Business

US industry make case for Nafta to Trump administration

WASHINGTON The business world is mobilising to convince the Trump administration to save the North American Free Trade Agreement (Nafta), which corporate leaders say has greatly benefited the world's largest economy for 23 years.

With televised advertisements proclaiming "Nafta works for America" and study after study enumerating the dangers of withdrawing from the treaty, the US Chamber of Commerce and like-minded trade proponents have taken their message to Capitol Hill.

The effort has taken on added significance now that negotiators from Canada, the US and Mexico working to overhaul the treaty, are conducting their fifth round of talks in Mexico City.

"We - along with several other business, agriculture and industry groups - made the case on the Hill in recent weeks. On Oct 24, the group talked about Nafta with all 100 Senate offices," a spokesman for the US Chamber of Commerce said.

Their message: Exiting Nafta would be a grave mistake that could, among many other painful outcomes, devastate American agriculture, according to the chamber.

According to senior fellow Monica de Bolle at the Peterson Institute for International Economics, an outright US withdrawal remains "a very, very clear possibility".

The last round of talks last month saw radical propositions from the US side, including a "sunset" clause - which would require the three sides to renew the treaty in five years, failing which it would expire - and a call to scrap the trade dispute arbitration mechanisms in Chapter 19 of the agreement.

Both proposals are anathema to investors and were immediately rejected by Mexico and Canada.

US President Donald Trump has denounced Nafta as a "disaster" and the worst agreement ever signed by the US, blaming it for a US$64 billion (S$86.7 billion) trade gap with Mexico and loss of countless jobs.

According to Ms de Bolle, different trade bodies and organisations are working to convince the Trump administration "to move away from this very hard rhetoric that we saw in the fourth round".

According to an opinion poll published this month, 56 per cent of Americans believe Nafta has benefited the US. Only among Republican voters do a majority believe the contrary.

Ms Beth Ann Bovino, chief US economist at S&P Global Ratings, said many people are unaware of how trade had grown since Nafta took effect in 1994.

"It has tripled since Nafta was initiated," she said.

Exiting the treaty would drive up prices, slowing consumer spending - a mainstay of the US economy - and depressing corporate revenues as a result, she added.

Citing an ImpactECON study, she said job losses for unskilled workers could rise as high as 250,000 positions in the three to five years following a withdrawal.

Adding skilled labour would see job losses rise by another million positions. - AFP

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