“We want to claim or reclaim some manufacturing employment that has settled itself in Mexico.”
June 23, 2017
Like our last entry, today’s is from the preliminary comments made by TradeWins president, John Magnus, acting as a panel moderator at GBD’s June 23 event. Earlier we shared with you his thumbnail estimation of the U.S. trade posture towards the European Union. He offered similar comments on America’s apparent goals for a revised NAFTA. The first round of NAFTA renegotiation got under way in Washington yesterday [June 16], beginning with a fairly challenging opening statement from the U.S. Trade Representative, Ambassador Robert Lighthizer. We shall turn to that in a moment.
First, though, this is as good a time as any to review the assessment that John Magnus offered back in June. “Okay, what about NAFT?,” he asked. These points were his answer:
Content, Rules of Origin. “We apparently would like to wring out non-North American content as fully as possible from the goods that have NAFTA eligibility.”
Jobs. “We want to claim or reclaim some manufacturing employment that has settled itself in Mexico.”
Trade Deficits. “And we would like to have a smaller, bilateral merchandize trade deficit with Mexico.”
Dairy. “We want to extract concession from Canada on some offensive issues, most notably dairy trade. I’ll let you decide what the word offensive modifies in all of that. It could be our behavior in relation to dairy trade.”
Investment and Trade Remedies. “We want to overhaul some of the NAFTA’s institutional provisions and dispute resolution provisions and most notably the ones that sit in chapters 19 and 11”.
Government Procurement. “We want to really have a new or continue our new mania for Buy American, meaning that we want to, apparently, refrain from deepening the NAFTA in regard to government procurement. And that matters because our NAFTA partners have some interesting requests and proposals in that category.”
The Cases. “And we seem to want to continue to treat even the highest profile trade remedy proceedings – examples: softwood lumber for Canada, sugar for Mexico – as basically matters of pure law enforcement as opposed to some part of our trade policy that we would be prepared to bargain over.”
Doubtless you have already read or read about Ambassador Lighthizer’s opening statement yesterday. Certainly, it was important, but its importance is bound to fade somewhat as the negotiations — and all that is said and written about them — move on to specific issues. But while it is still fresh, here are a few thoughts on the statement and on the negotiations now in their second day.
First, of course it was a tough statement. It had to be. It was the United States that called for these negotiations, and in a sense that was a fallback from President Trump’s threat to withdraw from NAFTA, to tear it up. And the essential toughness of the statement was in this paragraph:
“The views of the President about NAFTA, which I completely share, are well known. I want to be clear that he is not interested in a mere tweaking of a few provisions and an a couple of updated chapters. We feel that NAFTA has fundamentally failed many, many Americans and needs major improvement.”
That was near the end of his statement. The beginning was somewhat different. There he talked about the many Americans who have benefited from NAFTA. “For many of our farmers and ranchers,” he said, “Canada and Mexico are their largest export markets.” And, he added, “Many are particularly vulnerable today because of low commodity prices.”
In short, at least as we read it, it was a tough speech with a major concession: America too needs NAFTA. Yes, there is some leverage in the belief if not the fact that the other two, Canada and Mexico, need NAFTA more. But America needs it. Think of NAFTA as a leaky lifeboat in an unforgiving sea. It’s three occupants — Canada, Mexico, and the United States — may have, will have, trouble agreeing on the best way to patch it. But agree they must. Scuttling it is unthinkable (or should be).
Much as we would like to end on that rhetorical flourish, it doesn’t quite capture the larger point. NAFTA may have been a mistake. A better set of policies set in motion in the 1990s might have preserved more U.S. manufacturing jobs and led to a stronger U.S. industrial base. The challenge for today’s NAFTA negotiators, however, isn’t to rewrite the 1990s. That can’t be done. Their challenge it is to improve a system that is now deeply embedded in the economies of all three countries and to do so without disrupting the lives and livelihoods of those who have successfully adapted to it.
SOURCES & LINKS
An Educated Guess is a link to the YouTube video of the Diplomatic Panel at the GBD EU Outreach event on June. This was the source of today’s featured quote.
Opening Statement takes you to Ambassador Lighthizer opening statement at the start of the first round of negotiations toward and an updated and revised NAFTA.
Objectives is a link the U.S. negotiating objectives for the new NAFTA negotiations, which USTR published on July 17, 2017.
About Dairy is the TTALK Quote for June 14, 2017, which focuses on the issue dairy in U.S.-Canada trade, beginning with comments from Shawna Morris of the U.S. Dairy Export Council.
Originally published on Augusut 17 as TTALK Quote No. 51 of 2017.
© 2017 The Global Business Dialogue, Inc.