By on December 17, 2017

nafta-secretariat

In case you haven’t kept up with the coverage on the renegotiation of the North American Free Trade Agreement, things haven’t gone well. Despite wrapping the latest round of talks in Washington on Friday, negotiators have made no clear progress on updating the trade deal. Considering a new deal is supposed to be finalized by the end of March, it’s beginning to look as if the NAFTA revamp might be doomed.

The biggest issue crippling the talks continues to be regional-content requirements for cars to qualify for NAFTA benefits. Both Mexico and Canada have described the U.S. content proposals as “unworkable.”

“People have to be planning for what they do in a worst-case scenario,” Robert Holleyman, a partner at Crowell & Moring and the former deputy U.S. Trade Representative under Barack Obama, told Bloomberg. “At the same time, I’ve never seen industry more involved across all sectors in making the case that the U.S. needs to come out with a NAFTA that allows all three countries to declare victory.”

The United States is dead-set on narrowing trade gaps, especially with Mexico, and sees the content origin requirements as an essential part of ensuring a more equitable exchange. President Trump has said he would withdraw the U.S. from the agreement entirely if the gap in trade was not fixed.

Republican lawmakers, including Senators John Cornyn and Ted Cruz, have asked Trump not to abandon NAFTA as Democratic representatives have requested protection for U.S. workers. However, whether either side has the ability to actually stop him from leaving the accord is unknown. “History suggests it would be very challenging for Congress to muster the will and the energy to forcefully counter that,” mused Holleyman.

However, with no real progress made, it’s becoming increasingly difficult to envision a different outcome. The United States doesn’t seem interested in softening its demands and has been critical of Mexico and Canada for not participating earnestly. During the previous round of ineffectual discourse in Mexico, U.S. Trade Representative Robert Lighthizer explained his goal was to “rebalance” trade on the continent and requested that Mexico and Canada begin engaging in a “serious way.”

The next round of talks will take place in Montreal from January 23rd to the 28th. They are likely to become the defining moments for NAFTA’s future.

[Image: NAFTA Secretariat]

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64 Comments on “NAFTA Update: Nobody Has Any Idea What’s Going On...”


  • avatar
    dougjp

    U.S. Trade Representative Robert Lighthizer requested that Mexico and Canada begin engaging in a “serious way.”

    What? This is the height of hypocrisy. The US has done absolutely nothing but intentionally put forward things they knew in advance would never fly. Otherwise they have done nothing at all except saying “bend over”. Intentional destruction of NAFTA. What a bad joke.

  • avatar
    stuntmonkey

    I’m still trying to figure out if Canadian trade minister Chrystia Freeland is effective or not, but she seems a little prone to going off message and saying what’s really on her mind (or is she…?) Case in point when she alluded to Belgium being difficult in the CETA talks. When she openly called the NAFTA talks “troubling and unconventionally” we were all like “No-duh.”

  • avatar
    CombiCoupe99

    Give ’em hell, Mr. President!

    • 0 avatar
      probert

      Yes he is good at giving people hell. Mexico is our third largest trading partner, and the trade is symmetrical IE imports = exports, and Canada is our largest trading partner. So if our 5 times bankrupt president brings his usual acumen to bear – we will indeed be given a new version of hell.

    • 0 avatar
      Astigmatism

      Well as long as it makes you feel better.

      • 0 avatar
        jjster6

        CombiCoupe99 will feel better… as the price of the goods he consumes skyrockets and the march to automate unskilled labor is accelerated.

        I live in Ontario where the new minimum wage will be $15 an hour soon. The price of everything is going up. With tax a McDonald’s “Extra Value” meal was over 10 bucks the other day. And I ordered it from a computer display, not a person.

        Be very careful what you wish for CombiCoupe99. This is not going to end like you expect.

        • 0 avatar
          psarhjinian

          “The price of everything is going up”

          The minimum wage is going up more than a year from now, after an election, but prices are going up now?

          Yeah, I’m sure that’s the fault of minimum wage and not profiteering. Not at all.

          • 0 avatar
            jjster6

            Going up Jan. 1, 2018. My daughters dance classes for example. Minimum wage goes to $14/hour January 1, 2018. $15/hour January 1, 2019. And everyone already making that or a little more is expecting more… or else they will just leave and get a less challenging job for the same money.

