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Short-term ‘Wins’ Will Result In Tomorrow’s Losses in NAFTA Negotiations

Guest column: With NAFTA negotiations stalling, it’s time to be honest with ourselves that this is not just a problem of finding a compromise.

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Photograph by Judi Bottoni/AP

It’s been nine weeks since renegotiations of the North American Free Trade Agreement kicked off. It was an ambitious agenda for a short period of time, from incorporating the energy and e-commerce sectors to pushing for higher labor and environmental protections. Yet, four rounds of negotiations later, the hopes of bringing the twenty-five-year old agreement into the twenty-first century look increasingly slim. At this point, successful negotiations may simply mean NAFTA’s existence when this all ends, and fond memories of a missed opportunity to have done more.

To truly understand what’s going on, it’s worth revisiting how we got here. During the campaign period, then-candidate Donald Trump made countering trade a tenet of his platform, singling out NAFTA as the “worst deal ever” and accusing Mexico of taking advantage of its northern neighbor. In the Oval Office, his tone remained largely unchanged. Even as Trump’s team began establishing the renegotiating framework for NAFTA, the president never seemed to be sold on the idea. In a leaked call with Mexican President Enrique Peña Nieto, Trump made it clear that he was coaxed into the negotiations and was by no means convinced of their utility.

For most economists and trade analysts, this lax approach toward scrapping NAFTA appears to verge on the irrational. Most agree that NAFTA could use an update, but this language is almost always wrapped in a recounting of its virtues: the rising U.S. exports, lower prices for consumers, and the 14 million jobs that it underpins across the United States. Industry executives will also echo this sentiment, with their supply chains weaving back and forth across continent. At first glance, then, it could feel remarkable that a president would review those same graphs, skim those same articles, and still feel no qualms about withdrawing.

Except it’s rational (sort of). Ultimately, it comes down to what Trump is choosing to maximize: short-term politics or the long-term health of the economy. And with each threat of withdrawal or deliberate destabilization, it’s becoming clear that Trump’s priority lands squarely on the political side. Attacking NAFTA during negotiations is clearly about short-term politics, fanning the flames of a sub-set of the population that views trade with Mexico not as a set of neat charts of imports and exports, but intertwined with vaguer concepts of globalization, immigration, and fairness. It’s not that Americans dislike trade; in fact, most believe it’s a good thing for the country, including more than six out of ten Trump supporters. But each day it’s becoming clear that the issue is not always trade itself, but also with whom we trade—and for many, Mexico is the villain.

For decades, cheap political points have been scored by accusing Mexico of ripping off U.S. workers and stealing their jobs, and images abound of Mexicans getting rich off Americans empty factories. It is in this context, where feelings of unfairness and anger loom larger than statistics and models—no matter how accurate—that bilateral trade becomes decoupled from economic reality. This makes economic policy depend more on its political reception than on the substantive arguments, a confusing balancing game for negotiators and the United States’ economic partners.

All this to say that we have two divergent objectives playing out simultaneously. Trump is maximizing short-term politics while NAFTA negotiators are working away (or engaging in tense stalemates) ostensibly to improve the technical side of the agreement, thus improving upon the region’s competitiveness and ability to create jobs and prosperity. In the tug of two divergent polls, the United States is running the risk of completely pulling apart NAFTA and the economic system that it has fostered, and in the process, endangering our ability to lead economically, in the hemisphere and around the world.

With the negotiations stalling, it’s time to be honest with ourselves that this is not just a problem of finding a compromise. This is a story about an administration that sees no political benefit in negotiating NAFTA in good faith, and doesn’t value economic reality. As the President might tweet: “So sad. So pathetic.”

Antonio Garza is a former U.S. ambassador to Mexico. He is counsel in the Mexico City office of White & Case. Reach him through tonygarza.com and Twitter, @aogarza. Opinions expressed by Texas Monthly guest columnists are their own.

 

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  • SeeItMyWay

    What??? Another sophmoric thread offered up by an attorney? How about one from someone in business who is truly knowledgeable about the unfair trade laws?

    For every big business in the states that praises NAFTA, I feel there are scores of smaller ones who cuss it.

