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Date: 2016-08-12

gE Blog Series: Global Trade Agreements Part 3 - US Trade Issues with Canada and Mexico

Nitish Pahwa

On February 19th, President Barack Obama flew to Mexico to meet with Mexican president Enrique Peña Nieto and Canadian prime minister Stephen Harper, approximately twenty years after the three nations had signed NAFTA. The goal of the Toluca summit was to attempt to reduce trade frictions and come to agreement on trade conflicts between these countries. Issues discussed included Obama's trade executive order, the controversial Keystone XL oil pipeline, the "trusted traveler" program, updating NAFTA, and the Trans-Pacific Partnership.

On his flight over to Mexico on that day, Obama signed an executive order to reduce the barriers in approving businesses for exports and imports. The approval process, which usually takes days, is now supposed to be reduced to mere minutes. The goal of the executive order is to streamline trade rules, which will hopefully in turn integrate business supply chains, increase jobs, and boost international trade. Public figures are unsure as to how this will actually affect the United States' international trade. While exports and imports will most definitely be increased, and it has been seen that these sort of reduced barriers will benefit businesses all along North America, the overall impact of the order is still uncertain. An important fact that has been brought up is that cross-manufacturing has become increasingly popular over the years, especially between the U.S. and Mexico. This means that most products exported from these countries are made from parts from several countries in the continent, instead of just one. This sort of trade liberalization, which will be increased with the executive order, is expected to hurt more manufacturing jobs in different countries.

The Keystone XL oil pipeline has been a major source of contention between Canada and the U.S. for a long time. The pipeline, if approved, would be able to take Canadian crude oil and transport it to the U.S., helping the U.S. in developing crude resources and opening more trade between the countries. However, one huge factor is preventing this from happening - the pipeline's environment impact. Obama is still reluctant to approve the pipeline project as it would definitely worsen the greenhouse gases effect, which is of huge concern to the president. Ultimately, President Obama is the one who will make the final decision on the pipeline, but a decision is not expected to be made for months. This issue left the summit without any further decisions or progress.

One agreement that the three leaders did come to at the summit was the "trusted traveler" program. This will decrease border delays by allowing individuals who have been investigated to cross borders more speedily. This policy comes as an update to NAFTA in trying to fix issues left by the agreement, including cross-border efficiency.


Previous: gE Blog Series: Global Trade Agreements Part 4 – The Effects of NAFTA
Next: gE Blog Series: Global Trade Agreements Part 2 – Trade Agreements Around the World

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