            So economics, not profiteering.

          • 0 avatar
            28-Cars-Later

            Inflation, not profiteering.

  • avatar
    ScarecrowRepair

    Trade balances are fairy tales, or worse. What is your trade balance with your grocer, mechanic, plumber? Somehow almost every person has a non-zero trade balance with everyone else, yet no one suffers for it. Same with countries — if the trade balance with China or Mexico or Saudi Arabia is non-zero, guess what, it’s still meaningless.

    You can also come around to meaningless from a second direction — dollars sent out to pay for imports have to come back. When Toyota gets $5K or $10K for a car sold in the US, those are dollars and don’t spend so well in Japan. You can trade them for Yen, but that just postpones the inevitable — those dollars have to come back to the US sooner or later, unless they are burned, or unless some other economy wants to use dollars and be at the mercy of the US government. Dollars out have to equal dollars in.

    A third consideration is the silliness of the “trade deficit” — it only counts goods, not intangible things. I heard it once described that if Toyota bought a factory vs built a factory, even if the sum was the same, one counts towards the deficit, the other doesn’t. No, I don’t remember which way, because it’s such a stupid ill-defined concept in the first place, I’d rather laugh at it and people who believe in it that fret over the exact definition.

  • avatar
    hamish42

    It’s hard as hell to negotiate with someone who changes his mind every time he Tweets.

  • avatar
    Big Al from Oz

    I see it this way, as the US looks inward gives the Chinese more opportunity to look outwards and expand.

    Trade isn’t just about dollars, its about political influence.

    For the US to remain as, or increase influence it needs more trade. This will reduce a competitors position to less trade. As a bonus the US will prosper.

    Mexico and Canada IS not an issue for the US, China is. I think there are a lot of people who don’t understand trade.

    Trump is treating like a retail operation, he needs to understand trade via subject matter experts, not his family or from some far right shock jock.

    I just hope Trump is removed soon or the ling ter negative impact of his Presidency will prevent the US from fully recovering.

    Let NAFTA stay as is and concentrate on expanding multilateral trade deals.

    • 0 avatar
      Lou_BC

      Big Al from Oz – TPP would have siphoned 30% of Asian trade and money away from China and to USA. Killing NAFTA will make trade more expensive and complex for NorthAmerican business. That will weaken “us” and benefit China.
      USA middle and lower classes have been screwed over by unfettered capitalism in all aspects of life ranging from health care and social safety nets to education and worker rights. They need to look inward at the root cause of their ills. The US has done it to itself. No one other than US oligarchs are taking advantage of the USA. Free trade isn’t the cause of their problems. The top 3 men in the USA have the wealth of the bottom 50%. The UN has had an inspector tour the USA looking at poverty. The wealthiest country in the world has 3rd world problems it won’t fix because that would funnel money from the billionaires.

      • 0 avatar
        Luke42

        It’s really true that parts of the US are really in the 3rd world.

        I used to go to such places regularly back before kids, when I had time to explore rural West Virginia extensively.

        My mother has spent a lot of time in 3rd world parts of The American West, as well. (She has a life-long interest in legal and environmental issues related to Native American tribes.)

        As a pro-business pro-trade liberal, I’ve been trying to figure out how to invest in Rural America and poor Urban neighborhoods. The problem is that it takes a *lot* of money to build infrastructure and businesses where they didn’t previously exist, and it involves picking winners and losers. Also, the people in whom we would invest in vehemently object to such investments and have rejected them in the recent past. But, if we could figure out how to invest in poor parts of the country, we would do a lot to address income inequality and make rural america a better place to live.

    • 0 avatar
      ra_pro

      What has Drumpf ever understood(with the possible exception of female genitalia) in his life, can you cite one example?

      It’s a rhetorical question of course but so is this whole charade of trade talks for him, nothing but stupid sometimes empty but mostly provocative rhetoric. This is not about trade in any meaningful sense. US position proves my point it’s so stupid that it’s essentially meaningless.

      This article implies that this is a reasonable political process, it is not and never will be as long as the Drumpf is at the helm.

