Monthly Archives: January 2018

In praise of Trump’s solar panel tariffs

Making good on his “America first” rhetoric, President Trump slapped new tariffs on solar panel imports this week. Reaction from both environmentalists and the business world was swift and largely negative.


The new policy won’t generate many U.S. jobs, critics said. It will set back the growth of solar energy in America, and it could spark a trade war with China.

I’m not so sure. In fact, Trump’s tariff may well be a good thing.

The administration will impose a four-year tariff schedule on all solar panels bought from abroad — 30 percent the first year, and then dropping by 5 percentage points each subsequent year, until it gets to 15 percent in the final year.

These tariffs are clearly aimed at China. A mere ten years ago, China was not a major player in the global solar manufacturing industry. But today, it accounts for around two-thirds of all solar panel production. American solar manufacturers argue that China achieved this dominance by unfairly subsidizing its own solar production, and then flooding the global market with ultra-cheap panels.

But that doesn’t tell the whole story. Back in 2011, nearly three-fifths of all U.S. solar panel imports came from China. Today, it’s 11 percent, with Malaysia and South Korea taking the top two spots at 31 percent and 21 percent, respectively. (It’s worth pointing out that a lot of those imports could still be Chinese-owned companies stationed in Malaysia or South Korea, or Chinese-driven supply chains that stop off in those countries before ending as imports to America.)

American solar manufacturers have been hurt by such imports from abroad. More than a dozen have closed factories in the last six years. Ultimately, that’s because solar panels from abroad are cheaper. America imports around 80 percent of its solar panels.

But critically, domestic manufacturing of solar panels is a minor part of the overall domestic solar industry. Of the 260,000 to 374,000 Americans who work in solar, only around 38,000 actually produce solar panels. The rest mainly work in installation and related services.

If your business is installing solar panels, you want those panels to be as cheap as possible. More expensive panels mean fewer customers. So while Trump’s tariffs could create more jobs for solar manufacturing, it could potentially kill jobs in the far larger arena of solar installation.

Seems open and shut, right?

Well, maybe not. Because the effect of Trump’s tariffs on the total price tag for domestic solar installations is likely to be minor. Estimates suggest the cost will rise at most by 10 percent, and probably far less for smaller-scale residential installations. That increase will push the cost of solar installations back up to where they were a mere year and a half ago. “I don’t believe this decision will reverse the solar expansion in the U.S.,” Fatih Birol, the executive director of the International Energy Agency, said at the World Economic Forum in Davos. “The global solar industry will adjust. The penetration of solar in the U.S. will continue.”

Furthermore, solar panels from abroad are cheap because the countries that produce them often have low living standards. Their workers aren’t paid much. That means those manufacturers don’t really have to come up with new innovations and technological breakthroughs. They can compete mostly on price. American manufacturers, by contrast, have to pay their workers a lot more — and thus have a lot more incentive to innovate. American-made solar panels won’t be the cheapest. But they might be the best.

However, American solar manufacturers will never really have the opportunity to innovate and be the best if they get run out of business by a flood of cheap competition from overseas. Giving U.S. solar manufacturers a few years of breathing space, as Trump’s tariffs do, could really aid American solar innovation.

None of this is to say the tariffs are an ideal solution. Both sides in this debate are suffering from some pretty serious failures of imagination. Environmentalists are right to want as much solar as fast as possible, but are relying on breezy free trade “comparative advantage” arguments to push for it. Meanwhile, the Trump administration is right to worry about over-reliance on imports, but is falling back on brute mercantilism. You could envision an alternative where the U.S. government borrowed $1 trillion to invest in solar installations across the country, and promised to buy American while doing so. That would solve both sides’ problems at once.

But within the unfortunate limits imposed by both sides’ failures of imagination, Trump has arguably stumbled on a measured response to a complex and difficult problem. These tariffs are a good thing.

