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Top Analyst Paints Four End Outcomes For Nafta Deal Negotiations


09/28/2018


Top Analyst Paints Four End Outcomes For Nafta Deal Negotiations
According to Chris Krueger, managing director at Cowen Washington Research Group, the trilateral talks between the U.S., Mexico and Canada, can have four "endgame scenarios".
 
And none of the outcomes are very encouraging. The worst case scenario according to Krueger is "blow it up and make America an island" as US p[resident Donald Trump strives harder to bring down the trade deficit of the country.
 
"There exists the uncomfortable reality of Trump's view of NAFTA and the potential that this all ends in a raging dumpster fire," said Krueger in a note that was titled "Helpless: NAFTA Still HALFTA With AMLO Deadline Looming & 232 Tariffs."
 
"Trump has an instinctive hatred for multilateral deals with a special venom reserved for NAFTA first among all others," he added. "If we take Trump literally and seriously, this is the logical outcome that is hiding in plain sight."
 
Ever since assuming office., one of the major issues for Trump have been to revisit the multinational trade agreement that the US is party to and has clearly stated that he does not like the Nafta trade agreement with Mexico and Canada at all. In August the Trump administration announced the reaching of an a bilateral trade agreement with Mexico and had said that it was hopeful that Canada would also join the deal.
 
However, one of the major bones of contention in a trade agreement being reached between the US and Canada is the issue of American companies being given access to the Canadian dairy market. Other issues are related to supply management, steel and the US imposed aluminum tariffs and autos.
 
The issue if further complicated because the U.S. and Mexico desperately want their side of the deal completed by Monday after which the Congress would have 60 days to review it and then approve it, just in time before the resignation to the office by Mexican president.  Nieto will be succeeded by Andres Manuel Lopez Obrador, or AMLO, a populist who may not sign on.
 
Krueger has also mentioned three other scenarios. The first one being the deal missing the Sept. 30 deadline and having to wait till AMLO assumes office and renegotiating. The other is getting the deal signed with Mexico for now in the hope that Canada would join later, the last one is waiting for Canada to capitulate and meet the deadline ahead of a pivotal general election in Quebec on Oct. 1.
 
"If Canada comes to the table and agrees to a deal by September 30, it makes passage in the U.S. a lot easier, but still hugely dependent on the [U.S.] midterms," Krueger said. "If the GOP holds the majority (in our opinion a low probability), the deal will likely be approved. If the Democrats win the House, it is going to be a lot tougher."
 
(Source:www.cnbc.com)


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