  • avatar
    jacob_coulter

    We don’t need NAFTA, we can make individual trade agreements between each country. It doesn’t have to be one gigantic agreement with several countries at a single time. We have different concerns with different countries.

    People purposely want to conflate renegotiating trade agreements as if it’s going to be like the Cuban embargo. Trade will still occur, but this country was built on trading tariffs. The concept of free trade where an exporting company/country pays ZERO duty is a relatively new concept.

  • avatar

    Every country in the world has to take advantage of United States. Why? Because they can.

    • 0 avatar
      Big Al from Oz

      Inside,
      Why do you think and treat the US as the under dog?

      Your statement is very much an overstatement based on little knowledge and much fear.

      Why do you think the “world” is out to destroy the US? Every country confronts the same challenges as the US.

      Its just now competition is rising, which is good.

    • 0 avatar
      Lou_BC

      “Every country in the world has to take advantage of United States. Why?”

      Because it is easier to believe that lie than accept the failure of unrestrained amoral capitalism.

    • 0 avatar
      9Exponent

      Is it just our perception due to a Christian martyrdom complex?

      Or do they take advantage of us ’cause they hate our freedom?

      • 0 avatar
        Big Al from Oz

        9Exponent,
        Hate your freedom and take advantage? Wow!

        WTF? There are many countries freer than the US with more liberal markets.

        The US can take a leadership role, but in doing that doesn’t equate to more freedom in the US.

        Because economically the US is losing influence it needs to bolster as many allies as it can to improve its economic opportunities.

  • avatar
    slap

    If we restrict trade with Mexico and Canada, the jobs won’t come back to the US – they will just import the stuff from Asia.

    Jobs are going to leave the US, and it’s better for us that they go to our neighbors than to Asia.

    • 0 avatar
      dougjp

      Actually, it gets even worse for Americans than that. Cost of living goes up, inflation leads to higher interest rates, net job losses due to doing less business with current major trading partners who have struck up deals currently being worked on elsewhere, inefficient red tape introduced at the borders stifling trade/promoting doing trade elsewhere, major collapse of tourism industries especially in southern winter travel areas (early example proving the point, Governor of Florida was in Toronto recently asking for visitors and giving discounts). And the list goes on.

      I’m confident and/or hopeful Americans are smart and will see this train wreck coming, when it gets close.

      • 0 avatar
        jimmyy

        The train wreck coming is exploding debt levels being fed by massive trade deficits. About 10 more years of that and America would be insolvent. Fortunately, we got someone in the white house who understands business. Some higher GDP growth along with a lower trade deficit will save America. A little inflation is a side effect of the fix. But, a little inflation is good. A little inflation will get wage increases for the working class in this country. What is wrong with that?

        • 0 avatar
          slap

          ” Fortunately, we got someone in the white house who understands business.”

          Now THAT is funny.

          If Trump is so good at business, why has he filed for bankruptcy so many times?

        • 0 avatar
          jjster6

          @jimmyy… My jaw hangs open in disbelief… Have you seen how much debt Trump’s budget piles on.

          The higher GDP ain’t gonna happen. The US population is too old. And Trump is slowing down immigration, which leads to an older population. And a younger population is one of the biggest drivers of GDP.

        • 0 avatar
          Luke42

          “Fortunately, we got someone in the white house who understands business.”

          LOL, no.

          I have a degree in business. Based on how Trump behaves, he couldn’t manage a quickie mart or sell used cars.

          The little bit of The Apprentice I’ve been able to stomach is grandstanding BS that would get him drummed out of the very serious places where I’ve worked. And that’s before we even get to the tweets or the sexual harassment, either of which would get him fired from the very serious places I’ve worked.

          Undercover Boss is a much better business show, at least the first season. (I’m too busy to watch much TV.)

          • 0 avatar
            Lou_BC

            My Coffee with a Trump Supporter

            I finally found a Trump supporter – this morning when I went to buy coffee. (I noticed a Trump bumper sticker on his car.)

            “Hi,” I said. “Noticed your Trump bumper sticker.”

            “Yup,” he said, a bit defensively.

            “I hope you don’t mind my asking, but I’m curious. Why are you supporting him?”