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Trump imposes steep tariffs on imported solar panels and washing machines

Restrictions aim to boost US manufacturing, but critics warn they will slow shift to renewable energy and increase consumer costs


The US president, Donald Trump, has announced steep tariffs on imported washing machines and solar panels, giving a boost to Whirlpool Corp and dealing a setback to the renewable energy industry in the first of several potential trade restrictions.

The decisions in the two “Section 201” safeguard cases followed findings by the US International Trade Commission (ITC) that both imported products “are a substantial cause of serious injury to domestic manufacturers,” US trade representative Robert Lighthizer said.

The washer tariffs exceeded the harshest recommendations from ITC members, while the solar tariffs were lower than domestic producers had hoped for. The restrictions aim to help domestic manufacturers but drew complaints that consumer costs for new washers and solar installations will rise.

Trump will impose a 20% tariff on the first 1.2m imported large residential washers in the first year, and a 50% tariff on machines above that number. The tariffs decline to 16% and 40% respectively in the third year.

A 30% tariff will be imposed on imported solar cells and modules in the first year, with the tariffs declining to 15% by the fourth year. The tariff allows 2.5 gigawatts of unassembled solar cells to be imported tariff-free in each year.

Whirlpool, which sought the washers “safeguard” action against rivals Samsung Electronics and LG Electronics after years of anti-dumping cases, saw its shares rise 1.8% in after-hours trade.

“By enforcing our existing trade laws, President Trump has ensured American workers will compete on a level playing field with their foreign counterparts,” Whirlpool chairman, Jeff Fettig, said.

The move punishes Samsung, which recently began washer production in South Carolina, and LG, which is building a washer factory in Tennessee.

“This tariff is a tax on every consumer who wants to buy a washing machine. Everyone will pay more, with fewer choices,” Samsung said in a statement. LG Electronics said that the decision will hinder the ramp-up and employment prospects of its new plant, which will not begin production until late 2018 or early 2019.

Trump ignored a recommendation from the ITC to exclude South Korean-produced washers from LG from the tariffs, as prior anti-dumping duties on these machines have been dropped. The decision could also hurt retailer Sears Holdings, whose Kenmore brand sources its larger washers from LG’s overseas factories.
The tariffs are expected to slow a shift to renewable energy in the United States, just as solar was becoming cost competitive with electricity generated from fossil fuels like coal, an industry that Trump has pledged to protect.

MJ Shiao, head of renewable energy research for Wood Mackenzie, said the tariffs would likely reduce projected US solar installations by 10-15% over the next five years.

“It is a significant impact, but certainly not destructive to the end market,” Shiao said.

The domestic solar panel producers who sought the trade remedies wanted tariffs of 50% – the highest allowed under law. Petitioners Suniva and SolarWorld have said they cannot compete with the influx of cheap imports, mostly from Chinese producers, which has caused solar panel prices to drop more than 30% since early 2016.

The US solar trade group, the Solar Energy Industries Association, campaigned against the tariffs and estimated the decision would create a “crisis” for the burgeoning industry and result in the loss of 23,000 US jobs this year as billions of dollars in solar investments are cancelled.

Suniva, majority-owned by Hong Kong-listed Shunfeng International Clean Energy Ltd, applauded the decision, saying that Trump “is sending a message that American innovation and manufacturing will not be bullied out of existence without a fight.”

The decisions were the first of several potential tariff actions that Trump may take in the coming weeks and months. He is considering recommendations on import restrictions for steel and aluminium on national security grounds under a 1962 trade law and tariffs or other trade sanctions against China over its intellectual property practices.

The intellectual property, washer and solar panel probes were done under a 1974 trade law that has been seldom invoked since the World Trade Organization was launched in 1995.

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US slaps ‘America First’ tariffs on washing machines and solar panels

The US has approved controversial tariffs on imported washing machines and solar panels.


The move is in line with President Donald Trump’s “America First” trade policy, which aims to protect local manufacturers from foreign competition.

A spokesman said the administration would “always defend American workers, farmers, ranchers and businessmen”.

But China and South Korea, whose manufacturers will be most heavily affected, criticised the move.

US officials said more trade enforcement actions would follow.

