Thread: Trump’s Tough Talk on Nafta Suggests Pact’s Demise Is Imminent

Trump’s Tough Talk on Nafta Suggests Pact’s Demise Is Imminent

By ANA SWANSON
OCT. 11, 2017

WASHINGTON — The North American Free Trade Agreement, long disparaged by President Trump as bad for the United States, was edging closer toward collapse as negotiators gathered for a fourth round of contentious talks here this week.

In recent weeks, the Trump administration has sparred with American businesses that support Nafta and has pushed for significant changes that negotiators from Mexico and Canada say are nonstarters. All the while, the president has continued threatening to withdraw the United States from the trade agreement, which he has maligned as the worst in history.

As the trade talks began on Wednesday, Mr. Trump, seated in the Oval Office beside Prime Minister Justin Trudeau of Canada, said it was “possible” that the United States would drop out of Nafta.

“It’s possible we won’t be able to make a deal, and it’s possible that we will,” the president said. “We’ll see if we can do the kind of changes that we need. We have to protect our workers. And in all fairness, the prime minister wants to protect Canada and his people also. So we’ll see what happens with Nafta, but I’ve been opposed to Nafta for a long time, in terms of the fairness of Nafta.”

Mr. Trudeau, in comments later at the Canadian Embassy, said he remains optimistic about the potential for a Nafta deal but noted that Canadians must be “ready for anything.”

The collapse of the 1994 trade deal would reverberate throughout the global economy, inflicting damage far beyond Mexico, Canada and the United States and affecting industries as varied as manufacturing, agriculture and energy. It would also sow at least short-term chaos for businesses like the auto industry that have arranged their North American supply chains around the deal’s terms.

The ripple effects could also impede other aspects of the president’s agenda, for example, by solidifying political opposition among farm state Republicans who support the pact and jeopardizing legislative priorities like tax reform. And it could have far-reaching political effects, including the Mexican general election in July 2018 and Mr. Trump’s own re-election campaign.

Business leaders have become spooked by the increasing odds of the trade deal’s demise, and on Monday, more than 310 state and local chambers of commerce sent a letter to the administration urging the United States to remain in Nafta. Speaking in Mexico on Tuesday, the president of the U.S. Chamber of Commerce, Thomas J. Donohue, said the negotiations had “reached a critical moment. And the chamber has had no choice but ring the alarm bells.”

“Let me be forceful and direct,” he said. “There are several poison pill proposals still on the table that could doom the entire deal.”

The potential demise of the trade deal prompted supportive messages from labor unions, including the A.F.L.-C.I.O. and the United Steelworkers, as well as some Democrats.

“Any trade proposal that makes multinational corporations nervous is a good sign that it’s moving in the right direction for workers,” said Senator Sherrod Brown, Democrat of Ohio.

If the deal does fall apart, the United States, Canada and Mexico would revert to average tariffs that are relatively low — just a few percent in most cases. But several agricultural products would face much higher duties. American farmers would see a 25 percent tariff on shipments of beef, 45 percent on turkey and some dairy products, and 75 percent on chicken, potatoes and high fructose corn syrup sent to Mexico.

For months, some of the most powerful business leaders in the country, and the lobbies and political figures that represent them, had hoped that the president’s strong wording was more a negotiating tactic than a real threat and that he would ultimately go along with their agenda of modernization. Nafta is nearly a quarter-century old, and people across the political spectrum say it should be updated for the 21st century while preserving the open trading system that has linked the North American economy.

The pact has allowed industries to reorganize their supply chains around the continent to take advantage of the three countries’ differing resources and strengths, lifting the continent’s economies and more than tripling America’s trade with Canada and Mexico since its inception. Economists contend that many workers have benefited from these changes in the form of higher wages and employment, but many workers have lost their jobs as manufacturing plants relocated to Mexico or Canada, making Nafta a target of labor unions, many Democrats and a few industries.

But most business leaders had hoped that the president, whose Nafta criticism has been unrelenting, would be content to oversee tweaks to modernize the agreement, and then call it a political transformation.

It sometimes looked as if that might be the case. The appointment of Robert Lighthizer as United States trade representative, who pledged in his confirmation hearing to “do no harm” to Nafta, reassured many on Capitol Hill, where Mr. Lighthizer had long served in aide roles. And when the administration released its negotiating goals in July for the deal, they echoed many priorities of previous administrations.

But now, eight weeks into trade talks that were originally supposed to conclude by year’s end, the administration continues to push for concessions that the business community warns would essentially undermine the pact, and which few observers believe Canada and Mexico could agree to politically.

