NAFTA: THE CONFLICT RESOLUTION MECHANISM TRUMP WANTS TO NEGOTIATE

NAFTA: THE CONFLICT RESOLUTION MECHANISM TRUMP WANTS TO NEGOTIATE

For those who do not know, the NAFTA treaty plays a very important role in the current economy within North America. It was created in 1988 by Canada and the United States, joining Mexico in 1990.

 This agreement allows free trade for 15 years between these three countries, that is to say that there are no taxes in the corresponding customs, benefiting many companies in the region. 

Recently the President of the United States, Donald Trump, is in position to renegotiate certain agreements of the treaty maintaining a nationalistic point of view. In this negotiation, the US government intends to cancel chapter 19 of the treaty in which Mexico considers it unacceptable. 

Chapter 19 basically authorizes the creation of binational panels when two of the countries involved have differences or one believes that the other is carrying commercial acts that could harm it, such as the existence of dumping. This concept refers to the prices of goods or services that a company offers, where such prices are lower than the costs in order to eliminate market competition.

 Another commercial strategy that is prohibited in the free trade agreement are subsidies. When we refer to subsidy we speak of the delivery of money, goods or services of a company or person without the obligation to receive a counterpart. It should be clarified that the legal provisions to be used by the Panel in its review criterion are the laws, legislative background, regulations, administrative practice and relevant judicial precedents.

 Negotiations between countries remain open but both Mexico and Canada are totally against dissolving Chapter 19, disagreeing absolutely with the government of the United States.