Monthly Archives: April 2017

Revisiting Nafta: Stakes for Key Industries

President Trump may not be terminating the North American Free Trade Agreement, known as Nafta, but that doesn’t mean the deal is safe.

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After telephone calls with President Enrique Peña Nieto of Mexico and Prime Minister Justin Trudeau of Canada on Wednesday, Mr. Trump said he would start the process of renegotiating Nafta, a treaty that he had scorned during his presidential campaign, calling it “the single worst trade deal” ever signed by the United States.

Whatever his criticisms, Nafta has had a major impact on the American economy in the decades since it was signed, and any renegotiation would affect certain industries.

Here are four potentially vulnerable sectors:

Perhaps no industry is more closely entwined with Nafta, or has more at stake if there is a drastic shift in trade policy, than the automotive sector. It is a major employer in all three member nations — Canada, Mexico and the United States. Hundreds of thousands of workers in the United States are tied to the industry, while Mexico and Canada each rely on automaking for tens of thousands of jobs. The countries’ automotive sectors are also tightly linked, exporting and importing billions of dollars’ in auto parts from one another. Last year, the United States imported 1.6 million vehicles — mainly small cars — from Mexico. But about 40 percent of the value of the components in those vehicles, such as engines and transmissions, came from plants in the United States.
And about 40 percent of the nearly two million vehicles the United States exports go to its Nafta partners, according to data compiled by the Center for Automotive Research in Ann Arbor, Mich.

Pulling out of Nafta could disrupt Mexican car-making, which has grown rapidly in the past decade, but there are consequences for the United States, as well.
In a recent study, the research center concluded that withdrawing from Nafta, or restricting automotive trade, would increase costs for manufacturers in the United States, make its auto sector less competitive, and lower the returns for investors. Rather than shifting production to the United States, manufacturers would be more likely to move production to low-cost countries such as China or India.

A severe shock to Nafta could put as many as 31,000 automotive jobs in jeopardy in the United States, according to the research organization. And there are domestic politics to consider: Michigan, a state that helped Mr. Trump win the election, could be among those hit hardest by a withdrawal from Nafta because of its concentration of vehicle production and engineering jobs.

Textile, retail and apparel companies all say that Nafta can be improved. But pulling out entirely would be highly disruptive to the global supply chains that power businesses as varied as billion-dollar brands and small yarn manufacturers in Georgia.

American textile producers shipped more than $11 billion in goods to Canada and Mexico last year, according to Lloyd Wood, the director of public affairs for the National Council of Textile Organizations, an industry trade group. “Obviously, that’s some pretty big numbers, and so Nafta is obviously extraordinarily important to the United States textile industry,” Mr. Wood said. “That being said, we agree with the Trump administration that Nafta is due for a comprehensive review to determine whether it can be improved.”

For decades, retailers and the brands they sell have relied on an established flow of goods built around the agreement. If tariffs were to suddenly spike on clothing, for example, companies in the United States could not simply switch overnight to T-shirt factories in another part of the world. Changes could also raise prices for consumers, and there are manufacturing jobs to consider — as well as adjacent jobs in retail, shipping and other industries that would be indirectly affected — according to Stephen E. Lamar, executive vice president at the American Apparel & Footwear Association. “If we’re to withdraw from Nafta, that really puts a lot of those jobs in peril,” he said. Another group, the Retail Industry Leaders Association, has been lobbying for updates to the 23-year-old Nafta that reflect modern shopping realities, including e-commerce. “We’re looking to see a Nafta that is updated and modernized to reflect current supply chains, but also updated to reflect new sectors like the digital economy,” said Hun Quach, the association’s vice president for trade.

Agricultural trade between the three countries has significantly expanded under Nafta, but many economists agree that the trade deal was only one factor in that increase. International trade agreements, changes in domestic farm policies, and laws and international trade rulings were all part of the mix.

“The effects of this trade agreement on agriculture, that’s something you can’t assign a number to,” said Ryan Cardwell, an associate professor in the department of agribusiness and agricultural economics at the University of Manitoba in Winnipeg. “However, there is a broad consensus that Nafta did increase integration of agricultural markets in North America.”