            “I know he’s a little bit much,” said the Trump supporter. “But he’s a successful businessman. And we need a successful businessman as president.”

            “How do you know he’s a successful businessman?” I asked.

            “Because he’s made a fortune.”

            “Has he really?” I asked.

            “Of course. Forbes magazine says he’s worth four and a half billion.”

            “That doesn’t mean he’s been a success,” I said.

            “In my book it does,” said the Trump supporter.

            “You know, in 1976, when Trump was just starting his career, he said he was worth about $200 million,” I said. “Most of that was from his father.”

            “That just proves my point,” said the Trump supporter. “He turned that $200 million into four and a half billion. Brilliant man.“

            “But if he had just put that $200 million into an index fund and reinvested the dividends, he’d be worth twelve billion today,” I said.

            The Trump supporter went silent.

            “And he got about $850 million in tax subsidies, just in New York alone,” I said.

            More silence.

            “He’s not a businessman,” I said. “He’s a con man. “Hope you enjoy your coffee.”

            Robert Reich

    • 0 avatar
      ra_pro

      This is a very good point. Regardless of what happens, the manufacturing jobs by-and-large are not coming back to the US.

      I remember a few years ago some economists predicting that the cost of labor in China was rising so quickly that within a few years it would be the same what it is in the US. So they were predicting a large number of jobs would be “repatriated” from China back to the US because they thought “there would be no longer financial advantage” to making stuff in China. Now a few years later we can see that the first part of the theory might be happening, namely Chinese labor costs closing the gap on the US labor costs, but the second part, the jobs coming back to the US, isn’t happening at all. Why? Because there are plenty of other countries that offer lower labor costs than China such as Vietnam, Indonesia, Thailand, Bangladesh etc. And guess what if all of these are eventually exhausted as low labor producers there is always the whole continet of Africa just waiting for its shot at semi-prosperity.

  • avatar
    Jeff S

    @slap-Agree,look at Ford when Fields agreed not to make Focus and Fiesta in Mexico and keep the jobs in the USA then Ford decided to import the Focus from China. Much rather have the jobs go to Mexico than to China.

    @Big Al–That is part of my fear as well that the US will lose its Global influence under the Trump presidency. China is more than willing to fill the void and has been making trade alliances globally. China has become the major trading partner in Central and South America,a lost opportunity for the USA.

    • 0 avatar
      Lou_BC

      @JeffS – it is just a matter of time. Countries are already ignoring the US and making their own trade deals and own military pacts. Depending on what variables one looks at, China is ahead or a close 2nd. A war with North Korea most likely will be the straw that breaks the camel’s back.

    • 0 avatar
      jimmyy

      Jeff, the US is the most powerful country in the world by far. We have the biggest economy that is growing strongly again. That is strength. The US was losing its global influence under Obama, but that has all changed. This country is fortunate that Clinton was not elected or we would have lost our global influence.

      • 0 avatar
        jjster6

        @jimmyy… sorry to ruin your story with facts, but the US economy started growing again under Obama. It completely crapped out under Bush.

        Please don’t take this as an Obama endorsement, just suggesting your relationship with reality is tenuous at best.

      • 0 avatar
        Big Al from Oz

        jimmyy,
        From a military perspective the US has the best at the moment. Looking at potential military strength, China is stronger, no different to to UK vs US at the beginning of the 20th Century.

        The US economy is the largest, but the EU and Chinese are very close. This is completely different from the past when the US was by far the single biggest market and that gave the US influence.

        From the past many smaller economies learnt and developed controls to manage their markets better than the US, ie. ENCap. The US market is losing strength and needs to accommodate others to expand, as the rest of the world has developed since WWII.

      • 0 avatar
        Arthur Dailey

        @jimmyy: unfortunately you are incorrect. US influence in the world has not been this low since 1914. Trump has weakened NATO, playing directly into Putin’s hands. as Russia covets taking back the Baltic states and Ukraine.

        The ‘America First’ policy turns its backs on America’s allies, which may force some of them to ally with Russia or China. The massive deficit and tariffs may reduce America’s influence abroad. Already Trump has ceded America’s moral role.

