border communities in particular tend to be some of the poorest communities in the U.S. if you take San Diego out of the picture, and definitely talking about south Texas and even some Arizona border communities,” Lee said.

Lee thinks NAFTA has functioned overall, as trade between the three parties has significantly increased since it came into force in 1994.

“Trade has more than quintupled between the parties, and it is now an agreement that is deeply embedded in the three economies; it is remarkable,” Lee said.