NEGOTIATION CASE STUDY:

THE NORTH AMERICAN FREE TRADE

AGREEMENT (NAFTA)
RENEGOTIATION
Presented by:
Aman Aditya
22BCS16737
812 ‘A’
 THE KEY PLAYERS
• United States: Represented by the Trump administration, seeking to improve the trade balance with Mexico and
Canada, reduce outsourcing of jobs, and strengthen intellectual property protections.
• Mexico: Led by President Enrique Peña Nieto, aiming to preserve existing market access and avoid significant
economic disruptions.
• Canada: Prime Minister Justin Trudeau focused on maintaining tariff-free access to the US market and
protecting the interests of Canadian industries, particularly agriculture.
INTERESTS
U N I T E D S TAT E S :
Reduce trade deficit with Mexico and Canada, increase manufacturing jobs in the US, and
gain leverage in future trade negotiations with other countries.

MEXICO:
Maintain access to the US market for its exports, protect domestic jobs, and avoid
potential economic instability.

CANADA:
Secure continued tariff-free access to the US market for key exports, minimize disruptions
to agricultural and manufacturing sectors, and maintain strong ties with the US.
STRATEGIES EMPLOYED

U N I T E D S TAT E S :

Employed a hard-line approach, threatening to withdraw from the agreement if key

demands weren't met. Used bilateral negotiations with Mexico and Canada, attempting to
divide the two countries.

MEXICO & CANADA:

Advocated for a collaborative approach, emphasizing the benefits of the existing

agreement for all parties. Engaged in joint negotiations with the US, presenting a united
front.
OUTCOMES
• The agreement was renamed the United States-Mexico-Canada Agreement (USMCA) with some modifications:
⚬ Increased trade: NAFTA more than tripled trade between Canada, Mexico, and the United States after it was enacted.4
The agreement reduced and eliminated tariffs.
⚬ Increased economic output: Greater trade increased economic output. The U.S. International Trade Commission found
that full NAFTA implementation would increase U.S. growth by as much as 0.5% a year.
⚬ Lower prices: NAFTA lowered prices.8 U.S. oil imports from Mexico cost less because NAFTA got rid of tariffs. That
reduced America's reliance on oil from the Middle East. Low-cost oil means lower gas prices. This creates lower costs
of living, including lower food prices.
⚬ Stronger intellectual property protections.
⚬ Labor reforms in Mexico.

• The core of the agreement, including tariff-free trade, was largely preserved.
REFLECTION
The NAFTA renegotiation illustrates the complex dynamics of international trade
negotiations. While the US employed a confrontational tactic, the united front
presented by Mexico and Canada ultimately yielded a compromise that addressed
some US concerns while safeguarding their core interests. The case study
highlights the importance of understanding individual needs, building
partnerships, and employing flexible strategies to achieve mutually beneficial
outcomes in complex negotiations.