The eighth Summit of the Americas, which drew together around 20 presidents and prime ministers from across North, Central and South of the continent, ended on Saturday. Although United States President Donald Trump cancelled his travel there because of growing geopolitical tensions over Syria, the event proved significant for several reasons, including growing signs that a deal may be nearing on a renegotiated North American Free Trade Agreement (Nafta).
US Commerce Secretary Wilbur Smith said at the summit that he was optimistic of a deal in May. Meanwhile, Mexico’s Secretary of Economy Ildefonso Guajardo Villarrea said last week that the Nafta renegotiation was 80 per cent likely to be concluded as soon as this month.
In the context of this Nafta news, US Vice-President Mike Pence — who replaced Trump at the summit — urged fellow leaders in the continent to engage Washington, not Beijing, on international trade issues. His argument was that the US should be the hemisphere’s economic and political “partner of choice”, even though China is now a top trade partner of a number of nations, including Brazil and Uruguay.
With this summit pitch, the White House has been attempting this month to push forward the Nafta renegotiation that had stalled for months. Especially, with the White House now embarking on what could yet become a trade war with China, Trump has decided to dampen tensions with Canada and Mexico to reduce the number of fronts he is battling on.
The other key reason why Nafta progress appears to have recently sped up is the upcoming Mexican presidential elections on July 1. The campaign began on March 30 and until election-day, Ottawa and Washington had feared outgoing President Enrique Pena Nieto’s team could slowly disengage from Nafta talks.
This concerned Canada and Washington because international trade sceptic Andres Manuel Lopez Obrador leads in recent Mexican presidential polls. The leftist populist has positioned himself as a big Trump critic and his “campaign of hatred” against Mexico, and he is also no fan of Pena Nieto. It was feared, at least until the recent uptick in Nafta progress, that Pena Nieto may therefore decide there is little to no benefit of his team being engaged in the controversial trade talks, at the end of his mandate, with his party’s presidential candidate, Jose Antonio Meade, trying to regain electoral ground against Lopez Obrado.
In this context, and with November’s US congressional ballots on the horizon, the Nafta talks — in the absence of recent progress — could have collapsed, or been suspended until at least 2019. In this latter scenario, with the US House of Representatives and Senate going into recess in July, and only briefly reconvening this Autumn, Republicans who control Congress may well have preferred contentious Nafta issues to have been kicked out till next year and not to cloud the 2018 congressional campaign given that more protectionist-leaning Democrats are seeking to retake both chambers of the legislature.
Nafta issues aside, the US administration has paid relatively little attention — to date — to the Americas region and Trump is widely unpopular there. Hence the reason why there was a mixed reaction to the president cancelling his visit with some fellow leaders breathing a sigh of relief, while others concerned about the perceived lack of prioritisation the administration is giving to the hemisphere.
Pence’s trip to the summit followed up on his travels last August to Colombia, Argentina, Chile and Panama which came in the context of Trump’s then remarks that he was considering “military options” to intervene in Venezuela, an unfortunate comment given long memories on the continent of US interventionism. As in recent days, Pence emphasised in last year’s trip the strength of US commitments to economic, political, and security partnerships throughout the region, but was forced to cut his trip short last year to join Trump at Camp David for a meeting on North Korea.
To date, however, it is Nafta that the Trump team has placed most attention on in terms of policy towards the Americas region, and the president had said, week before last, that he hoped to see a renegotiation treaty announcement “fairly soon”. The deal, which originally came into force in January 1994, is the most comprehensive trade agreement outside the European Union, and the first trade major trilateral accord negotiated between a developing country (Mexico) and developed counterparts (US and Canada).
The chief reason why the renegotiations have dragged has been the intransigence of Trump who has called Nafta “the worst trade deal maybe ever signed anywhere, but certainly ever signed in this country”. The president has repeatedly raised the rhetoric on Canada and Mexico with both previously concerned that he may deliver Washington’s six-month notice of withdraw from the treaty.
A key reason for the Trump team’s stance is that, despite the fact Nafta has much US business support, it has long been criticised from elements of both the political Left and Right in the country. For instance, US labour unions have blamed it for contributing to a hollowing out of the country’s manufacturing industry, partly because of increased trade deficits with Mexico and Canada.
Yet, Trump now appears ready to volte face over the issue, and Pence used the summit more broadly to try to re-anchor hemispheric neighbours into the US alliance system. With a Nafta breakthrough potentially in sight, Washington appears determined to double down on delivering a renegotiated treaty soon.
Andrew Hammond is an Associate at LSE IDEAS at the London School of Economics.
