NAFTA Collapse a Threat to National Security, Future Trade Deals – By Andrew Soergel (usnews.com) / Dec 11 2017
A group of former ambassadors and trade officials warned Monday that the collateral damage from the destruction of the North American Free Trade Agreement would extend well beyond individual countries’ trade balances.
Speaking at an event hosted by the Center for Strategic and International Studies, a group of experts and panelists were asked to speculate on what the world would look like if NAFTA went up in smoke, as has consistently been threatened by President Donald Trump and U.S. Trade Representative Robert Lighthizer.
Few had many good things to say about such a result.
“I think the basic message is that things would cost more. Cars could cost a couple thousand dollars more if we went out of our North American production chain. The winter vegetables you get from Mexico would probably cost a little bit more, maybe not be as available,” said Earl Anthony Wayne, a former ambassador to Mexico under President Barack Obama.
Meanwhile, Carla Hills, the former U.S. Trade Representative under President George H.W. Bush who helped lay the original groundwork for the North American agreement, cautioned that tourism, agriculture, automotives and national security interests would all be thrown into jeopardy should NAFTA go down the drain.
“In 1993, our jobs connected to Mexico totaled 700,000. Today, as a result of the NAFTA, it’s 5 million. Exiting from the NAFTA would obviously cause that number to shrink very significantly,” she said. “After a pullout, our companies would see their costs increase, adversely affect their global competitiveness and result in a decrease in our sales, which would mean fewer jobs.”
Trump rode into Washington on promises that the destruction of NAFTA would actually bring jobs back to the U.S. But Hills warned that the deal’s termination would likely spur companies, particularly in the automotive sector, to relocate to Asia, where in some places regional tension isn’t as high and supply chains could become more integrated than they would be in a NAFTA-less North America.
“At the end of the day, I think it’s a hard question, because, if you look at the 2016 presidential campaign, this was a campaign that was won not on public policy debates or discussions but on narrative and storytelling,” said Arturo Sarukhan, a former Mexican ambassador to the U.S. “This will provide real pinch in states that elected President Trump – profoundly red states, agricultural states that would lose significantly if this disappears.”
Indeed, America’s agricultural exports to Canada and Mexico between 2010 and 2012 were nearly $28 billion larger than they were between 1991 and 1993, according to a 2015 report circulated by the Department of Agriculture. NAFTA is believed to have been a primary facilitator of that uptick, and agriculture groups have been among the most vocal in urging the Trump administration to refrain from walking away from the deal.
In a letter sent to Commerce Secretary Wilbur Ross in October, more than 80 agriculture-related associations, companies and special interest groups warned that “NAFTA withdrawal would cause immediate, substantial harm to American food and agriculture industries and to the U.S. economy as a whole.”
“Under NAFTA, American food and agriculture exports to Canada and Mexico grew by 450 percent,” the letter said. “In 2015, the United States held a 65 percent market share for agriculture products in the NAFTA region, and in 2016, we exported nearly $43 billion worth of food and agriculture goods to Canada and Mexico, making our NAFTA partners the largest export consumers of U.S. agriculture.”
Trump’s desire to retool – or potentially destroy – NAFTA appears to come from his frustration with America’s trade deficit with Mexico, in particular. When goods and services are factored in, the U.S. actually maintains a trade surplus with Canada, but Trump has taken issue with certain dairy restrictions and disputes between the two countries that have been brought before the World Trade Organization.
But efforts to alter the agreement could send shockwaves that go well beyond agriculture and commerce. Sarukhan noted a recent Pew study showed Mexicans in 2017 hold a considerably more pessimistic view of the U.S. than they did just a few years ago. In 2015, 49 percent of Mexicans polled by the research group said they had confidence in the U.S. president. In 2017, just 5 percent said the same.
The Mexican public, Sarukhan warned, hasn’t taken particularly kindly to Trump’s threats of building a wall and of destroying a trade agreement considered to be crucial to Mexico’s trade-heavy economy. And with a presidential election looming south of the U.S. border next year, candidates don’t appear to be particularly eager to show a public closeness to Trump or to the U.S.
What that means in terms of national security and cross-border cooperation isn’t great. Sarukhan notes, for example, that when the 2013 “Gang of Eight” immigration bill was being worked out in the Senate, Mexico offered to temporarily take in roughly 11 million individuals believed to be in the U.S. without documentation – even though many of them didn’t actually come from Mexico.
“Mexico said we would be willing to take in 11 million people if you can process them in 48 hours in Mexican consulates, and then we would allow them to cross back into the United States, and that way we can help in ensuring that those individuals who are in the country without papers can come back in with a legal status,” he said. “It would be political suicide for anyone in Mexico today to put that on the table.”
Future trade negotiations with other countries were also cited as potentially hanging in the balance, as the perception that the U.S. could walk away from standing agreements on a whim would potentially deter trade partners from signing new deals in the first place.
“To turn our back on an important agreement with our neighbors over concern about bilateral deficits raises questions with respect to our reliability and our leadership,” Hills said. “What other government would want to sit down and negotiate on any topic? Concern would loom that we could not be relied upon to deliver tomorrow what we promised today.”
Monday’s event coincides with an “intersessional” meeting this week between trade representatives of the U.S., Mexico and Canada as they continue to make progress toward a revised agreement.
In an effort to make more headway before the end of the year, Lighthizer and his international colleagues are expected to discuss some of the finer, less controversial details that are still on the table.
The bigger ticket items – such as America’s proposals for new rules of origin provisions and agreement sunsets that would require periodic renegotiation – are expected to be left to deal with during the new year. But with time running out until Mexico’s presidential election and a contentious 2018 mid-term election in the U.S., the threat of NAFTA’s implosion doesn’t appear to have gotten any smaller in recent weeks.
“I would be concerned about an anti-American sense in both Mexico and Canada that is going to be damaging for the relationship among all of our countries. We just don’t need that, and I think it’s something that we have to be concerned about,” Mike Wilson, a former Canadian ambassador to the U.S., said Monday. “We are concerned about a dissipation of the strong relationship that has built over the last 25 years.”
PB/TK – Who cares if it might cause someone to pay more for their Ford, GM or Chrysler, it’s the patriotic thing to do, right? Who cares if the small business farmer will have to pay more to export their product to Canada or Mexico, it’s the cost of doing business, right? There’s more at stake then many know when it comes to renegotiating NAFTA, especially when it comes to oil imports when your #1 and #7 importers are at the table.