Certainly, some farmers in all three countries saw immediate and significant changes because of Nafta. American corn, for example, now flows into Mexico, a market from which it was once mostly excluded. And common food safety standards introduced under the pact led to an explosion of Mexican exports to Canada and the United States, particularly of avocados. But the agricultural provisions in Nafta, perhaps more than those for other sectors, allowed the countries to keep some of their markets closed. Canada still has tight controls for dairy, poultry and egg production, effectively shutting out imports from the United States and Mexico to keep domestic prices high.
James Rude, an associate professor of resource economics at the University of Alberta in Edmonton, said that while cross-border integration had certainly increased in the farm sector under Nafta, it is nowhere near the levels found in other industries, like automaking. Integration mainly reflects corporate investment decisions, rather than changes in trade rules, he said.

Medical devices
Manufacturers of medical devices have come to rely significantly on the free flow of goods afforded by Nafta. The United States imports about 30 percent of its medical devices and supplies, and Mexico is a leading supplier. Several American companies have established factories in Mexico in recent years, including Medtronic, the large device maker, and Integer, which makes components for defibrillators.

Moving that work back to the United States could be complicated, given that the Food and Drug Administration must sign off on even the smallest changes at medical factories.

“Our companies make plans five, 10 years into the future, sometimes at the very least,” said Andrew C. Fish, the chief strategy officer at the Advanced Medical Technology Association, a trade group representing the medical device industry. “Uncertainty is always a challenge for our industry, and I think most others. We would certainly welcome policy clarity, sooner rather than later, and would like to work with the Trump administration.”

Read more in the New York Times



Four Ways Our Trade Vision Beats Trump’s

If you support workers’ rights, clean air and water, and climate protections, you probably oppose the North American Free Trade Agreement (NAFTA). And you’re probably not a big fan of Donald Trump either.


But here’s the catch – Trump also opposes NAFTA. Does this mean that progressives and Trump share a surprisingly common vision for trade?

Not remotely.

In fact, progressives and Trump form two opposing sides in a battle that’s currently underway for the future of U.S. trade policy. The stakes are high, as resulting trade deals could impact everything from the wages we earn to the health of our families to the depth of the climate crisis.

There are actually three competing visions for the future of trade deals:

  1. The corporate vision: more NAFTA deals that prioritize the profits of multinational corporations over the stability of our jobs, communities, and climate – under the guise of “free trade”
  2. Trumps vision: replacing NAFTA with deals that prioritize the profits of U.S. corporations that Trump happens to like, including the Big Oil and Wall Street firms running his cabinet – under the guise of putting “America first”
  3. Our peoplecentered vision: replacing NAFTA with an entirely new approach to trade that prioritizes the needs of people and our planet over corporate profits

Last year, a movement of millions, motivated by the people-centered vision for trade, defeated the Trans-Pacific Partnership (TPP) – an embodiment of the corporate vision. As the TPP’s demise opened a trade policy vacuum, Trump stepped in to try and fill it. He claimed credit for the death of the TPP and promised an “America first” alternative that would benefit U.S. workers.

But thus far, Trump’s “alternative” trade agenda looks more like an attempt to dust off the defunct TPP and wrap it in Trump-branded nationalist packaging. Trump’s draft plan for renegotiating NAFTA recently emerged, revealing an intent to copy and paste many of the TPP’s corporate handouts. Meanwhile, Trump has stocked his cabinet with billionaires from ExxonMobil and Goldman Sachs who are no friends to workers or the environment.

Currently the administration is divided on the path forward, with some of Trump’s billionaire advisors pushing for trade deals that expand the corporate model of NAFTA and the TPP, while others push for a more isolationist approach that would boost the profits of a narrower set of the Trump administration’s corporate insiders.

As the administration fights over which corporations will reap the benefits of Trump trade, the movement that defeated the TPP offers a fundamentally different alternative: rewriting trade as if people and our planet actually mattered more than corporations.

For example, last week the Sierra Club and other leading environmental organizations released an eight-point platform for replacing NAFTA’s legacy of pollution with a deal that would protect our air and water. The Sierra Club also has put out a set of concrete proposals for climate-friendly trade, while partner organizations have suggested similar proposals to benefit workers, family farmers, and consumers. We need your help to push forward this alternative trade agenda – click here for a toolkit.