“Everyone knows that much of what is being proposed in key areas are, in effect, non-starters, which begs the question as to what, exactly, the administration is trying to achieve,” Michael Camuñez, a former assistant secretary of commerce under President Barack Obama, wrote in an email. It’s not unreasonable to think that by accommodating the president’s most extreme positions, American negotiators are “simply giving Trump cover to do what he really wants: withdraw from the agreement,” he said.

Phil Levy, a trade adviser for the George W. Bush administration, said the president was most likely looking for a pretext to kill Nafta.

“Find me the last trade agreement that U.S. passed with the chamber in opposition,” Mr. Levy said. “You don’t have a chance. It’s hard enough with the U.S. Chamber in favor.”

The most controversial of the administration’s proposals, floated by Commerce Secretary Wilbur Ross, would incorporate a sunset clause in the deal, causing Nafta to automatically expire unless all three countries voted periodically to continue it. That provision has drawn swift condemnation from the chamber and other industry groups like the National Association of Manufacturers, which say that it would instill so much uncertainty in the future of Nafta that it would basically nullify the trade agreement.

Another contentious push by the United States centers on changing Nafta’s rules governing how much of a product needs to be made in North America in order to enjoy tariff-free trade between the countries. The United States is pushing for higher levels, including a requirement to make 85 percent of the value of automobiles and auto parts in North America, up from 62.5 percent currently, and an additional requirement for 50 percent of the value to come from the United States.

That has pitted some of the world’s biggest auto companies against the Trump administration. Industry representatives say such high and complex barriers could deter companies from manufacturing in the United States altogether.

The administration has also proposed limits on the number of federal government contracts that Mexican and Canadian companies can win, as well as significant changes to how disputes are resolved under Nafta.

Business groups say they are firmly opposed to an American push to curtail a provision called investor-state dispute settlement, which allows companies to sue Canada, Mexico and the United States for unfair treatment under Nafta. Meanwhile, Canada has said that it will not consider dispensing with another provision, Nafta’s Chapter 19, which allows countries to challenge each other’s anti-dumping and countervailing duty decisions before an independent panel.

In his remarks Tuesday, Mr. Donohue called the administration’s proposed changes to these provisions “unnecessary and unacceptable.”

Mr. Donohue’s remarks followed a sharp exchange of words between the Chamber of Commerce, the country’s most powerful business lobby, and the Trump administration on Friday.

John Murphy, senior vice president of international policy for the chamber, said the administration’s proposals had “no identifiable constituency backing them” and had sparked “a remarkable degree of unity in their rejection.” He added that business leaders had perhaps never been at odds with an administration over a trade negotiation on so many fronts.

Hours later, the administration fired back.

“The president has been clear that Nafta has been a disaster for many Americans, and achieving his objectives requires substantial change,” said Emily Davis, a spokeswoman for the trade representative. “These changes of course will be opposed by entrenched Washington lobbyists and trade associations. We have always understood that draining the swamp would be controversial in Washington.”

Mr. Trump is known for taking a tough negotiating stance, and analysts said the administration might view its ambitious opening requests as a way to gain more leverage in the Nafta negotiations.

But Mr. Murphy and others in the business community cautioned that such an approach would probably be ill-fated. In both Canada and Mexico, Mr. Trump is unpopular, and caving to his demands could have devastating consequences for local politicians. Mexican government officials have repeatedly said they would not negotiate with a gun to the head.

“There’s an old adage in negotiations, never take a hostage you wouldn’t shoot,” Mr. Murphy said.

https://www.nytimes.com/2017/10/11/b...fta-trump.html

NAFTA is going down.

All these chambers of commerce are writing letters to keep NAFTA. Mean while in their own back yards sits commercial building falling in once booming manufacturing that employed people of their own communities. NAFTA never should have been signed to begin with. If we get out of NAFTA it will be another hit to Globalist agenda.

When we get out of NAFTA, we are free again, free to do what's best for our manufacturing companies, our workers, our communities. NAFTA was a socialist redistribution program disguised as "free trade", the basis of it was "parity" which means to redistribute from the successful to the less successful to try to increase the number of transactions instead of the quality and price of the transactions. It failed for the United States as they all knew it would, it wasn't for US, it was for Mexico primarily and Canada to some extent. It was the eventually merger of the 3 countries into a North American Union that would be part of a hemispheric division of One World Government run by the WTO.

