NAFTA renegotiations risk and main implications for investors

What is NAFTA and how are the renegotiations proceeding?

Annalisa USARDI: The North American Free Trade Agreement (NAFTA) is a trilateral pact between the US, Canada and Mexico that has been in force since 1994. Currently, it is the world’s largest trade agreement. Negotiations to revamp and modernize it, requested by the US, started in August 2017. Tensions have increased regarding the agreement, with the new US administration’s focus on nationalistic “buy American” proposals and pushing on issues considered hardly receivable by the counterparties. This has cast a shadow on the negotiations, resulting in a lower likelihood of the parties coming to an understanding, with a raised threat of a unilateral withdrawal by the US frequently being mentioned by US officials and President Trump. The last round of negotiations was more constructive, with progress being made even if at a very slow pace. All participants declared their commitment to working towards reaching an agreement, with a new round of talks announced for late February, to take place in Mexico.

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