Tag Archives: Lighthizer

U.S. NAFTA GOALS

A CONJECTURE

“We want to claim or reclaim some manufacturing employment that has settled itself in Mexico.”

John Magnus
June 23, 2017

CONTEXT

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.”

COMMENT

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.

 

NAFTA NEGOTIATING OBJECTIVES

NAFTA AND THE PRESIDENT’S PROMISE

“President Trump continues to fulfill his promise to renegotiate NAFTA to get a much better deal for all Americans.”

Robert Lighthizer
July 17, 2017

CONTEXT

This is a NAFTA week in Washington. We use the indefinite article “a” rather than “the,” because there have been others and there will be more. But this is an important one. On Monday (July 17), the United States Trade Representative, Ambassador Robert Lighthizer “released a detailed and comprehensive summary of the negotiating objectives for the renegotiation of the North American Free Trade Agreement (NAFTA).” Yesterday, July 18, the House Committee on Ways and Means held a hearing on the modernization of NAFTA, and on Thursday, July 20, WITA, the Washington International Trade Association, will begin its NAFTA series.

Today’s featured quote is from the USTR press release announcing the publication of their NAFTA negotiating objectives. Here is the full quote:

“President Trump continues to fulfill his promise to renegotiate NAFTA to get a much better deal for all Americans. Too many Americans have been hurt by closed factories, exported jobs, and broken political promises. Under President Trump’s leadership, USTR will negotiate a fair deal. We will seek to address America’s persistent trade imbalances, break down trade barriers, and give Americans new opportunities to grow their exports. President Trump is reclaiming American prosperity and making our country great again.”

***

So what are America’s negotiating objectives for NAFTA? Well, by our count, there are 159, including items and subsets of items in each category. And there are 22 categories from trade in goods to currency as follows:

Trade in Goods
Sanitary and Phytosanitary Measures (SPS)
Customs, Trade Facilitation, and Rules of Origin
Technical Barriers to Trade (TBT)
Good Regulatory Practices
Trade in Services, Including Telecommunication and Financial Services
Digital Trade in Goods and Services and Cross-Border Flows
Investment
Intellectual Property
Transparency
State-Owned and Controlled Enterprises
Competition Policy
Labor
Environment
Anti-Corruption
Trade Remedies
Government Procurement
Small- and Medium-Sized Enterprises
Energy
Dispute Settlement
General Provisions
Currency

COMMENT

The Sting, which came out in 1973, was the second great movie starring Paul Newman and Robert Redford. The first, of course, was Butch Cassidy and the Sundance Kid in 1969, but it is The Sting we want to talk about because it has a moral, sort of, which is applicable here, sort of.

The title of the film may have been “the sting,” but if there is a single word that dominates the film it is “con.” It is a rich word, and no single synonym really sums it up, but “swindle” comes close. Newman’s character, Henry Gondorff, is the more seasoned con man. Redford’s character, Johnny Hooker, more the apprentice. The wonderfully mean character they want to swindle is Doyle Lonnegan, played by Robert Shaw.

Relatively early on Newman offers this advice:

“You gotta keep Lonnegan’s con, even after you spent his money.”

It is good advice and doesn’t just apply to dishonest transactions. As most good salesmen will tell you — reinforced by their company’s advertising — “Your last purchase with us was a great investment (just as your next one will be).”

NAFTA’s big problem was that really no effort was ever made to keep the con of the American electorate after the deal was done. There are several strands to that rope. One of them, of course, is that no one was elected to negotiate an FTA with Mexico, the new element of NAFTA. A second is that a third party candidate, H. Ross Perot, managed to garner a whopping 18.9 percent of the popular vote by running against NAFTA in the presidential election that came after NAFTA had largely been negotiated but before it was implemented. That was in 1992.

There is one more strand that needs to be mentioned. It is just as real but harder to put your finger on than the other two. And it is this. Over the last century, American politicians have regrettably been increasingly quite successful in their efforts to shield the public from unpleasantness, especially unpleasantness that might hurt candidates at the ballot box. In the Vietnam War, they first gave the middle class draft deferments and then went to an all volunteer Army. In the environmental arena, it was polluter pays. Citizens need not worry. The companies would take care of it. And as for NAFTA, well, people don’t like it. So we won’t talk about it.

Whatever one might think of candidate Trump’s extreme anti-NAFTA language, it provoked a national conversation, and that conversation has, among other things, begun to bring out just how important NAFTA has become to the United States. Earlier TTALK Quotes took note of some of the sectors that have become highly dependent on the North American and particularly the Mexican market over the course of the last 23 years. Later today, we will highlight another such sector, namely U.S. pork producers.

Our impression is that these discussions have begun to reshape the public’s view of NAFTA, and they have clearly had a demonstrably salutary effect on policy. The widely shared first and, we think, accurate impression of the NAFTA negotiating objectives published by USTR on Monday is that they are indeed designed to upgrade and improve a valuable agreement and not, as many feared, to destroy it. That is not to say that these objectives are not ambitious. They are. Nor is it to say that the negotiations that are set to begin next month will not be tough. They will be. There is also every reason to believe, however, that in the end they will  be successful.

We will conclude this entry with something Nick Giordano of the National Pork Producers Council said at the GBD NAFTA event on May 25. It was during the final Q&A session.. A reporter asked what would happen if the negotiations failed. Mr. Giordano said he thought a genuine failure of the talks, an end to NAFTA, would trigger a farm crisis in the United States. The heart of his response, however, was more positive. He said:

“The way I look at this, North America is the low-cost production platform for agriculture — really for manufacturing as well. So the opportunity… There’s opportunity all over the world, but the greatest opportunity is in the Asia Pacific Region. It’s in Asia. They need our [North American] products there. And so, we benefit by working together. We benefit by further harmonizing our standards. …”

 

SOURCES & LINKS

NAFTA Objectives Announced is a link to the  July 17, press release from USTR on the newly published U.S. negotiating objectives for an updated and improved North American Free Trade Agreement. This includes the statement from Ambassador Lighthizer that is today’s featured quote.

The Objectives is a link to USTR’s summary of the U.S. negotiating objectives for the upcoming NAFTA negotiations.

WITA Series takes you to the page of the website of the Washington International Trade Association with details for WITA’s upcoming NAFTA series.

Dairy and NAFTA is a link to the TTALK quote for June 14, which deal with this issue.

From Cars to Carrots is the YouTube video recording of the agricultural panel’s presentations, including the Q&A, at GBD’s NAFTA event on May 25, 2017.

Orginally published on July 19, 2017 as TTALK Quote No. 43
© 2017 The Global Business Dialogue, Inc.