Mr Trump has talked about taking the action ever since coming to office. In his inauguration speech a year ago he promised to protect US borders from other countries “making our products, stealing our companies and destroying our jobs”.

The actions are being seen as the president’s most significant trade moves since his decision to pull the US out of the Trans-Pacific Partnership deal (TPP) and renegotiate the North American Free Trade Agreement (Nafta).

Why have the tariffs been imposed?

The tougher policy was approved by President Trump after the US International Trade Commission (ITC) found local manufacturers were being hurt by cheaper imports.

Manufacturing companies – Whirlpool, a US-based maker of washing machines, and the solar firms Suniva and Solar World Americas – had complained to the ITC and it found in their favour.

The tariffs set on solar panels were lower than domestic US producers had hoped for, but the duties on washing machines and parts were steeper than expected – adding as much as 50% in some cases, according to US documents.

  • Is Trump the WTO’s biggest threat?
  • World trade: What will Donald Trump do?
  • What is the World Trade Organization?

How will the tariffs work?

The first 1.2 million imported large residential washing machines in the first year will have a 20% tariff imposed on them, while there will be a 50% tariff on machines above that number.

By the third year, these will drop to 16% and 40% respectively.

Figures suggest that in 2010, 1.6 million washing machines were imported to the US.

Meanwhile, the tariff increase on imported solar cells and modules in the first year will be 30%, falling to 15% by the fourth year, although 2.5 gigawatts (GW) of imported cells – enough for about 11.5 million panels – will be allowed in tariff-free annually.

The ITC said that China had been selling “artificially low-priced” solar components in the US, assisted by state subsidies.

What does it mean for the solar industry?

Taylor Kate Brown, BBC News, Washington

The Trump administration has imposed these tariffs as part of a larger promise to protect American manufacturing – including the solar industry firms that brought the original complaint to the trade commission. But what the “solar industry” means in this context is complicated.

The tariffs were opposed by America’s largest solar industry group – the Solar Energy Industries Association (SEIA). SEIA said Suniva and Solarworld had used the complaint to cover for bad business practices – and pointed out the two companies are actually foreign-owned even though the produce panels in the US.

SEIA’s position was also driven by the fact the group represents thousands of solar installers – an industry that’s seen explosive growth, driven in part because of the dropping cost of panels. Firms that specialise in larger solar “farms” that sell their energy to US utilities are particularly worried about the decision, as they compete directly with coal, natural gas and wind producers.

Ironically, the decision could mean more competition for Suniva and Solarworld, as several foreign firms may be interested in moving production to the US.

What has the reaction been?

US appliance maker Whirlpool, which for years has sought protection against cheaper imports from South Korea and Mexico, welcomed the move.

“This announcement caps nearly a decade of litigation and will result in new manufacturing jobs in Ohio, Kentucky, South Carolina and Tennessee,” chairman Jeff Fettig said in a statement.

Shares in Whirlpool rose 2.5% on the news, and it immediately announced it would employ 200 more people. Shares in US solar panel manufacturers also went up.

Environmentalists argue that making solar panels more expensive risks holding back the development of renewable energy in the country.

China and South Korea have reacted angrily to the news.

South Korea said it would complain to the World Trade Organization (WTO), calling the tariffs “excessive” and “regrettable”. Its manufacturers, including Samsung and LG, compete in the washing machine market with US firms such as Whirlpool.

Samsung called the tariffs “a tax on every consumer who wants to buy a washing machine”.

Meanwhile China, the world’s biggest solar panel manufacturer, said the move would further damage the global trade environment.

China is the US’s biggest trading partner and government spokesman Wang Hejun said that Beijing expressed “strong dissatisfaction” with the plans.

He warned that “together with other WTO members, China will resolutely defend its legitimate interests” adding that the plans “not only aroused the concern of many trading partners but was also strongly opposed by many local governments and downstream enterprises in the US”.