        • 0 avatar
          macmcmacmac

          Russia is not stupid enough to try to take anything back in Europe. There is simply nothing in it for them to try. NATO is a horribly obsolete and dangerous phantasm of the cold war, and a fig leaf to cover unilateral US action vis a vis Russia.

          The One Belt, One Road will sound dwarf any trade agreement currently in existence. US is flailing about trying to convince the world they still call all the shots, while the parade disappears into the middle distance. Once America is no longer economically dominant, expect the hot air finance balloon to deflate, with $20 trillion chickens coming home to roost

          • 0 avatar
            Arthur Dailey

            @macmac: Agree that China’s new Silk Road will change the balance of power. Have a business associate who has seen the naval base they are building in Pakistan. Soon the Indian and eastern part of the Pacific will be a Chinese Sea.

            Plus China approved and helped stage the coup in Zimbabwe. The are building highways throughout Africa in return for mineral rights.

            However Russia is still following their traditional policies of trying to gain a year round port and creating space between themselves and Western Europe. They have annexed Crimea, destabilized Ukraine and are seriously pushing the Baltic States.

            If European faith in American leadership falls much further, then the smaller/weaker European nations may be forced to cut deals with Russia and return to its orbit.

    • 0 avatar
      ra_pro

      US already lost a lot of its influence; in Europe US is already treated as a crazy uncle that needs to be restrained rather than relied upon. In disguise this is the best thing that could have happened to Europe (albeit a bad thing for the US), finally after 60 years the onus will be on Europe to produce some leadership and resistance to Russia, China (as a global superpower) and others.

  • avatar
    el scotto

    Dontcha know? They’ll be making Chevy’s in abandoned West Virginia coal mines. Steve Bannon will make everything all right.

  • avatar
    DeadWeight

    MAGA!

    BARUTH BROS ALL IN BANNON/TRUMPTARDIAN GUARD

    MAGA MAGA!!!

  • avatar
    jimmyy

    Trump has it right. The US holds all the cards. I am confident Trump will do the right thing and throw Canada and Mexico under the bus. Our huge deficits keep growing and will bring down America if someone does not do something about fixing the trade agreements. Next, Trump needs to go after China and the WTO. Of course, the Democrats and some Republicans will run around and yell fire because that some big money donors will take it in the shorts … but the upper midwest will be the big winner. It will take a few years for the midwest to see the win, but it will be big.

    • 0 avatar
      Arthur Dailey

      Funniest post of the day.

      Do you write for the Daily Show?

    • 0 avatar
      Lou_BC

      @jimmyy – actually no. I’ll give you a few examples. In the past any economic downturns in the USA would hurt the Canadian lumber industry. That was the same when ever the USA started putting punitive tariffs on Canadian lumber. This summer the USA slapped punitive tariffs on Canadian lumber.
      Guess what?
      I’ve seen virtually no effect locally.
      Why?
      In British Columbia for example, we ship more lumber to Asia than the USA.

      Several pipelines are in the works to ship oil to Asia.

      What will bring the USA down is how it treats its own populace. Poverty, healthcare for just those who can afford it, good education for those who can afford it, plus racial inequities as well as a crumbling infrastructure.

      A tax plan that will shift more wealth to the already wealthy will eventually bankrupt the USA.

  • avatar
    stingray65

    NAFTA and other trade agreements will most strongly be in the US interest if the US does everything possible to make doing business in the US profitable. Cutting the corporate tax rate is a good start, but it should be zero since corporations don’t pay taxes – only shareholders, employees, and customers do. It would also be smart to cut all taxes on foreign earned income –
    let companies bring foreign profits home to America for investment. Cutting all environmental regulations that don’t pass cost-benefit analysis would also be very helpful, which means eliminating regs that don’t provide environmental benefits that cost more than $50 per CO2 equivalent ton reduction. Doing everything possible to make cheap energy available is another profit maker – drill baby drill. And making the USA a right to work country is another thing that would make the US more attractive for investment and manufacturing. Do these things and the giant sucking sound you hear will be a lot of jobs leaving China, Mexico, Europe, and Canada for the USA.