Americans know this now, and collapsing this NAFTA will lead to collapse of all these bad trade deals, so the world is on notice, the US is back. Americans have taken back our country from borders and trade to manufacturing and jobs. No one is going to mess with US any more without penalty.

Trudeau fights to save NAFTA deal, but Trump offers little hope

By Steven Mufson
October 11 at 5:51 PM

Canadian Prime Minister Justin Trudeau visited the White House on Wednesday seeking a new “fairer trade” deal among the United States, Canada and Mexico amid growing alarm from business leaders that President Trump is leaning toward jettisoning the North American Free Trade Agreement in favor of bilateral accords.

In a news briefing at the Canadian Embassy, Trudeau insisted that maintaining the trade deal between the United States, Canada and Mexico would “produce better outcomes for the citizens of all three countries,” enabling North American businesses to compete more effectively in the global market.

Coming up with ways to achieve “fairer trade” was “the president’s focus, and it’s certainly my focus,” Trudeau said.

However, Trump continued to disparage the 23-year-old accord and promote the idea of bilateral trade deals.

“We’ll see what happens,” Trump told reporters in the Oval Office after being asked whether NAFTA was dead. “We have a tough negotiation, and it’s something you will know in the not too distant future.”

The two leaders met as the fourth round of NAFTA negotiations began just outside Washington, with trade experts, businesses, labor and lawmakers from all three countries warning of a possible breakdown in the talks.

While Trudeau reaffirmed that he continued to believe in *NAFTA, Trump said that he was willing to strike bilateral trade deals with Canada or Mexico if the negotiations failed.

“Absolutely it’s possible we won’t be able to reach a deal with one or the other, but in the meantime we’ll make a deal with one,” Trump said in the Oval Office, seated next to Trudeau. “I think it’s going to work out well for both countries and Mexico.”

The sense of urgency about the talks has been building after earlier rounds in Mexico City and Ottawa. On Monday, U.S. Chamber of Commerce President Tom Donohue, speaking in Mexico City, said it was time to “ring the alarm bells” on NAFTA. He said that abandoning the agreement would pose an “existential threat” to the continent’s national and economic security.

Labor and environmental groups were taking aim at the talks, which have remained closed to the public. Ben Beachy, trade expert at the Sierra Club, said that “it is completely unacceptable that two months into NAFTA’s renegotiation” the sessions remained closed.

In his Oval Office comments, Trump added that “we have to protect our workers, and in all fairness, the prime minister wants to protect Canada and his people also. So we’ll see what happens with NAFTA.”

The president reiterated that “I’ve been opposed to NAFTA for a long time in terms of the fairness of NAFTA. I said we’ll renegotiate.” He said, “I think Justin understands that if we can’t make a deal, it will be terminated and that will be fine. They’re going to do well. We’re going to do well. But maybe that won’t be necessary. But it has to be fair to both countries.”

Earlier Wednesday, during meetings with members of the House Ways and Means Committee, the Canadian prime minister stressed that he did not want negotiations to collapse.

“He made it clear they don’t want to pull out. They want a successful renegotiation,” said Rep. Sander M. Levin (D-Mich.), a member of the committee. Levin said Trudeau shared his concern about labor conditions and wages, saying he did not want the treaty to speed “a race to the bottom.”

But Trudeau also told committee members that he was worried about “poison pills,” proposals the United States might make that were designed to kill, not repair, the NAFTA agreement.

The Trump administration’s decision to impose 219 percent tariffs on Canadian aircraft — designed to block a Bombardier sale to Delta Air Lines that might otherwise go to Boeing — also inflamed tensions with Canada. Delta chief executive Ed Bastian said on an earnings call that Boeing’s case was weak and that he did not expect to pay the tariff, though he added that Delta’s 75-plane order could be delayed.

Trudeau said he “highlighted” the dispute in his talks Wednesday. Switching to French, he added that “this was not an easy conversation but an important conversation.” He said Canada’s military might seek alternatives to Boeing for future fighter-jet purchases.

Trump and Trudeau met one day after an interview was published in Forbes magazine in which Trump said that NAFTA had been “a terrible deal for our country.”

“NAFTA has been a disaster for manufacturing in this country. We have lost so much of our car business to Mexico. NAFTA is a disaster as a deal,” Trump told the magazine. “Now we’re renegotiating it. I happen to think that NAFTA will have to be terminated if we’re going to make it good. Otherwise, I believe you can’t negotiate a good deal.”

The fourth round of talks will extend to Tuesday.

https://www.washingtonpost.com/busin...=.701775952f76