Stitched together, such proposals offer a people-centered vision for trade that will contrast sharply, in four ways, from any self-serving corporate agenda that emerges from Trump. All indications are that Trump’s trade agenda will be:

  1. Written by corporations in Trumps cabinet: Several of the Wall Street billionaires and corporate polluters who fill Trump’s administration seem bent on crafting Trump’s trade policy behind closed doors. If so, you can bet that the resulting trade deals will pad their pockets at the expense of working people, clean air and water, and the health of our families. A people-centered approach to trade will not come from backroom dealmaking by Trump’s corporate cronies, but from an open trade transformation process that puts the public at the center.
  2. A handout to Big Oil and a threat to our climate: With ExxonMobil and coal CEOs helping to drive Trump’s trade agenda, we risk trade deals that boost even further the power and profits of corporate polluters, spelling more polluted air, more contaminated drinking water, and increased flooding of our coastlines. The people-centered vision for trade is 180-degrees different. We want trade deals that support the transition to clean energy, while Trump’s advisors contemplate trade rules that would make it harder for governments to prioritize wind and solar. We want trade deals that back up the Paris climate agreement, while Trump has promised to undermine Paris.
  3. An antiunion agenda cloaked in a proworker sales pitchTrump claims that his trade policies will help U.S. workers, though he has consistently attacked unions and exploited cheap labor for his own businesses. The proof is in the pudding. Trump’s recently-revealed draft NAFTA renegotiation plan “leaves standing the worst and most oppressive parts of NAFTA,” according to AFL-CIO president Richard Trumka. Will this be Trump’s approach to trade policy – tweeting out his support for workers while selling out workers with rewarmed corporate deals? We need a transformation of our trade policy that puts working people at the center – not more empty Twitter boasts.
  4. Rooted in xenophobiaTrump’s “America first” trade agenda wrongly paints trade policy as a contest between the U.S. and other countries. In reality, for decades it has been a contest between big corporations and the rest of us. When trade deals allow corporations to continually offshore jobs in search of the lowest wages, workers everywhere lose job security and bargaining power. When trade rules help Big Oil skirt our climate protections, people face the impacts of rising seas and worsening storms from Louisiana to Bangladesh. By contrast, a people-centered approach to trade would create a solid floor of labor, climate, and environmental standards, boosting workers’ wages and protecting families’ health from Michigan to Mexico. Instead, Trump’s trade vision is distorted by border walls and racist slurs. Such a xenophobic vision violates our values and fails our communities, both here and abroad.

With so much at stake, we cannot allow Trump to fill the post-TPP void with his backwards trade agenda. Now is our moment to build broad support for a new approach centered on people and planet. To that end, the Sierra Club is talking with communities across the country – asking what they want to see in a new trade model, refining our proposals, and building power across diverse constituencies that have common cause in seeking change.

Through such engagement, we can build a movement for a new trade agenda that’s even broader and larger than the one that defeated the TPP. You can help by taking action today. If we do our work, when Trump and his self-serving corporate trade vision are gone, our people-powered vision will be ready to go.

By Ben Beachy for the Huffington Post


Trump is right to criticize NAFTA—but he’s wrong about why it’s bad for America

Donald Trump’s promise to renegotiate or tear-up the 1994 North American Free Trade Agreement was a major reason why he won the support of working class voters in the Midwestern states that were crucial to his election. It’s also a trap.


As US president-elect, Trump quickly scored some points with his Rust Belt constituency after claiming to get the Carrier and Ford corporations to reduce the number of jobs they are sending to Mexico. He also clearly exaggerated the effect of his personal persuasiveness: Carrier was moved by a $7 million tax break from the state of Indiana and Ford might well have made its decision before Trump intervened. In any event, as the Wall Street Journal reports, other companies, such as Rexnord, Caterpillar, and Nucor continue to send jobs south of the border. Renegotiating NAFTA is therefore the first real test of Trump’s pledge to create good new jobs by negotiating better trade deals.

Will he deliver on this pledge? No. But the reason is not, as the conventional economic wisdom has it, because outsourcing work to low-wage countries is the inevitable result of immutable global forces that no president can reverse. The problem for American workers is not international trade, per se. America has been a trading nation since its beginning. The problem is, rather, the radical new rules for trade imposed by NAFTA—and copied in the myriad trade deals signed by the US ever since—that shifted the benefits of expanding trade to investors and the costs to workers.