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When CEOs Say ‘Do No Harm’ in NAFTA, They Mean ‘Don’t Harm Me’

We keep hearing CEOs of global companies and giant agribusiness conglomerates say “do no harm” in the North American Free Trade Agreement renegotiations, but from the perspective of working families who haven’t had a raise in the past 20 years, this advice doesn’t make any sense.


NAFTA continues to hurt families across the United States, Canada and Mexico, pushing down our wages, making it harder to join together in union, and making us constantly vulnerable to losing our jobs due to outsourcing. NAFTA threatens our health and undermines democracy. It forces our governments to pay off private companies like Exxon Mobil that object to laws and rules created in a democratic fashion. So how could any rational person say that fixing NAFTA would be “harmful”?

It’s true that the negotiations could make NAFTA more like the Trans-Pacific Partnership—and that would be extremely harmful. But big businesses liked TPP, so that’s not what they mean.

To understand what they mean, let’s use an analogy, comparing North America’s economy to the human body. Like the human body, the North American economy is susceptible to various illnesses, and NAFTA is one such illness. In fact, we can compare NAFTA to a tumor. Like a tumor, it has led to rapid growth in profits and incomes for some, but at the expense of the economic health of the rest of us. In fact, bad U.S. trade policies cost most of America’s workers $2,000 a year in lost income.

To heal the North American economy, we need new rules for trade. New rules that level the playing field and prioritize ordinary families over corporate profits. But changing the rules means getting rid of the privileges that global corporations now enjoy. And just like tumors cling to life, these companies are fighting to keep their entitlements.

Those who have profited off NAFTA say “do no harm” because they can only see what benefits them. They don’t see that the unfair rules are actually bad for America as a whole. NAFTA’s unfair rules make it harder for most families to reach the American Dream because they divert the benefits of trade to those who already are economically powerful. That’s why we always feel like we are running in place and not getting ahead.

Changing the rules of trade means those who have benefited at the expense of others must get used to a level playing field. It means the president will have to say no to global corporations, despite their whining. The president promised to protect working families from bad trade, but it remains to be seen whether he will renegotiate NAFTA to protect working families or, as he did with the tax bill, protect the interests of his rich and powerful friends.

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Trump says terminating NAFTA would yield the ‘best deal’ in renegotiations

President Donald Trump on Wednesday said that terminating the North American Free Trade Agreement would result in the “best deal” to revamp the 24-year-old trade pact with Canada and Mexico in favor of U.S. interests.


Lawmakers as well as agricultural and industrial groups have warned Trump not to quit NAFTA, but he said that may be the outcome.

“We’re renegotiating NAFTA now. We’ll see what happens. I may terminate NAFTA,” Trump said in an interview with Reuters.

 “A lot of people are going to be unhappy if I terminate NAFTA. A lot of people don’t realize how good it would be to terminate NAFTA because the way you’re going to make the best deal is to terminate NAFTA. But people would like to see me not do that,” he said.

Trump’s comments come less than a week before trade negotiators from the United States, Canada and Mexico meet in Montreal for the sixth of seven scheduled rounds of negotiations to update NAFTA.

The talks are viewed as pivotal for the success of the NAFTA renegotiation effort because major differences remain over aggressive U.S. demands on autos, dispute settlement and a five-year sunset clause — proposals that some business groups have labeled “fatal.”

Trump discussed NAFTA and other trade issues last weekend in Florida with U.S. Trade Representative Robert Lighthizer, who is leading the U.S. negotiating strategy.

Trump’s comments appeared to validate concerns voiced last week by Canadian government sources that the U.S. president, now a year in office, looked increasingly likely to announce a pullout from NAFTA.

Canadian Foreign Minister Chrystia Freeland added that U.S. threats to quit NAFTA had to be taken seriously.

The Reuters interview with Trump also reversed gains on Wednesday in Mexico’s peso, which has been highly sensitive to NAFTA withdrawal talk.

But Trump told the Wall Street Journal last week that he would be “a little bit flexible” on the withdrawal threat.