    I have shared my own experiences regarding unfair trade here several times.

    U.S. based major corporations involved in everything from textiles to shipping containers to automobiles to high tech to various food categories, are moving around the world seeking the cheapest labor force.

    This search has led the U.S. clothing industry to Mexico, then China, then Bangladesh, then Central America, and now Vietnam. Africa is next. These U.S. corps care nothing about the health of the U.S. worker. It is all about the bottomline.

    Here’s the equation…Global manufacturing corporations reap huge profits by hopping around the world; foreign countries economies are boosted and they are able to build a middle class; U.S. workers lose jobs and our middle class declines. Eventually, the middle class salaries around the world will equal each other, and the Global Mega Corps, even if still based in America, will control all. A welder in Pittsburgh will make the same as one in Timbuktu.

    This is why the Big’s in the U.S. push the world globalization strategy; they are spending millions in D.C. to insure they get what they want.

    In the meantime, it costs nothing for baking company in the European Common Market to send a cookie into the United States; it costs an American baker a deal killing import duty to send his product into Europe. Take a look at dairy products coming into the U.S. from Canada and what they charge American dairy products going north. There is nothing fair about these agreements. Whoever negotiated them initially were idiots.

    Anyone disagreeing, please offer up specifics, because my retort will be loaded with them.

  • BCinBCS

    Well, how’s that businessman who’s not a politician working out for ya? Aren’t ya glad that Comrade Trump is running the government like a business?

    If a businessman constantly changes his mind or doesn’t know what he is doing or makes a bad decision, it only hurts the business; now those things hurt the entire country.

    • SpiritofPearl

      It’s being run like an adult daycare.

  • BCinBCS

    R.G. wrote: “And with each threat of withdrawal or deliberate destabilization, it’s becoming clear that Trump’s priority lands squarely on the political side.

    This appears to be one of Comrade Trump’s go-to moves. When he can’t get the other kids to do what he wants, he ruins what they were doing and walks away. He did it to Obamacare and now he is doing it to NAFTA.

    • SpiritofPearl

      He has also relinquished all of east Asia to China by withdrawing from the TPP and skipping out on important meetings in Asia next month.

  • BCinBCS

    It’s not that Americans dislike trade; in fact, most believe it’s a good thing for the country, including more than six out of ten Trump supporters.

    R.G., you say that like it’s a good thing. What it really says is that almost half of Comrade Trump’s supporters do not believe in free trade. That’s crazy.

  • WUSRPH

    “We must never regard as normal the regular and casual undermining of our democratic norms and ideals. We must never meekly accept the daily sundering of our country, the personal attacks, the threats against principles, freedoms and institution, the flagrant disregard for truth and decency, the reckless provocations — most often for the pettiest and most personal reasons, reasons having nothing to whatsoever to do with the fortunes of the people that we have been elected to serve.”
    Sen. Jeff Flake
    Too little, too late.

    • BCinBCS

      We are numbed to the squalor we see daily. It’s common to hear the president called a “disrupter.” But unlike the tech-world heroes to whom the label is typically applied, he builds nothing, creates nothing and moves a majority of our fellow citizens only toward rage or a sense of helplessness.

      -E.J. Dionne Jr.-
      WaPo October 22, 2017

  • SeeItMyWay

    This blog has become adult day care for you flock of sheep who follow your pedantic leader on off-topic comments. First of all, BCS, Ratcliffe did not post the thread. You might pay a bit closer attention.

    • BCinBCS

      JJ, thanks for pointing out the author of this blog posting. I have corrected the mistake.

      My lip is not bothering me at all. You and your Rush Limpball conspiracy watching friends are constantly being lead around like dogs on a leash by conservative craziness. Investigation after investigation of Hillary Clinton by Republicans have found NOTHING. Eight separate congressional investigations of Benghazi and eleven hours of grilling by Trey Gowdy on live TV has led to nada.

      Now, to divert attention from a complete failure of a president (that you vigorously supported), the GOP has cooked up another Jade Helm crazy-conspiracy concerning the sale of an uranium company to the Russians. This despite the fact that it was investigated ad nauseam before the election and despite the fact that any uranium mined and processed cannot be exported from this country.

