Fiddling with NAFTA will damage America’s relationship with Mexico

Free traders exhaled a sigh of relief after it was announced recently that President Trump was backing away from his campaign promise to rip apart the North American Free Trade Agreement (NAFTA). According to reports, the president arrived at this conclusion after being briefed by top aides about the possibility of real job and economic losses if the U.S. were to withdraw from the landmark trade agreement signed into law by President Bill Clinton over two decades ago.

Still, NAFTA is far from safe. By all accounts, the president remains convinced that the trade agreement between Mexico, Canada and the United States is flawed and must be renegotiated. This impulse is understandable. After all, the president ran on a protectionist campaign, and the president is eager to demonstrate that he is following through on one of his central promises on the campaign trail.

{mosads}But the truth is that there is much risk and little upside in trying to renegotiate NAFTA. For starters, Mexico is prepared to play hardball in a future NAFTA renegotiation. Among the demands to renegotiate NAFTA must include, “better salaries for workers in Mexico” and “protect the flow into Mexico and defend Mexican investment.” These hardly sound like “America First” ideas and would surely push the Trump administration to make numerous concessions to win over Mexican approval in a reworked NAFTA.

And that is just the start. That’s because President Trump’s tough talk is sparking a growing nationalist movement in Mexico. Led by the extreme Leftist Mexican presidential candidate Manuel Lopez Obrador, there are calls in Mexico to not only pull away from NAFTA, but to reconsider the special relationship that both countries have shared in recent years.

If Mexico were to revert to protectionism, the Mexican middle- and lower-middle class that have benefited greatly in higher wage jobs and cheaper goods as a result of free trade would surely suffer. The demand to leave for the United States in search of economic opportunity would only increase.

Beyond divisions over immigration and migrant issues, there is actually much cooperation between Mexico and the United States. This is seen in national security agreements including the Merida Initiative that enhances intelligence gathering information on both sides of the border in the fight to curtail drug and human trafficking. As our country finds itself in the midst of one of the worst opioid epidemics, Mexico is an important partner in this fight.

Beyond security issues, the most important way our countries are intertwined is economically. As the third largest trading partner, more than $1.5 billion in bilateral trade crosses are happening on any given day. And according to the Mexico Institute at the Wilson Center, a think tank, trade with Mexico is generating nearly five million jobs here in the United States. That is a large chunk of Americans that rely on a healthy and thriving U.S.-Mexico trade relationship.

And with the unemployment rate steadily declining and the economy showing real signs of a sustainable recovery, why would we want to spark a trade war with one of our biggest trading partners?

Picking on NAFTA (and even free trade) makes for good political fodder. Seismic changes to our market economy are having a profound effect on the way Americans are able to make a living. Blaming foreign competition for the decline in manufacturing clearly resonates with a considerable portion of the American electorate.

But if President Trump truly wants to make America great again, he would do well to leave NAFTA alone. Instead, the president should double down on reducing the onerous regulatory state and work with Congress to cut the corporate tax rate to make America even more competitive in an increasingly global economy.

The risks of renegotiating NAFTA are too great. The president would do well to concentrate his attention elsewhere.

Israel Ortega is a public policy expert and contributor to The Hill, Forbes, Washington Examiner, and Univision. You can follow him on Twitter @IzzyOrtega.

The views expressed by contributors are their own and are not the views of The Hill.