Working Paper No. 46

Renegotiating NAFTA in the Era of Trump: Keeping the Trade Liberalization In and the Protectionism Out

When the North American Free Trade Agreement (NAFTA) came into force in January 1994, it was a groundbreaking achievement. It eliminated nearly all tariffs among three significant trading partners and achieved liberalization on a wide range of other issues (some of which had never before been included in trade agreements). Now the United States, Canada, and Mexico are about to begin an historic renegotiation of NAFTA.

The proposal to renegotiate NAFTA may have been motivated by protectionist objectives. But there is potential to minimize or even avert protectionist outcomes. In the end, renegotiation presents the opportunity to modernize, fix, and expand the rules of NAFTA, and produce a “freer” free trade agreement, which would be good for the North American economy.

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Simon Lester is a trade policy analyst at the Cato Institute’s Herbert A. Stiefel Center for Trade Policy Studies. Inu Manak is a visiting scholar at Cato Institute’s Herbert A. Stiefel Center for Trade Policy Studies. Daniel Ikenson is director of the Cato Institute’s Herbert A. Stiefel Center for Trade Policy Studies.