      Banning Muslims, building a border wall with Mexico and locking-up Hillary Clinton are the legs of the stool that hold up the support for Comrade Trump. The distopian GOP will do anything, including making conspiracies out of whole cloth to keep their ignorant supporters in a constant state of rage. These are basic tenets of 1984: “Ignorance Is Strength” and maintain rage with the daily Two Minute Hate.

      Congratulations, JJ, you’re a loyal Comrade Trump apparatchik.

      • SeeItMyWay

        Typical duck and dodge. I explicitly mentioned the new investigation of the uranium deal. You know…the one that liberal rag the NYT’s reported extensively on a year or so back, and You called bullshit on. Since no major news group is willing to print it, maybe you haven’t heard about it. Maybe you haven’t picked up on the DNC being behind the fake report about Trumps ties to the Russians either. How about the Podesta’s involvement? Read anything about Holder’s funneling money to liberal leaning action groups? All about to go to congressional committees with reported “smoking guns” in tow. Oh, and then there is the Comey “smoking gun”. Do you know anything about any of this? Probably not, because none of the major networks are reporting it. Hide and watch, and get ready to eat a big bite of crow.

        • BCinBCS

          JJ, I knew about that article Tuesday. You have not dug deep enough, relying on the absolutely “unbiased” Faux Noise for your news will never get you the complete story – on anything.

          First of all, the investigation into Comrade Trump’s ties to Russia was begun and paid for by the Republicans when he was running in the primary. When he won the nomination, Republicans dropped their investigation and the Democrats began funding it. (Goose/gander) As to your statement that his ties to Russia are fake, how can you come to that decision because there is plenty of evidence that he was dealing with Russians up until the presidential election?

          The Podesta that you reference is Tony Podesta, not his brother John Podesta. Tony’s firm has been caught up in the Paul Manafort Russia investigation.

          As far as A.G. Holder letting sued firms donate money to action groups, I have no opinion, although I lean against it. This policy is a much larger example of a convicted person, on the local level, being required to perform community service with local action groups as part of the punishment.

          Finally, I don’t know which Comey “smoking gun” you are referencing since he did so many unethical things during the presidential election campaign. You will have to be more specific.

          I have been waiting since 1992 for the Republicans to “hang” the Clintons but after hundreds and hundreds and hundreds of millions of dollars investigating them, they are still walking free. It seems that their biggest “crime” is being the Democratic “Boogie-wo/man” on which conservatives can focus their Two Minute Hate.

        • BCinBCS

          JJ, I knew about that article Tuesday. You have not dug deep enough, relying on the absolutely “unbiased” Faux Noise and/or Washington Times for your news will never get you the complete story – on anything.

          .
          https://uploads.disquscdn.com/images/73b291408236055f57bf81f111b200c7b261c25c35da5c96b98fc6d301afbfe6.jpg

          .
          First of all, the investigation into Comrade Trump’s ties to Russia was begun and paid for by the Republicans when he was running in the primary. When he won the nomination, Republicans dropped their investigation and the Democrats began funding it. (Goose/gander) As to your statement that his ties to Russia are fake, how can you come to that decision because there is plenty of evidence that he was dealing with Russians up until the presidential election?

          The Podesta that you reference is Tony Podesta, not his brother John Podesta. Tony’s firm has been caught up in the Paul Manafort Russia investigation.

          As far as A.G. Holder letting sued firms donate money to action groups, I have no opinion, although I lean against it. This policy is a much larger example of a convicted person, on the local level, being required to perform community service with local action groups as part of their punishment.

          Finally, I don’t know which Comey “smoking gun” you are referencing since he did so many unethical things during the presidential election campaign. You will have to be more specific.

          I have been waiting since 1992 for the Republicans to “hang” the Clintons but after years and years and years and hundreds and hundreds and hundreds of millions of dollars investigating them, they are still walking free. It seems that their biggest “crime” is being the Democratic “Boogeywo/man” on which conservatives can focus their Two Minute Hate.