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    Entries in NAFTA (1)

    Friday
    Oct122018

    The Week in Public Finance: How the New NAFTA Deal Impacts States

    The revised trade pact keeps the original agreement's free trade zone intact while placing some new burdens on the auto industry.
    BY  OCTOBER 12, 2018

    The assembly line at GM's Chevrolet Silverado and GMC Sierra pickup truck plant in Fort Wayne, Ind. (Shutterstock)

    After President Trump threatened for more than a year to withdraw from NAFTA, auto-manufacturing states breathed a sigh of relief when he announced a renegotiated trade agreement earlier this month with Canada and Mexico.

    A U.S. withdrawal from the 1994 pact would have resulted in the reimposition of tariffs on specific goods between the U.S., Canada and Mexico. The impact would have been felt most acutely by states such as Michigan that do a lot of business with the two countries.

    The revised trade pact, dubbed the United States Mexico Canada Agreement, keeps the free trade zone intact while placing some new burdens on the auto industry. Two new key requirements include introducing a higher minimum-wage standard and boosting the required share of auto parts and components from North America up to 75 percent from 62.5 percent.

    Industry observers have reacted positively to the deal mainly because there is one. “It’s a positive compared with the alternative,” says Moody’s Investors Service analyst Ted Hampton. “But a lot remains to be seen.”

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