A dramatic realignment of economic class interests

Trump is right that the 1994 agreement with Mexico and Canada displaced US jobs—some 850,000, most of which were in manufacturing. But he is wrong in his claim that American workers lost out to Mexican workers because US negotiators were outsmarted. The interests of workers were never a priority for either American or Mexican negotiators.

NAFTA was the first important trade agreement that reflected the dramatic realignment of economic class interests across national borders. The globalization of corporate finance, production, and marketing has disconnected the interests of investors and workers throughout the world. As Jorge Castañeda, who later became Mexico’s foreign minister, observed in his book The Mexican Shock, NAFTA was not a deal between competing national interests. It was “an agreement for the rich and powerful in the United States, Mexico and Canada, an agreement effectively excluding ordinary people in all three societies.”

If NAFTA had been just a “free-trade” accord, it could have been written on a few pages. Instead, it was more than a thousand pages of complex rules that gave corporate investors—who dominated all sides of the bargaining table—privileged access to the US market for goods produced in Mexico where wages are low and regulations weak. The agreement also contained an array of extraordinary protections for investors, including secret dispute settlement panels with the power to override national labor and environmental regulations deemed to threaten profits. US employers’ ability to shift, and threaten to shift, production to Mexico severely undercut the bargaining power of their American workers.

As a result of NAFTA, Mexican workers gained industrial jobs. In the auto industry, for example, employment in Mexico grew 620,000 between 1999 and 2016, while the US lost 360,000 jobs. Yet Mexican wages and working conditions remained suppressed. Although they produce for the same market, workers in the Mexican auto parts industry make 12% of the wages of US auto parts workers. Mexico’s labor costs, meanwhile, are now 40% below China’s, and its 2014 poverty rate was higher than it was when NAFTA began 20 years earlier. The massive surge in illegal immigration from Mexico to the US in the two decades after NAFTA was evidence of the failure of NAFTA to bring its promised prosperity and opportunity to the majority of that country’s workers.

In both the US and Mexico, the gap between worker productivity and worker compensation widened relentlessly. Mexican manufacturing workers productivity rose 80% between 1994 and 2011, while their real wages actually fell about 20%—pulling down US wages, which rose less than half of the gain in worker productivity. The result was an upward redistribution of income from labor to capital in both countries.

Trade agreements are a major cause of this widening gap, although other factors, such as the decline of labor unions and labor market de-regulation, have also played a role. But the currently fashionable idea that US workers are losing ground because they are not educating themselves to keep up with new technology is wrong. This idea is inconsistent with the continuous rise in their productivity, as well as the stagnation in the real wages of young college graduates, whose real wages have not risen since 2000.

What Trump should do—but won’t

For Trump to live up to his promise, he would need to negotiate a rebalanced agreement—one with enforceable labor standards and protections equaling those given to investors—so that workers’ wages on both sides of the border could once again rise with their productivity.

Donald Trump will not do this. He and the Republican-led US Congress are dedicated to the de-regulation, not re-regulation, of labor markets. Trump’s economic advisers come from the same pool of financial interests that negotiated NAFTA for their own benefit 25 years ago. The current Mexican policy elite—whose own increased wealth also depends on low-wage labor—shares their perspective.

Neither will Trump tear up NAFTA. NAFTA was a flawed agreement, but after two decades there are simply too many cross-border business relationships at risk—especially in border states important to Republicans—for him to simply dissolve it. Moreover, pulling out of the agreement would end the cooperation Trump needs from Mexico to police the border, wall or no wall.

As he has on other issues, Trump has trapped himself with his own bombast. His administration’s chaos and confusion is already eroding his popular support. It will likely erode further as it becomes clear that his tax, budget, and health care proposals will redistribute income further up the economic ladder. Thus, it will become even more important for him to keep the loyalty of the Midwestern working class, for whom NAFTA became a major symbol for their populist rage. So, Trump will be forced to re-negotiate NAFTA in a way that appears to change the agreement without actually changing the way it undercuts his supporters’ wages and living standards.

This would be a delicate political task for any negotiator. But after over a year of relentless criticism of NAFTA, Trump appears to have no serious idea of how he would change it.

Mexico’s bargaining chip

Although unclear about his bargaining goals, Trump is clear about his bargaining strategy: bluster, insults, and threats. His style already scuttled a scheduled January meeting with Mexican president Peña Nieto, who would not—as no Mexican leader could—agree to discuss his country paying for Trump’s Wall.

