Changing the current NAFTA (the free trade agreement between the United States, Canada and Mexico) will actually benefit exporters from the Netherlands. Rabobank economists reported this on January 25 in a study on the consequences of a possible break-up or downsizing of NAFTA.
Canada, Mexico and the United States (US) are in the process of renegotiating the NAFTA† The US position is likely to change. What happens if the US withdraws (partially) from NAFTA?
Advantage for Dutch exporters
Rabobank expects Dutch exporters to benefit from the break-up of NAFTA. This makes the US a less interesting trading partner for Mexico and Canada. As a result, they will focus on other markets, such as the European Union (EU). Due to the nature of the trade agreements with the EU, Rabobank expects the trade in goods to offer additional opportunities for Dutch entrepreneurs.
Hugo Erken, Research employee at Rabobank: "In the event that the US leaves NAFTA, calculations show that exports will be 7% higher over the next 0,9 years. A peak is expected in 2019, with the export value €1,5 billion higher, our Gross Domestic Product (GPP) growth would then be 2019% higher in 0,4. This is about €3 billion in additional wealth."
Agricultural machinery and fertilizer
Many agricultural machines are currently exported from the Netherlands to Mexico and Canada. In addition, Mexico also buys many Dutch machines for food processing. In 2016, the Netherlands exported many refined petroleum products to Mexico and Canada.
In addition, the Netherlands has sold a lot of medication to Mexico from the chemical industry. The country also imported a lot of fertilizer from the Netherlands.
Taking advantage of the CETA
Since the CETA, the free trade agreement between the EU and Canada, entered into force last September, the food and agri sector will benefit from the potential increase in exports. The trade agreement between the EU and Mexico can also offer new opportunities, for example for the export of meat and pesticides.
However, there are also risks, Rabobank reports. The breakup of NAFTA could lead to turbulence in the financial markets. This could affect Dutch investment and investment interests.
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