Thread: USMCA: A trade deal that does no harm, but breaks no ground

USMCA: A trade deal that does no harm, but breaks no ground

Kevin Carmichael: Trudeau and Chrystia Freeland achieved none of the things they identified as Canadian goals with the new pact

Kevin Carmichael
October 1, 2018
6:11 PM EDT

The romantics who think international commerce works best when bureaucrats determine trade flows will be pleased.

Canada’s new trade agreement with the United States and Mexico — the United States-Mexico-Canada Agreement, or USMCA — is a step back to the time when doing business with America meant limiting your exports, no matter how badly Americans themselves might want them.

Perhaps the biggest cost of securing commercial peace with President Donald Trump was sacrificing Canada’s commitment to freer trade, a pillar of this country’s economic policy for at least three decades, albeit one championed hypocritically on occasion.

The USMCA, assuming the new Congress in 2019 is of a mind to work with the Trump administration, will limit the number of cars and the value of automobile parts that Canada can ship to the United States without paying higher duties.

It will force Canada and Mexico to respect the excessively long patents the U.S. gives to its pharmaceutical companies. The agreement opens the door for one party (Washington) to influence trade talks another party (Ottawa, Mexico City) have with a “non-market economy,” such as China. The new terms might even force the Bank of Canada and the Bank of Mexico to keep an eye on Washington as they set monetary policy, thanks to the introduction of a committee that will review the conduct of macroeconomic policy in the three countries.

Judging by the initial reaction, a setback for freer trade on the continent will be judged a “win” for all involved: Trump gets his first “major” trade deal just in time for the midterm elections; Mexico’s outgoing president, Enrique Peña Nieto, will leave office with significant accomplishment of his own, and the president-elect, Andrés Manuel López Obrador, will avoid beginning his term on Dec. 1 with the headache of a trilateral trade negotiation; Prime Minister Justin Trudeau, will be able to say that he successfully defended his country from an economic calamity.

To be sure, Trudeau will have to explain why the completion of the USMCA late on Sept. 30 was a “good day for Canada.” He and Chrystia Freeland, the global affairs minister and lead negotiator in the talks to update the North American Free Trade Agreement, achieved none of the things they identified as Canadian goals, such as making it easier for professionals to work in the U.S. and Mexico.

Instead, their “wins” came on defence, accepting some minor blows to keep the basic infrastructure of Canada’s trading arrangement with the U.S. in place; key to the Trudeau government’s larger goal of positioning itself as a global trading hub with preferential access to the world’s largest economy, the European Union through the Comprehensive Economic and Trade Agreement and Asia via the Trans-Pacific Partnership. Most important was fighting off the Trump administration’s attempt to raze NAFTA’s dispute-settlement chapter, an imperfect shield from Washington’s liberal use of punitive tariffs, but a shield all the same.

Dairy farmers and their political allies will be displeased with the Trudeau government’s decision to let more American milk pass through the tariff wall that protects the supply-management system. Some retailers may dislike the big increase in the amount of goods Canadians can bring home from the U.S. without paying duties. The new chapter on financial services suggests Canada’s banks will be unable to rely on government policy to shield them from competitive attack from upstarts who use technology to facilitate lending, saving and trading.

As lawyers and lobbyists dig deeper into the 34 chapters of the USMCA, problems could arise. Jim Balsillie, the former co-chief of Research in Motion, said NAFTA might have a new name, but retains the same old flaws. “Provisions in this new agreement raise [Intellectual Property] protections so that pre-existing IP owners, who are predominantly American, can entrench and extend their monopoly rights and rents for decades to come,” he said in a statement.

Still, on the surface, there were no obvious examples of fundamental harm. The limits on automobile exports remove the threat of future duties, and appear to be set at a level that Canada would struggle to reach anyway. It was inevitable that American dairy farmers would get improved access to the Canadian market because the Trudeau government accepted similar provisions to secure a trade agreement with the EU and the other 10 members of the TPP. (Trudeau also promised that dairy farmers would be compensated for any losses.) More optimistic retailers will note that Canadian shoppers still will be expected to pay sales taxes on most of the purchases they make within their new duty-free threshold.

The value of trade certainty was reflected in the loonie, which was nearing 78 U.S. cents, the highest since May. Perrin Beatty, the president of the Canadian Chamber of Commerce, said his group was “delighted” by the apparent deal. “This step forward comes as a relief for our members have been searching for much-needed clarity and predictability in the relationship with our (North American) partners,” he said in a statement. Rona Ambrose, the former Conservative cabinet minister who advised the government on the NAFTA talks, tweeted that the revised agreement would “ease investor anxiety” and “reassure the world that North America remains committed to free trade.”

Ambrose’s sentiment is right, but she makes the mistake of equating low duty rates with “free trade.” In fact, the USMC shows the U.S. is bent on dictating the terms of commerce, and smaller partners can either go along or be subject to years of harassment and abuse.

Trudeau did well to avoid a major disruption in trade rules that would have hurt investment and further monopolized the time of the trade professionals at Global Affairs Canada. The latter is important, because if Trudeau is serious about freer trade, he will need those men and women to pursue that goal somewhere other than North America.

https://business.financialpost.com/n...eaks-no-ground

NAFTA-2 Trade Deal Preserves ‘TN’ Visa-Worker Program

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Chip Somodevilla/Getty2 Oct 2018396

Business lobbyists and the Mexican government have preserved two small but open-ended visa-worker programs in the updated NAFTA treaty.