On paper, Mexico’s bargaining position is weak. Because of NAFTA, 80% of its exports now go to the US. Pre-NAFTA Mexico was self-sufficient in essential staples like corn and gasoline; today it has become increasingly dependent on US suppliers. Moreover, time should be on Trump’s side. Uncertainty among investors about Mexico’s future access to the US market (link in Spanish) has already slowed growth to a crawl. A falling peso has raised the price of gasoline, setting off large anti-government demonstrations around the country. President Enrique Peña Nieto’s popularity has fallen to 12% and he has less than two years left in his term.

But Peña Nieto’s weakness also gives him a bargaining chip. The political assumption of the original NAFTA was that closer integration with the US would, as one American negotiator blurted out to me in 1993, would “keep the Mexican Left out of power.”

Today, Trump’s rhetoric has inflamed a Mexican electorate already alienated by increasing inequality, corruption, and the spread of criminal violence. The left nationalist, Manuel Lopez Obrador, a fierce critic of US influence in Mexico, is ahead in the polls for Mexico’s 2018 presidential election. Forcing onerous concessions on Mexico at this point could ignite a political explosion and result in a Mexican government that would be a nightmare for the business interests represented both Trump’s and Pena Nieto’s negotiators.

The erratic and belligerent Trump might, of course, drive US-Mexican relations over a cliff. But he prides himself as a deal-maker, not a deal-breaker. So the most likely outcome is a modestly revised NAFTA that: 1) Trump can boast fulfills his pledge 2) Peña Nieto can use to claim that he stood up to the bullying gringo 3) doesn’t threaten the low-wage strategy for both countries that NAFTA represents.

Revisions might include weakening NAFTA’s dispute settlement courts, raising the minimum required North American content for duty-free goods, and reducing the obstacles to cross-border trade for small businesses on both sides of the border.

Changes like this could marginally improve the agreement, and would be acceptable to the Canadians, who have been told by Trump that he is not going after them. But from the point of view of workers in the American industrial states who voted for Trump, the new NAFTA is likely to be little different from of the old one. The low-wage strategy underlying NAFTA that keeps their jobs drifting south and US and Mexican workers’ pay below their productivity will continue.

But you can bet that Trump will assure them that it is the greatest trade deal the world has ever seen.

By Jeff Faux- Founder of the Economic Policy Institute

Trump’s Tough Talk on Trade Deals is Absent from New Executive Orders

Donald Trump, on Friday, signed a pair of Executive Orders aimed at addressing what he calls bad trade deals for the United States. Is Trump really willing to play hardball with our trading partners?Well, to discuss this, we are joined by Justin Akers Chacón. He is an individual activist, writer and an educator who lived in the San Diego-Tijuana border region. He is also co-author of the book titled, “No One is Illegal,” along with Mike Davis, and he’s a professor of Chicano history at San Diego City College.He joins us today from the west coast. Justin, thank you so much for being here.

JUSTIN AKERS CHACÓN: Thanks for having me.

KIM BROWN: These Executive Orders were a little vague, and Trump has tasked the Commerce Department with reporting within 90 days about what factors into our trade deficit. Justin, what were your thoughts about these Executive Orders, when you read them, and is this an appropriate thing for the Commerce Department to be doing?

JUSTIN AKERS CHACÓN: Well, what struck me was how different in content they were from the rhetoric that Trump used during the campaign. And I think this reflects the fact that, at least pertaining to trade with Mexico, that the U.S. has a lot of vested interests -– I should say corporate interests have a lot of vested interests in Mexico -– and I think, when Donald Trump talked tough on trade with Mexico, he was really coming from a place where he didn’t exactly know to what extent U.S. interests had invested there.And I think he had to recalibrate his approach there, because in fact, trade with Mexico is very lucrative for U.S. corporations. I think he got the message that messing with that was not the right idea.

KIM BROWN: Get into that a little bit more, Justin. Because Donald Trump, while he was on the campaign trail, railed heavily against these international trade deals. He vowed to pull the United States out of the Transpacific Partnership — which he has done — and he says that NAFTA was a bad trade deal for the United States.So, talk to us about the history of this trade deal, the North Atlantic Free Trade Agreement, signed in the ’90s during the Clinton administration between the United States, Mexico and Canada. I mean, has this trade deal been bad for the United States? Has it been bad for U.S. corporate interests, and bad for American workers, as well?

