SAO PAULO (Reuters) – The North American Free Trade Agreement will probably be renegotiated successfully with only marginal changes, said a large majority of economists in a Reuters poll, despite the Trump administration’s saber-rattling.
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Only four of 45 economists polled this week said they thought the deal would be terminated, with the rest expecting an updated trilateral agreement that would not differ radically from the current one.
The remarkably sanguine view from economists in Mexico, Canada and the US is a sign many experts are taking US President Donald Trump’s repeated warnings that he wants his country to withdraw from the pact, which he has repeatedly said is unfair to American businesses, with a grain of salt.
“We expect a modernized agreement after a bumpy and lengthy negotiation and approval process,” said Carlos Capistran, head of Canada and Mexico economics at Bank of America Merrill Lynch. “It will be an update … with marginal changes. The bulk of it will remain the same.”
The sixth and penultimate round of talks to revamp the agreement underpinning more than $1 trillion per year in trade among the three countries will begin in Montreal on Tuesday.
The agenda is likely to include a proposal to mandate more auto manufacturing in the US, a dispute settlement mechanism and a five-year sunset clause.
Canada and Mexico have widely disputed those issues, which US negotiators had raised.
Having blamed NAFTA for US job losses and trade deficits, Mr Trump said on Wednesday that terminating the pact would result in the “best deal” to update the 24-year-old agreement, in effect threatening to scrap it.
Mr Trump has long toyed with the idea of triggering a six-month countdown to US withdrawal as a negotiating tactic. Mexico has warned it would not take part in talks with a clock ticking.