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Jack Lessenberry

Jack Lessenberry

The State of NAFTA Negotiations Today

October 13, 2017

DETROIT – Nobody doubts that NAFTA, the North American Free Trade Agreement, needs to be modernized.  “The agreement is 23 years old. The global, North American and Canadian economies have been transformed in that time by the technology revolution,” said Chrystia Freeland, Canada’s foreign affairs minister, in a major speech in August. 

That was at the start of an expected seven rounds of talks scheduled between the United States, Canada and Mexico before Christmas. Canada’s point of view is that NAFTA, for all its flaws, is more than worthwhile, and that the renegotiations are “an opportunity to make what is already a good agreement even better.” Mexico feels much the same way.  But President Donald Trump has been attacking NAFTA (“the worst deal ever made”) in a series of tweets – and more disturbingly, his administration seems to be making a series of protectionist demands that the U.S. Chamber of Commerce is calling “highly dangerous,” and which may threaten prosperity.

Some even think the talks could collapse and Washington might decide to pull out of NAFTA, something that could have disastrous consequences, especially for this part of the nation.

Douglas George, Canada’s consul general in Detroit, noted in an interview that “of all the states that could be affected by the negotiations over NAFTA, Michigan is at the top of the list,” because it has more trade with Canada than any other state. 

George, who was trained as a professional trade negotiator, said his impression was that after three rounds, the talks were going reasonably well – at least before this week’s scheduled meetings in Washington.  “This is a remarkably fast process for trade negotiations. They want to have the talks finished by the end of the year,” he said. The meetings are never held twice in the same place, oscillating between Washington, Ottawa, and Mexico City. 

NAFTA, however, is generally unpopular in the United States – and has been since President Bill Clinton got it through Congress in 1994, largely with the aid of Republican votes.  Daniel Ujczo, an attorney in Columbus who specializes in U.S.-Canada matters, agrees the treaty needs to be carefully modified, not scrapped. “But anytime you hear the term NAFTA in this part of the world, it is usually combined with another adjective starting with F,” he said succinctly.  Ujczo has called this a “once-in-a-lifetime opportunity” to modernize NAFTA – and hopes the politicians behind the negotiators understand how delicate trade agreements can be.  Delicate – and easy to derail.

The Trump administration, led by U.S. Trade Representative Robert Lighthizer, began negotiations by aggressively demanding massive changes in things like content requirements for cars and car parts.  That surprised Ujczo, who was quoted in August as saying “it’s somewhat unorthodox to come out with that level of negative comments about the existing agreement and to lead with our most difficult issue first.”  He cautioned, however, not to read too much into an early negotiating stance; negotiators have different styles.

But the tough talk continued.  Last month, Wilbur Ross, Donald Trump’s Secretary of Commerce, asserted in a column in the Washington Post that NAFTA was destroying U.S. jobs and benefiting other countries, including those not in NAFTA, though he didn’t explain that.  “Our nation’s ballooning trade deficit has gutted American manufacturing, killed jobs and sapped our wealth. That is going to change under President Trump, he asserted, vowing that the “rules of origin” that specify, for example, what percentage of car parts have to come from the United States.

The auto industry is a particular target because, Ross claimed, “The United States would enjoy a trade surplus with its NAFTA partners if it were not for the trade deficit in autos and auto parts.” That alarmed the U.S. Chamber of Commerce, which then asked the Trump administration to drop attempts to force “extreme” changes in rules of origin requirements.  But the only answer to that was a contemptuous comment from Emily Davis, a spokesperson for the U.S. Trade Representative who virtually sneered that “NAFTA has been a disaster for many Americans, and achieving (President Trump’s) objectives requires substantial change,” she said. “These changes of course will be opposed by entrenched Washington lobbyists and trade associations.”

What happens next is not clear; Canadians say they don’t think the talks are going badly. To be sure, many negotiations began with sometimes violent posturing – and end with handshakes, smiles, and signed international agreements.  The Trump administration, at least as of the end of the third round of talks, had yet to submit concrete proposals as to what, for example, they want rules of origin standards to be.  It also is worth remembering that any new treaty would have to be approved by both houses of Congress.

What if the talks fail? President Trump would have the option of pulling out of the treaty entirely with six months’ notice. But that could cause economic and legal havoc.  The short and mid-term damage to the automotive economy could be terrific if things had to be decoupled. Both Ujczo and Consul General George noted that billions have been spent to develop an efficient supply chain among all three countries. Dismantling it wouldn’t be easy or cheap.  NAFTA has, indeed, had some negative impacts on auto workers, and may have cost some jobs.  But massive international agreements have many ramifications.

Perhaps the best advice for those at the NAFTA talks is to make sure they understand what they are wishing for – and to be absolutely certain they are prepared to get it.

Jack Lessenberry is the head of journalism at Wayne State University, serves as Michigan Radio’s senior political analyst and writes regularly for several publications. He also serves as The Toledo Blade’s writing coach and ombudsman and is host of the weekly television show Deadline Now on WGTE-TV in Toledo.

October 12, 2017 · Filed under Jack Lessenberry



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