Canada, the United States and Mexico are holding separate meetings within their countries preparing for a major renegotiation of the North American Free Trade Agreement.
In the U.S., NAFTA has always been more about the economy than politics. In the early 1990s, the administration of Republican President George Bush negotiated the agreement, and it was the Democratic administration of Bill Clinton that passed it into law.
Ross Perot, the Reform Party candidate for president in 1992, was a major critic of NAFTA. He predicted “a giant sucking sound” would be heard as jobs were lost all over the U.S. to Mexico. That never materialized. Even so, there were factory closings, primarily in the Midwest.
Some of those factories did relocate to Mexico and other countries where labor costs were cheaper and unions were not a factor. But even the harshest critics of NAFTA admit that a majority of those jobs would have been lost eventually to China and automation.
Throughout the 2016 presidential campaign, then-candidate Donald Trump vowed to get rid of NAFTA, calling it “a horrible deal for the United States. It’s been very good for Mexico and it’s been very good for Canada, but it’s been horrible for the United States.”
Most U.S. economists disagree. Trade among the three countries has more than tripled, with border states like Arizona and Sonora reaping the benefits of a stronger relationship.
According the U.S. Commerce Department, before NAFTA, U.S. trade with Mexico was around $80 billion per year. Today it is more than $500 billion – a 600 percent increase in 24 years. In Arizona, trade with Mexico is vital to the state’s economic health. Mexico is Arizona’s No. 1 trading partner.
Faust Soto, an architect from the Mexican state of Sonora, and Tom DeSollar, a real estate broker from Arizona, say NAFTA has greatly benefited both states. Soto said while top officials in all three countries argue the pros and cons of NAFTA, the relationship between Arizona and Sonora goes beyond a trade agreement.
“It’s always been a bilateral, binational, bicultural relationship that we have,” Soto said.
DeSollar echoed Soto’s comments: “I wish someone from the administration could come and hear what these actual numbers are. How the exporting goods to Mexico and the reimporting them have helped both economies”
President Trump has received a great deal of pressure from the Canadian prime minister and the Mexican president to renegotiate NAFTA. The president has also been inundated with advice from his own party and the business community to keep NAFTA in place.
That may be part of the reason Trump has changed his stance on NAFTA.
“So they asked me to renegotiate,” Trump said, “and I said I will. And I think we will be successful in the renegotiation.”
While the negotiations are scheduled to begin within the next 60 days, DeSollar and Soto say Arizona and Sonora will continue with business as usual. Both business leaders are anxious about the future of NAFTA, but say the relationship between the two border states will survive no matter what the Trump administration does.