JUSTIN AKERS CHACÓN: Well, the North American Free Trade Agreement really began with a drive from U.S. corporations to open up Mexico’s economy. Mexico traditionally had a closed economy. Really stemming from its… going back to its revolution, that began in 1910. And the conclusion of the revolution was with a constitution that contained various clauses that were designed to protect Mexico’s economy from foreign control.Essentially, in the 1980s, much of those constitutional protections that were designed to protect the economy from foreign domination, were lifted, were written out of the constitution, and NAFTA was written into the economy.So, what that basically means, is NAFTA was a series of requirements -– well, I should say prior to NAFTA, there were a series of requirements that were designed to open Mexico’s economy. This began, really, in the early 1980s when Mexico began to experience a significant debt crisis. And much of that debt was owned by the United States.And so, when Mexico began to experience this, the United States, primarily through the institution of the International Monetary Fund, began to issue what were called, Structural Adjustment Programs. Which were, in exchange for loans to deal with their debt, they were required to basically change the rules within their economy.And so, there were over nine Structural Adjustment Programs that were implemented through the 1980s that, in exchange for debt servicing, required Mexico to remove tariffs. Required Mexico to basically end state ownership of much of the economic infrastructure — began to reduce, or remove currency controls.And basically we saw the opening up of Mexico’s economy, completed in 1994 with the signing of the North American Free Trade Agreement, which basically was the consolidation of all of these Structural Adjustment Programs into a treaty.KIM BROWN: When we look at the after-effects of the North American Free Trade Agreement, some 20-plus years after it’s signing, who made out the best here?Did the United States make out well? How did Mexico fare? What about Canada? And, again, was this trade deal more beneficial to U.S. corporations than it was to U.S. workers? Because many point to the signing of this trade agreement as sort of the beginning of the end for the manufacturing economy in the United States.

JUSTIN AKERS CHACÓN: Well, yes. The people who won out in NAFTA were U.S. corporations — by a large margin. The transformation of the Mexican economy, basically allowed U.S. corporations, U.S. capital, U.S. investors, et cetera, to operate freely in Mexico. And so, we’ve seen over the last few decades, we’ve seen a fundamental transformation of the Mexican economy. About 80% of Mexico’s financial sector is now owned and controlled by U.S.-based banking institutions.About 60% of its manufacturing is now controlled by U.S. corporations. There are over 2,800 maquiladoras, which are primarily U.S.-owned assembly plants in Mexico. We go industry, by industry — automotive, electronics — much of the infrastructure in Mexico is actually owned by U.S. corporations.And so, we’ve seen a tremendous amount of investment coming in, and that has led to a very profitable arrangement for U.S. corporations. So, as of 2016 for instance, U.S. corporations within Mexico, employed about 1.3 million people, and generated about $250 billion in sales revenue. Much of what they produce came back to the United States.So, this is what is interesting about our trade deficit, is that there is a trade deficit of about $60 billion between the United States and Mexico. But much of the trade that’s coming from Mexico into the United States, is coming from U.S.-based corporations, or U.S.-based facilities operating in Mexico, and furthermore, about half of what they use to produce, their products come from the United States.So, we’re not really talking about a deficit between the U.S. and Mexican-based corporations, or Mexican-based enterprises, we’re really talking about a deficit (laughs) that’s really reflecting of the fact that U.S. companies in Mexico are doing more business. And much of that is coming back into the United States.So, this is one of the contradictions of Trump’s claim that, you know, that we have too big of a deficit with Mexico.Furthermore, the United States is now entering into the once-protected oil industry of Mexico. And so, much more capital is being invested there, with the intention of producing more oil for export.

KIM BROWN: Justin, when we talk about what Donald Trump is proposing, in terms of amending American trade policy, I mean, he has proposed a number of things, including import tariffs on Mexican goods into the United States. He’s also going to be hosting the Chinese Premier, Xi Jinping, later this week, and there’s a lot of talk there.He has had many strong words for China, he has criticized China for allegedly devaluing their currency, and how much of American debt that China actually holds. So, have any of his sort of, loose proposals for addressing America’s trade issues, does any of it sound appealing to the American worker in your opinion?

