Talks on renegotiations of NAFTA is set to begin today in Washington. During his Presidential campaign, President Trump promised to cancel NAFTA and described the agreement as one of the worst trade deals ever made by the United States. He, however, said later that after discussing with his counterparts in Mexico and in Canada, the United States has agreed to renegotiate NAFTA to make it fair and updated.

The United States, Canada, and Mexico signed NAFTA in 1994. According to Trump, the deal which provides for tax-free trade between the three countries has been misused for re-exports and have caused havoc for American workers in the Auto industries, where companies have shifted plants to Mexico to improve on costs. One of the key reasons for renegotiating NAFTA has been the drastic shift in the US’ trade balance with Mexico which has changed from a surplus of $1.3 billion to a deficit of $64 billion since the deal came into force. The Mexican economy is highly dependent on the US with nearly 80 percent of exports going to the Northern neighbor. Any changes in the deal could have a huge impact in Mexico, on manufacturers and farmers in particular.

While the commercial balance with Canada, America's second largest trading partner, is more even, those trade relations also have some stumbling points in such sectors as dairy, wine, lumber, and grains.

A successful negotiation is crucial for the incumbent Mexican President Enrique Pena Nieto, who is up for re-election next year.