As the battle for the Democratic nomination between Hillary Clinton and Barack Obama intensified in the months leading up to the election, both would-be candidates raised the renegotiation of the North American Free Trade Agreement (NAFTA) as essentially a fait accompli.
Ã¢â‚¬Å“We should use the hammer of a potential opt-out as leverage to ensure that we actually get labor and environmental standards that are enforced,Ã¢â‚¬Â Obama said during a February 26th debate in Ohio.
Naturally, this played well in the great American Heartland where NAFTA is blamed for everything from job losses to crop failures. Oddly enough, both Obama and Clinton neglected to mention an overhaul of NAFTA when campaigning in, say, New York or Los Angeles, but that is fodder for another day.
With Obama ultimately winning the Presidency, can we now expect his first official act to be an announcement that the U.S. will unilaterally overhaul the agreement that has defined North American trade practices for the past two decades?
There is plenty to keep the new President occupied in his first few days after moving into the White House. There is that little matter of the Ã¢â‚¬Å“Big 3Ã¢â‚¬Â auto manufacturers that will certainly take up much of ObamaÃ¢â‚¬â„¢s time and there is still the lionÃ¢â‚¬â„¢s share of the $700 billion to spend so NAFTA may drop down a couple of spots in the old priority list.
In truth, the Democrats seem to have softened their stance somewhat since the early primaries. When referencing the agreement on ObamaÃ¢â‚¬â„¢s official website, the only mention of NAFTA states that the combined team of Obama and Biden will Ã¢â‚¬Å“work with the leaders of Canada and Mexico to fix NAFTA so that it works for American workersÃ¢â‚¬Â. Also, at a campaign stop in July, Obama referred to the changes he envisioned as being merely Ã¢â‚¬Å“tweaksÃ¢â‚¬Â.
While it is unclear what exactly Ã¢â‚¬Å“tweaksÃ¢â‚¬Â could comprise, the fact remains that negotiating wholesale changes to NAFTA is not a simple task. While such protectionist sentiments may be effective on the campaign trail, now that that posters have been pulled down and the votes tabulated, there is little reason to expect that the original NAFTA trade agreement will soon be on its way out. At least not until everything else is fixed which should keep ObamaÃ¢â‚¬â„¢s team busy until April Ã¢â‚¬â€œ May tops.
About the Author
Scott Boyd has been working in and writing about the financial industry since the early 1990s. As a technical writer and project manager with several of Canada’s leading financial institutions, Scott has produced educational materials for investment system end-users including portfolio managers and traders. Scott now administers and contributes to OANDA FXPedia and regularly provides commentaries for the OANDA FXTrade website.