JUSTIN AKERS CHACÓN: Well, I don’t think Donald Trump has the American worker in mind when he’s talking about getting tough on trade, or deficits, or whatever. I think he’s really posturing, in order to represent the interests of the investor class in the United States. And I think that’s one of the reasons why NAFTA has sort of fallen off of his radar, in terms of being a central problem for U.S. trade, and that’s perhaps why he didn’t mention it specifically in his Executive Orders.But really, I think what’s happening here, is an attempt to try to increase U.S. control, or U.S. access in places like Mexico by posturing, by threatening to impose taxes, or threatening to take some sort of action, based on the false idea that the United States is losing out from these measures.So, for instance, if we look at Mexico, and we try to understand what is the root of the problem here, where is the trade deficit coming from, or how is it being produced? It really… there’s no discussion of what’s actually happening in the Mexican economy, as a result of NAFTA.So, for instance, prior to 1994, prior to NAFTA being fully promulgated, like I had mentioned before, there were over 700 economic activities that were closed to U.S. investors, or at least required restrictions on any kind of investment activity. While, since 1994, 669 economic activities within Mexico, we’ve seen all restrictions lifted. We’ve seen all restrictions lifted. And so, there has been a significant investment within Mexico of U.S. capital. And for instance, Walmart now is the largest retailer in Mexico. It’s a significant… banking institution, as well. It’s actually expanded its range of economic activities.Exxon Mobil, and Chevron, now operate within the Gulf of Mexico. Now, as of last year, have moved into Mexico’s once very, very protected and cherished oil industry, and it’s not a coincidence that the Secretary of State is himself a former CEO of Exxon Mobil, Rex Tillerson. So, I think part of the posturing here, part of the threatening behavior on behalf of Trump, is not so much to actually address the tremendous economic displacement that’s happened in places like Mexico, as a result of this massive influx of capital, and the export of profits, which has displaced, by the way over, 7 million people in Mexico since 1994.Nor is it to address the export of jobs, or the role of U.S. corporations to move operations into Mexico, to take advantage of cheap labour to make more profit off of the lower labour costs in Mexico -– it’s not to address either one of those issues. It’s to figure out how to create more opportunities for corporations to operate in Mexico, and to extract more wealth from that process.KIM BROWN: Indeed. Well, we’ll certainly be keeping an eye on what Donald Trump does, because obviously what he does, and what he says, don’t always match up.Today we have been speaking with Justin Akers Chacón. He is an activist, writer and an educator, who lives in the San Diego-Tijuana border region, and he’s also the author of a recent book titled, “No One is Illegal”, and he teaches Chicano history at San Diego City College.Justin, we appreciate you joining us today.

TPP reincarnation

President Trump may have withdrawn from the TransPacific Partnership, but his Administration plans to use TPP as the “starting point” for a revamped North American Free Trade Agreement and new bilateral deals, according to Commerce Secretary Wilbur Ross (WTD, 3/31/17).

no-tpp-2TPP made some improvements over previous US trade deals, the secretary said in an interview with Bloomberg Television Friday. “We’re not going to throw the baby out with the bath water.”

NAFTA partners Canada and Mexico made concessions in the TPP that should be the starting point from which to build a new NAFTA – which will then be the model that can be used going forward for new US trade agreements, Mr. Ross stated.

The Commerce Secretary described himself as “anxious” to get started on NAFTA renegotiations, but said the timing is up to Congress. It would be better to conclude the negotiations well in advance of next year’s Presidential elections in Mexico, he suggested.

Asked whether the Trump Administration plans to abide by World Trade Organization rules, Mr. Ross expressed some concern about the “mindset” at the global trade body. The WTO treats antidumping and countervailing duties and domestic trade remedies in general as protectionist measures. It fails to acknowledge that trade remedy cases are on the rise because more countries are violating the rules, he said.

In a separate interview on Fox Sunday Morning Futures, Mr. Ross said he believes the US trade deficit is a “bad thing” because it means jobs are being created in other countries and not in the United States. Commerce has been charged by President Trump to compile a report on all trade barriers that are contributing to the US trade deficit.


After Calling Nafta ‘Worst Trade Deal,’ Trump Appears to Soften Stance

WASHINGTON — President Trump, who has called the North American Free Trade Agreement “the worst trade deal” ever signed by the United States, appears to have backed off his threat to abandon the deal and is instead proposing keeping major planks in place when he begins renegotiating it later this year.