Farm state lawmakers have been making the case to Trump in recent weeks that a NAFTA withdrawal could cause a major tariff increase on U.S. corn and other crops sold to Mexico, hurting a major political support base for Trump in the rural United States.

On Monday, automakers from Detroit and around the world urged the Trump administration not to quit NAFTA and to back away from some of its demands in the negotiations.

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NAFTA negotiations will end in an agreement, say economists

This despite numerous warnings from Trump administration.


The North American Free Trade Agreement will probably be renegotiated successfully with only marginal changes, said a large majority of economists in a Reuters poll, despite the Trump administration’s saber-rattling.

Only four of 45 economists polled this week said they thought the deal would be terminated, with the rest expecting an updated trilateral agreement that would not differ radically from the current one.

The remarkably sanguine view from economists in Mexico, Canada and the United States is a sign many experts are taking U.S. President Donald Trump’s repeated warnings that he wants his country to withdraw from the pact, which he has repeatedly said is unfair to American businesses, with a grain of salt.

“We expect a modernized agreement after a bumpy and lengthy negotiation and approval process,” said Carlos Capistran, head of Canada and Mexico economics at Bank of America Merrill Lynch. “It will be an update … with marginal changes. The bulk of it will remain the same.”

The sixth and penultimate round of talks to revamp the agreement underpinning more than $1 trillion per year in trade among the three countries will begin in Montreal on Tuesday.

The agenda is likely to include a proposal to mandate more auto manufacturing in the United States, a dispute settlement mechanism and a five-year sunset clause.

Canada and Mexico have widely disputed those issues, which U.S. negotiators had raised.

Having blamed NAFTA for U.S. job losses and trade deficits, Trump said on Wednesday that terminating the pact would result in the “best deal” to update the 24-year-old agreement, in effect threatening to scrap it.

Trump has long toyed with the idea of triggering a six-month countdown to U.S. withdrawal as a negotiating tactic. Mexico has warned it would not take part in talks with a clock ticking.

Reuters reported last week that Canada was increasingly convinced that Trump was likely to pull out. He has already imposed punitive duties on Canadian softwood lumber and planemaker Bombardier Inc that prompted a World Trade Organization trial.


More than two-thirds of the economists consulted said they thought the renegotiation was warranted.

Respondents in the poll cited the energy and technology industries as among potential winners from renegotiation while autos, manufacturing and agricultural companies could suffer.

However, the economic impact of a modernized pact will largely be neutral or positive for each country and their currencies, the economists forecast.

The peso, which has been hammered by Trump’s protectionist threats to ditch NAFTA, is likely to appreciate sharply, as much as 8 percent, while the seesawing Canadian dollar could make small gains or remain flat.

However, some respondents said terminating the agreement could send the Canadian dollar and the peso tumbling, hurting those nations’ economies. The greenback could also sink as much as 5 percent.

“We are dangerously close to allowing an ill-informed group to lose all that NAFTA has delivered in terms of competitiveness of North American companies,” said Diane Swonk, chief economist at Grant Thornton

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How NAFTA Is Making Our Food and Water Much Less Healthy

A system that allows foreign investors to sue countries is terrible for human rights and the environment.


As the sixth round of the negotiations on North American Free Trade Agreement begin next week in Montreal, Canada, the controversy over exactly what a new agreement might involve—if there is one at all—continues to generate debate.

As the NAFTA renegotiations were about to start, the Canadian government publicly stated its core objectives for a renewed North American Free Trade Agreement. These included making NAFTA more progressive by bringing strong labor safeguards and enhanced environmental provisions into the core of the agreement; adding a new chapter on gender rights (and another on Indigenous issues, in line with Canada’s commitment to improving relationship with its Indigenous peoples), and reforming the controversial Investor-State Dispute Settlement (ISDS) process—a system through which investors can sue nations for alleged discriminatory practices—”to ensure that governments have an unassailable right to regulate in the public interest.”

Following the third round of NAFTA negotiations, Laura Dawson of the Wilson Center’s Canada Institute wrote in early October that “the negotiations had split into two separate tracks”: one focused on easy consensus (based on the Trans-Pacific Partnership text, which has already been approved by the three parties), and the other “characterized by differences so irreconcilable that they threaten to derail the negotiations.”