    • 0 avatar
      Arthur Dailey

      Except unless you want the majority of American’s living below the poverty line, they cannot live on the wages paid in many Asian companies.

      And many of the taxes that corporations should pay are instead used for bonuses and executive perks. Not re-invested in America.

  • avatar
    kvndoom

    Now that TTAC has become a political blog that occasionally reviews cars, I need to start bookmarking some of the better comment sections for entertainment purposes, and then re-read them in a few years after our new isolationism policies have had time to fester and bear fruit.

    • 0 avatar
      Luke42

      Yeahz, I used to read this blog to escape politics.

      Noe I use it to yell at Jack Baruth’s politics.

      I also read it less. It’s auto show season, so there should be a lot more going on with concepts and other kinds of speculative fun. But, instead we get trolled by a guy whose writing I appreciate less each time he publishes a politically motivated article.

      The Trumpies have been pushing a kind of faith-based economics which does not agree with either the observational or theoretical economics that I’ve studied. In other words, a lot of their proposed policies (especially restricting trade) are likely to contract the economy and have other unintended consequences. But, the Trumpies continue to have faith that BS and swagger are good for business, and that’s hard to take seriously by those of us who relish the rich complexities of the real world.

  • avatar
    tomLU86

    Good point JJster!

    It seems like there really is “no way out”.

    NAFTA was bad for America. Ross Perot was correct. And now it appears to be too late to undo the damage.

    To JJ’s point, undoing the ‘damage’ might cause more harm than good!

    • 0 avatar
      Luke42

      NAFTA wasn’t bad for America. It was bad for some businesses in America which employed a lot of people.

      Those are not the same thing.

      So, the question is: if we have technology or a trade deal which
      A) generates economic efficiency (ultimately a big good thing) and
      b) puts people put of work (a bad medium-sized thing),
      Then how do we resolve that conflict?

      Twenty years ago, I was a Libertarian. Now, I’ve come to believe that a European-style social safety net let’s of have our cake and eat it too. If we took all of the money my family currently pays for health insurance and put it toward that type of social safety net, it probably would cost me about the same, too — because our healthcare system is very inefficient (based on per capita healthcare costs) compared to other 1st world nations. In other words, I’ve come to believe that liberal social policies are the answer to individual people being screwed while the nation as a whole benefits.

      This line of reasoning is why Silicon Valley types (of which I’m sort-of one) like the Universal Basic Income. It’s a simple policy that could fix a lot of problems. It’s just that redistribution is philosophically unpalatable to a lot of the people who it’s trying to help, so whatchagonnado.

      • 0 avatar
        28-Cars-Later

        None of this exists in nature, nature simply fracking kills you if you’re weak. Nature will outlast the folly of Man, and then all of the aberrations will cease to be. Going against it now simply sets people up for an eventual genocide. One Carrington Event affecting a single hemisphere would be more than enough for Nature to make a comeback.

    • 0 avatar
      jjster6

      NAFTA is bad for a few industries that were very inefficient. And those are highly visible when a plant closes down. For the vast majority it was very beneficial… look at your TV today compared to your 85 model. Technological advancement and efficient allocation of resources. The only way to a better life. Too bad it will force some to change.

  • avatar
    1500cc

    Despite all the bluster, it’s actually unlikely that Trump alone would have the power to pull out of NAFTA. Most likely it would require support from Congress, which would be a difficult sell.

  • avatar
    PrincipalDan

    The headline made me picture someone standing up in the middle of the negotiations proclaiming: “THAT’S NOT HOW THIS WORKS! That’s not how any of this works!”

  • avatar

    Late to the party as usual but it must be said.
    The Americans negotiating tactic is ‘You’ll swallow what we give you to swallow and you will like it’ and then have a fit because Canada and Mexico aren’t eagerly pulling down their pants for their prize.
    Can’t even provide some Vaseline to ease the pain, just shut up and smile, we have a political base to pander to.
    This is not negotiating, it’s a series of poison pills they know will be rejected and a FU pay me tactic.
    The POTUS is not a negotiator, he just plays one on TV and bilateral agreements while the orange one is in charge is lunacy.

  • avatar
    lostjr

    Did the Auto Pact go away after NAFTA, or is it still in the background?

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