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Experts: NAFTA may only see small changes after renegotiations

Keith Kirkpatrick, the host of Lakeshore Focus on Lakeshore Public Television, moderates a discussion Wednesday with Ralph Biedermann, the executive director of the US-Mexico Chamber of Commerce Mid-America Chapter, and Chantal Wittman Meier, vice president of International Banking at MB Financial, at Avalon Manor in Hobart.

Changes could be coming to the North American Free Trade Agreement, or NAFTA, which some economists say has offered a modest boost to the U.S. economy because of cheaper goods and greater export opportunities but which critics have blamed for the loss of more than 5 million manufacturing jobs since 2000.

But don't expect a major overhaul, experts said during a Northwest Indiana World Trade Alliance-sponsored discussion Wednesday at Avalon Manor in Hobart.

Ralph Biedermann, the executive director of the US-Mexico Chamber of Commerce Mid-America Chapter, said the Trump administration initiated the renegotiation after campaign promises to bring back factory jobs, and that the United States, Canada and Mexico have agreed to new terms on three of 30 chapters so far.

"They were looking at large trade imbalances with many countries," Biedermann said. "There's a $65 billion trade deficit with Mexico that's growing. It's being looked at as a way to bring back jobs to the Midwest."

The United States had a positive trade balance with Mexico until NAFTA was passed in 1994 and has run a deficit ever since, Biedermann said. But overall trade with Mexico has increased tenfold, and some sectors like agriculture are exporting more than they are importing.

The administration has been trying to make the deal more advantageous for manufacturing in American, such as by increasing the required amount of North American-made parts in a vehicle sold in North America from 62.5 percent to 85 percent, and to require at least 50 percent of a vehicle be made in the United States.

"They're trying to achieve having more manufacturing products made in the United States," Biedermann said. "The administration is likely to go after low-hanging fruit and, if they get any of it, declare victory and claim to be victorious."

Any concessions might not ultimately amount to much, since the United States runs much higher trade deficits with other countries like China, said Chantal Wittman Meier, vice president of International Banking for MB Financial.

"I'm not sure why Mexico is being picked on," she said. "Out of all the countries that do a lot of exporting to the United States, China is the largest and Mexico is the smallest."

Automation has accounted for much of the loss of U.S. manufacturing jobs, and it's doing the same in Mexico, Biedermann said. Auto plants there have fewer assembly line workers than they once did as productivity increases.

United Auto Workers member Scott Houldieson said the trade deal put downward pressure on wages.

"NAFTA and a lot of trade agreements work for folks like you, but not for the working class," he said. "Wages have been flat for a long time. In 1989, when I started, new workers made $12 an hour and some change. Now it's $15 an hour, and think about how much inflation has gone up since 1989."


Business Reporter

Joseph S. Pete is a Lisagor Award-winning business reporter who covers steel, industry, unions, the ports, retail, banking and more. The Indiana University grad has been with The Times since 2013 and blogs about craft beer, culture and the military.