“On the question of visas, we have retained existing NAFTA language on that, but not gone beyond it,” an official told reporters before the U.S.-Mexico-Canada Trade Agreement (USMCA) deal was released Tuesday.

Pro-American immigration reformers want to see the TN visas cut back, in part, because visa allows employers to import cheap foreign college-graduates to work in several dozen professions. The careers include landscape architects, graphic designers, interior designers, management consultants, social workers, therapists, vocational counselors and many more.The preservation of the TN program in the trade treaty is also a problem for reformers because it provides a fall-back for outsourcing companies if middle-class pressure forces Congress to trim or end the existing H-1B, OPT, and L-1 visa-worker programs. These unpopular visa-worker programs now keep roughly 1.3 million foreign college-graduates in U.S. jobs because they are fiercely defended by investors and business groups, such as the pro-investor group FWD.us.

“This [TN visa] provision could turn out to be very harmful to Americans,” said Jessica Vaughan, policy director at the Center for Immigration Studies. She continued:

This deal nullifies congressional control over guest worker entries in the stipulated professions. It forbids a labor market test, allows unlimited numbers, has no fair pay guarantees, and even lets the spouses work. What’s in this deal for Americans?

We never should include guest worker provisions in trade agreements, especially on terms as open-ended as these, and especially when we have no idea who uses these visas now, and no idea of the effects.

The number of college-graduates using the TN visas is uncertain because the State Department does not release data about the number of Canadians who use the visas to take college-grad jobs in the United States, such as nursing jobs in Detroit hospitals.

However, federal agencies do record the award of TN visas to Mexicans. That data suggests that roughly 45,000 Mexican graduates use the three-year visas to get U.S. jobs and to bring their families into the United States.

In October 2017, Iowa GOP Sen. Chuck Grassley suggested that the TN visa allows 100,000 foreign workers into U.S. college-graduate jobs. “It is estimated that almost 100,000 TN visa holders are working in the United States, in professions ranging from doctors and lawyers to interior designers, librarians and beekeepers,” regardless of the impact on Americans, said a statement from his office.

One advocate for the outsourcing visas, Stuart Anderson wrote:

TN visas are used across many sectors in the American economy. “The dairy industry uses scientists, technologists and veterinarians to place workers in remote areas of the United States,” the report explains. “The same is true for other parts of U.S. agriculture. Instructors at colleges and seminaries, particularly in distant or smaller community settings, are able to use TN visas to employ individuals to teach American students. Engineers, lawyers, accountants and economists are among the many other eligible occupations under NAFTA.”

Finding nurses is more difficult than ever in America and TN visas are used to employ nurses in many states, particularly Michigan and Texas. Canadian nurses often commute from Windsor to Detroit. In fact, the Henry Ford Health System in Michigan employs approximately 300 Canadian nurses.

However, any hospital’s shortage of nurses could be solved if CEOs offered higher wages to hire nurses away from less-popular hospitals, so raising wages throughout the career and encouraging more people to train for a nursing career. That free-market option is hated by business groups and investors because it reduces their stock-market values.

The treaty provisions come amid data showing that wages for college-graduates have stalled in President Donald Trump’s booming economy, partly because many starter-jobs are being filled by the 1.5 million visa-workers.

Even less is know about the treaty’s preservation of the E Visa, which is used by small-scale investors to invest in U.S. businesses, such as hotels or bars. The E visa is not often used for outsourcing jobs, but to encourage people with money to move into the United States.

Four million young Americans will join the workforce this year, but the federal government will also import 1.1 million legal immigrants, and allows an army of at least 2 million blue-collar and white-collar visa-workers to work U.S. jobs, alongside asylum-claiming migrants, refugees, and illegal aliens.

That policy shifts wealth from young people towards older people by flooding the market with cheap white-collar and blue-collar foreign labor.

That flood of outside labor spikes profits and Wall Street values by cutting salaries for manual and skilled labor offered by blue-collar and white-collar employees.

The policy also drives up real estate prices, widens wealth-gaps, reduces high-tech investment, increases state and local tax burdens, hurts kids’ schools and college education, pushes Americans away from high-tech careers, and sidelines at least 5 million marginalized Americans and their families, including many who are now struggling with opioid addictions. Immigration also pulls investment and wealth away from heartland states because investment flows towards the large immigrant populations living in the coastal states.

https://www.breitbart.com/big-govern...orker-program/

"In October 2017, Iowa GOP Sen. Chuck Grassley suggested that the TN visa allows 100,000 foreign workers into U.S. college-graduate jobs. “It is estimated that almost 100,000 TN visa holders are working in the United States, in professions ranging from doctors and lawyers to interior designers, librarians and beekeepers,” regardless of the impact on Americans, said a statement from his office."

We know how many TN visas are from Mexico from another article, 25,000 with 15,000 of those as spouses and family members, but we don't know how many are from Canada for some reason. They're handed out at the Border up there by Border Patrol, so DHS needs to contact head of Border Patrol, Canadian Border, and ask them to prepare a report that identifies all the TN visas that have been issued to Canadians, how many are still active, breakdown by worker and spouse/family members, and what jobs they hold so a quick study can be made of this for Congress. That way Congress can decide what to do about it.

There be reports on all TN visas regularly from all trade agreements including the new one with South Korea.