Ending NAFTA to harm US, Canada, says new report
DETROIT - Reuters
Terminating the North American Free Trade Agreement would harm the U.S. and Canadian economies and reduce their competitiveness versus Asia and Europe, a report issued by the Bank of Montreal said on Nov. 27.
According to the report, “The Day After NAFTA,” a failure to renegotiate the trade agreement between the United States, Canada and Mexico would lead to a 0.2 net reduction in real U.S. gross domestic product over the next five years, and a 1 percent decrease for Canada’s economy.
U.S. President Donald Trump has threatened to withdraw from NAFTA unless it can be reworked in favor of the United States, arguing that the pact has hollowed out U.S. manufacturing and caused a trade deficit of more than $60 billion with Mexico.
The U.S., Mexico and Canada concluded a fifth round of talks to update NAFTA last week with major differences unresolved, casting doubt on whether a deal could be reached by the end of March 2018 as planned.
Douglas Porter, chief economist of BMO Financial Group and one of the report’s authors, said that while the three North American economies would adjust to a new reality, a shift in low-wage work to Mexico enabled by NAFTA had made them collectively more competitive on the global stage.