Trump, Mexico, and the TPP

The article “Mexico ready to discuss NAFTA with Trump, eyes non-US TPP” discusses Mexico and their actions with respect to the TPP post the Donald Trump vote. (http://www.reuters.com/article/us-usa-election-mexico-idUSKBN1352N0?il=0) Per the article “Mexico is willing to discuss NAFTA with U.S. President-elect Donald Trump but may seek to circumvent the United States on a broader trans-Pacific deal if necessary…”. The main mission of the discussions are to “persuade Trump how beneficial NAFTA… had been for North America”, and how “… the world is not competing by country, it’s competing by region…”. While currently no date has been established, both parties are anticipating one soon. “Mexico and the United States do about half a trillion dollars in trade every year, with the balance of commerce favoring the smaller country by tens of billions of dollars”. Despite this, Mexico is the US’s second-biggest foreign goods market after Canada. How will these negotiations play out? Only time will tell.

Will the TPP Agreement Cost US Jobs?

An article in Voice of America (October 30, 2015) titled “Will the TPP Agreement Cost US Jobs?” (http://www.voanews.com/content/will-the-tpp-agreement-cost-us-jobs/3029372.html) describes the risk that TPP represents for the unemployment rate in US. The AFL-CIO Labor Unions blames the North American Free Trade Agreement (NAFTA) with the loss of approximately 700,000 U.S. jobs since the deal took effect in 1994. Barak Obama has promised that the TPP will be different from NAFTA, since it will improve workers’ standards by having enforceable mechanisms in countries like Vietnam and Malaysia. Some people discuss that the TPP is a betrayal to the American worker, while others highlight the advantages of this commercial deal for economic sectors such as agriculture.  How will the TPP impact the unemployment rate in the U.S? If the deal is approved what actions will be performed by the Central Bank to control such unemployment rate and its impact on the economy?

Five Questions about the Big TPP Negotiations

According to the article (http://www.ctvnews.ca/business/five-questions-about-the-big-tpp-negotiations-1.2587022), there are five key questions regarding what is at stake with the TPP agreement, as follows:

  1. Would the TPP agreement eliminate NAFTA? No. NAFTA would continue to exist, but certain parts would be superseded by the new agreement.
  2. What will happen to Canada’s auto sector? It depends on who you ask. Some auto-parts companies are solidly in support of the new deal, while some are adamantly against it.
  3. Will there be more imports of foreign dairy? Almost certainly. According to some sources, the U.S. has requested and opening of the Canadian dairy market greater than the 2% share that they granted to Europe in the Canada-EU deal.
  4. Will drug prices go up? Possibly. The U.S. is demanding greater protection for pharmaceutical companies as well as longer exclusivity for cutting-edge medical treatments, which could increase prices.
  5. Could this affect Canada’s election? Absolutely. The race is a nail-biter, and depending on how successful the industries affected by the TPP are, the election could go either way.

Automakers want more from the TPP

On September 9, the Globe and Mail reported that the NAFTA automakers want the TPP to be “sweetened.”

The auto industry accounts for about 20% of all NAFTA trade. While the current TPP is negotiating to allow duty free products and parts that use no more than 45% or 20% domestic content respectively, the automakers want these levels to be increased to at least 50% in each. They cite that there are at least 3 million jobs that the industry caters and that catering to these might be difficult under the current deal.

Canada’s government has assured that they will do all in their capacity to keep the domestic market competitive, but will they succeed? Will the TPP be modified to finally hear the automakers and add them to their list of allies?