2. Case Description:
NAFTA 2.0: The USMCA
https://www.youtube.com/watch?v=r_L4LXiZVpg
■ Donald Trump denounced NAFTA throughout his presidential campaign in 2016
– Unjust Agreement/Deal
– American manufacturing millions of job
– After being elected, he started renegotiation NAFTA
(North American Free Trade Agreement)
3. Case Description:
NAFTA 2.0: The USMCA
■ Automotive business
– American automakers export $21bn worth of completed
vehicles/components
– Import $84bn worth of vehicles and automotive components
– If it weren’t for the $63bn gap in cars,
U.S. would only run for $6bn deficit
■ In response to Trump’s criticism,
Ford abandoned plans to construct
a $1.6bn vehicle assembly facility in Mexico
■ NAFTA renegotiated into the United States- Mexico-
Canada Agreement, USMCA
4. Relation to Chapter 9
■ A number of economic integration ideas listed throughout chapter are
possible
■ Ideas include- free trade area, a customs union, a common market, an
economic union, and a full political union.
■ Trade barriers of member countries would be removed
■ Regional economic integration is an attempt to achieve economic gains from
the free flow of trade and investment
■ Minority countries would be heavily affected
■ Allows countries to specialize and trade their specific product without
government interference which can benefit all economies.
5. Importance of the Case
■ Importance in maintaining a good trading relationship with Mexico &
Canada
■ Automobile industry is one of the most important & profitable industries in
the U.S.
■ Forces automakers to source a lot of car parts from North America
■ Generate more jobs and money for the North American people
■ Understanding the impact on non-participating countries
6. Argumentation
Donald Trump is wrong …....
■ The concept of trade diversion
■ Incentives for political cooperation, reducing potential for violent conflict
■ Staying competitive --> Minimize cost & Maximize profits
■ National sovereignty ??? Rise in unemployment ???
7. Q&A
■ Do you view the renegotiation of NAFTA as more beneficial for the U.S
economy?
■ How can the U.S. automobile industry stay competitive with Asian and
European rivals after raising the average salary for production workers?
■ Should the USA create an economic union with Mexico and Canada? Follow the
EU approach?
■ Do you care if your purchased car is made in the USA or Mexico?
