Description
The renegotiation of the North American Free Trade Agreement (NAFTA) was characterised by a power paradox: although US-Mexico power asymmetries increased since NAFTA was signed, the Trump administration was not able to implement most of its negotiating objectives. Drawing on over 80 interviews with negotiators, policymakers, labour union and business representatives in NAFTA countries, this paper expands Putnam's (1988) two-level games theory to include the role of path dependence. It argues that the costs of disrupting NAFTA changed the preferences of US domestic actors originally opposed to NAFTA (labour unions and most US Democratic representatives), while three US democratic institutions undermined Trump's ability to alter NAFTA: separation of powers, electoral competition, and the influence of civil society in politics. The findings suggest that the path dependence created by FTAs can insulate weaker countries from power asymmetries with their trading partner. This is most likely to hold in closely integrated regions with democratic institutions.