31NAFTA-01-master768But Mr. Trump, eager to showcase his tough stance against unfair trade practices, plans to sign two executive orders on Friday that will lay the groundwork for new policies and stricter enforcement of trade laws. The president will order a 90-day study of abusive trade practices that contribute to the United States’ trade deficit. The Commerce Department and the United States trade representative will do a country-by-country, product-by-product accounting of the reasons for the imbalance. A second directive is aimed at increasing the collection of duties from countries whose companies American officials believe are selling products in the United States below their cost of production.

Neither measure will have an immediate impact on trade policy or enforcement, but each could eventually lead to aggressive new measures. Both are aimed at showcasing Mr. Trump’s intent to fulfill his promises on trade. Mr. Trump has often said that the United States could abandon Nafta altogether if renegotiating it is not possible. But the hawkish rhetoric of the campaign has given way to more measured statements on trade from the administration that track more closely with the stance of many congressional Republicans, who are avid promoters of free trade and deeply skeptical of policies they view as restrictive or protectionist. “In terms of what we consider to be President Trump’s economic nationalist objectives and what he has said previously about Nafta, the list of negotiating terms was relatively benign,” said Scott S. Lincicome, an international trade lawyer at White & Case.

American business welcomed the additional specifics on trade policy. “The details in the letter have whet our appetite for more,” said John Murphy, senior vice president for international policy at the U.S. Chamber of Commerce.

The tone of the eight-page draft letter, which was reported by The Wall Street Journal, did not echo Mr. Trump’s campaign speeches. Nowhere was there a mention of his threats to pull out of the agreement.

Antonio Ortiz-Mena, a former Mexican trade official, said the letter suggested a softening in tone but also contained several proposals that were likely to prompt a strong response from the Mexican government.

“There are some specific problems,” said Mr. Ortiz-Mena, now a senior adviser at Albright Stonebridge Group in Washington. “But in terms of the language used during the campaign and at the beginning of the administration, it’s not as far-reaching as some people could have expected.”

The assessment that the actual policies of the United States might not end up being as harsh as those espoused by Mr. Trump during the campaign is reflected in the confidence in the Mexican peso. Measured against a basket of currencies, it has gained about 17.5 percent in value since the inauguration, more than any other major currency. On Thursday, it traded at 18.72 pesos to the dollar, approaching the levels it held before Mr. Trump’s victory.

The Canadian government declined on Thursday to comment directly on the draft letter, because Nafta negotiations have not begun. “Should notice of intent to renegotiate be given, Canada is prepared to discuss improvements at the appropriate time,” said Global Affairs Canada, the country’s foreign ministry.

Rather than scrap Nafta’s arbitration tribunals, regarded by some free-trade critics as secretive bodies that give private corporations unbridled power to challenge foreign governments outside the court system, the letter proposed to “maintain and seek to improve procedures” for settling disputes. It made no mention of currency policy, an issue many trade experts had thought might be on the table. The administration did give itself room to get tougher. The proposal for reinstating tariffs, often referred to as a snapback, was billed as a “safeguard mechanism” to protect domestic industries. The draft also suggested efforts to “level the playing field” on tax treatment. Such measures could bring objections from Canada and Mexico.

Mr. Trump’s economic advisers have argued that Mexico uses its value-added tax as a tariff that puts the United States at a disadvantage. The president has called for a tax on companies that move their operations to Mexico and try to sell products in the United States. Republicans in Congress are considering a “border adjustment tax” that would make imports more expensive. Automakers and car dealers have expressed concerns that changes to Nafta could disrupt the strong vehicle market in the United States. General Motors, Ford and Fiat Chrysler operate plants in Mexico that supply models popular with American consumers, such as pickup trucks. Their assembly plants in the United States also rely on a steady flow of parts made by Mexican suppliers.

The industry, including dealers, is particularly worried that Mr. Trump will follow through on the border tax on vehicles imported from Mexico. The 90-day window gives members of Congress and industry players time to weigh in before the Trump administration opens the negotiations. “There is much to like about it,” Representative Kevin Brady, Republican of Texas and chairman of the House Ways and Means Committee, said of the draft letter. “There are areas where we are going to make suggestions.”