Trade Balances and the NAFTA Renegotiation

June 1, 2017

The Trump administration’s strategy toward trade agreements in general, and the North American Free Trade Agreement (NAFTA) in particular, is fundamentally misplaced for two reasons: (1) its apparent desire to use trade policy rather than macroeconomic policy including exchange rate policy to reduce trade imbalances and (2) its focus on the bilateral rather than global scope of those imbalances. Bergsten outlines the dangerous and self-defeating implications for the negotiation of such an unusual approach. Accordingly, provisions that could be included in the agreement to pursue that purpose are not likely to be feasible.

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Topics: TRADE POLICY TRADE DEFICIT

Agreements: NORTH AMERICAN FREE TRADE AGREEMENT (NAFTA)

Regions: CANADA MEXICO UNITED STATES NORTH AMERICA

Authors: C. FRED BERGSTEN

Publishing Institution: PETERSON INSTITUTE FOR INTERNATIONAL ECONOMICS

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