In late August, President Donald J. Trump announced a “big trade agreement” with our neighbors to the south, Mexico. A major portion of the United States-Mexico Trade Agreement would address issues with the North American Free Trade Agreement, such as the “sunset clause.”
Jesus Seade serves as the chief negotiator for the Mexican government, working closely with U.S. trade representative Robert Lighthizer. A critical component of the new agreement is establishing a review process that would override the automatic five-year expiration clause outlined in NAFTA.
“It’s going to come out,” Seade commented. “It’s no longer what the United States was putting first in any way.”
Now, critics are creating commotion over the investor-state dispute settlement provision in NAFTA. This crucial stipulation protects U.S. investors, such as oil and gas businesses, from unlawful treatment or asset seizures by host nations. What naysayers don’t realize is that an agreement of this magnitude that encompasses so many government offices and private sector interests takes time to finalize.
“The problem is knowing exactly what that means,” criticized Josh Zive, Bracewell LLP senior principal. “How broad is it? How strong are those protections? What’s the rollback in the other areas, and what does Mexico think they agreed to? As is often the case, in this administration and other administrations, when you walk out of the negotiations, until something is committed in detail to writing, both sides can think they agreed to very different things. The energy sector desperately needs more details.”
While Zive raises important questions, his impatience demonstrates the challenge the Trump administration faces as it tries to improve trade for American businesses. With Trump and his advisors hard at work making sure American enterprises have the legislation required to operate at maximum capacity, the oil and gas industry is certain to benefit from the United States-Mexico Trade Agreement, once all of the details are finalized.
Currently, the United States is facing off against Canada as Prime Minister Justin Trudeau threatens to take short-sighted and detrimental action against NAFTA. These empty threats demonstrate Trudeau’s inability to comprehend basic economics and trade, which likely reek untold havoc on Canadian business owners. A specific United States-Mexico trade agreement could strengthen ties with our southern ally while teaching our neighbor to the north an important lesson about diplomacy and business relations.