The North American Free Trade Agreement may not include any Asian nations, but the trade-dependent region will be closely watching how the Trump administration handles talks, analysts said.
President Donald Trump since his campaign has railed against many previously negotiated trade deals. After axing the Trans-Pacific Partnership that would have linked major Asian economies with the U.S., Trump has now set his sights on NAFTA.
The trilateral trade agreement between Canada , the U.S. and Mexico is coming under the knife as renegotiation began this week between the countries.
Although those talks may seem a world away, they have major implications for countries like South Korea, according to Deborah Elms, executive director of the Asian Trade Centre.
The Trump administration has also said it wants to renegotiate the free-trade agreement with South Korea, which was signed in 2007. New talks were set to begin next week on amending the deal, Reuters reported, and Seoul will likely be looking to NAFTA for clues to its future.
“Anyone else thinking about doing a bilateral deal with the U.S. is watching to see what a bilateral with this administration looks like,” Elms said.
At a joint press conference in Washington, DC, on Wednesday with the three NAFTA countries, U.S. Trade Representative Robert Lighthizer issued tough rhetoric.
“I want to be clear, [Trump] is not interested in a mere tweaking of a few provisions and a couple of updated chapters,” Lighthizer said. “NAFTA has fundamentally failed many, many Americans and needs major improvement.”
The tough rhetoric on NAFTA could have another impact on Asia: It could turn Canada’s head toward the Pacific, Stewart Beck, CEO of the Asia Pacific Foundation of Canada, told CNBC’s “Capital Connection” on Wednesday.
