By Daniel J. McLaughlin
The North America Free Trade Agreement - or NAFTA for short - has lasted a quarter of a century. It is 2,000 pages long, with eight sections and 22 chapters, but it only takes a few words to end it. The treaty between the United States, Canada and Mexico is the world's largest trade agreement, with the gross domestic product of all three members making up more than $20 trillion.
It came into effect in 1994 under President Bill Clinton. However, it started when Ronald Reagan pledged to make a North America trade pact during the 1980 presidential campaign. His successor, George HW Bush, signed NAFTA in 1992, ready for congressional approval, and it was Clinton who ushered it through Congress. The agreement has stayed in place for 25 years - that's until Donald Trump got his hands on it.
The US president wants to end NAFTA, and replace it with his own trade deal, the United States–Mexico–Canada Agreement (USMCA). He is trying to force Congress' hands by formally notifying Canada and Mexico about his intention to withdraw from NAFTA in six months.
The US, Canada and Mexico signed the new trade deal at the G20 summit in Argentina. Trump told reporters when departing from Buenos Aires on Air Force One: "I’ll be terminating it within a relatively short period of time. We get rid of NAFTA. It’s been a disaster for the United States.
"And so Congress will have a choice of the USMCA or pre-NAFTA, which worked very well."
Has NAFTA, in Trump's words, been a disaster for the US? According to the US Chamber of Commerce, the free trade agreement increased US trade in goods and services with Canada and Mexico from $337 billion in 1993 to $1.1 trillion in 2011.
The Council on Foreign Relations reports that NAFTA, which fundamentally reshaped North American economic relations by integrating the US and Canada's developed economies with Mexico's developing one, has provided benefits to their economies. US trade with its North American neighbors has more than tripled - more than US trade with the rest of the world.
"Most estimates conclude that the deal had a modest but positive impact on US GDP of less than 0.5 per cent, or a total addition of up to $80 billion to the US economy upon full implementation, or several billion dollars of added growth per year," they explain.
Lower tariffs also mean reduced import prices, and this means the risk of inflation is lessened and interest rates could stay low. The largest import in the US is oil, and NAFTA plays a big part in this.
"The United States imported $144.2 billion in oil from Mexico and Canada. Thanks to greater US shale oil production, this figure was down from $157.8 billion in 2007," The Balance explains.
They add: "NAFTA reduced US reliance on oil imports from the Middle East and Venezuela."
Donald Trump has called NAFTA "the worst trade deal in the history of the country" and he was quick to replace it with his own trade agreement with Canada and Mexico. But, like most things in the Trump administration, this is hyperbole. The United States has actually benefitted from NAFTA.