In a blog prior to the fifth round of negotiations in Mexico City, my colleague Sophia Murphy argued that “neither a TPP agenda through NAFTA 2.0 nor tearing up the treaty is the answer,” and instead suggested a third track. Taking a page from Canada’s stated commitment to trade and protect, and acknowledging the cost of any change, a third track would support trade that protects those “least able to absorb the shock bearing all the cost of adjustment, whether it is going to be a new NAFTA or no NAFTA.”

An important part of the third track must include getting rid of one of the most controversial dispute settlement mechanisms in NAFTA called investor-state dispute settlement mechanism (a provision Canada and Mexico unfortunately still support). While this dispute settlement mechanism has emerged as a sticking point, it is far from certain how the negotiations will proceed.

The U.S. has reportedly proposed that countries be allowed to “opt in” (or not) to that mechanism. If this really is a serious proposal, it would be a big step toward civil society demands to eliminate it. Leading up to the fourth round of negotiations in mid-October, U.S. groups had delivered over 400,000 petitions asking to eliminate the investor-state dispute settlement (ISDS) system. The petitions were gathered by civil society organizations ranging from farm organizations, environmentalists and trade unions to women’s organizations and church groups.

The U.S. proposal has resonance in Canada and Mexico as well. For example, the Canadian Center for Policy Alternatives has argued that “removing ISDS from NAFTA—or killing it with an opt-in clause—would be a major win for Canada.” In a report published earlier this week, CCAP takes stock of Canada’s experience with NAFTA, and concludes that “Canada accounts for about half of the known ISDS challenges filed under NAFTA” and calls on Canadian negotiators to “not let this opportunity slip through their hands.”

What is at stake in ISDS?

ISDS is now part of most multilateral or bilateral investment agreements. As a recent report from the Institute for Agriculture and Trade Policy (IATP) shows, ISDS gives foreign investors the right to demand compensation for environmental, public interest and other laws that undermine their anticipated profits. This provision, initially put in place to protect investors’ rights against nationalizations or expropriations, has evolved to become a tool for corporations to tie up governments in long and expensive legal cases, with chilling effects on public interest rules around the world. Cases are decided by unaccountable panels of trade lawyers, who might have conflicts of interest.

In fact, this ISDS provision allowed the Canadian company TransCanada to sue the U.S. government over the Keystone XL (KXL) Pipeline, where it specifically claimed breach of “fair and equitable treatment/minimum standard treatment” of foreign investors. The ISDS clause in NAFTA allowed the Canadian multinational to craft a win-win scenario in the case of Keystone XL Pipeline: either it could have pursued the ISDS claim for the $15 billion from the United States, or it could have used the threat of ISDS claim to get around the new “buy American rules” (especially if it did not want to go through a lengthy WTO dispute settlement body citing this rule as violation of international trade rules]). As this example shows, no nation is powerful enough to be safe from the overreach of ISDS, whether it is trying to protect national interest or trying to fulfill a campaign promise.

With the number of ISDS cases growing exponentially across the globe over the last two decades, ISDS has become quite controversial globally too, especially because of the way it affects food and water security. Some of these cases involve agriculture-related foreign investments and involve land or water grabbing from local communities.

In other cases, communities find that their water sources are either depleted or polluted, affecting not only their irrigation water but also their drinking water and cooking water. The fallouts are not limited to agriculture-related investments. Investments in other sectors (such as extractive industries) too directly affect food and/or water security of the impacted communities, as for example the experiences of two countries (El Salvador and the U.S.) examined in IATP’s report show.

Moreover, experiences over the last three decades show that this provision is increasingly being misused by transnational corporations not only to avoid culpability but also to seek to extort public money by suing host governments. ISDS has evolved as an important instrument in the hands of investors, as they seek to stifle conflicts—often arising from environmental problems including water pollution and public health problems impacting local communities —with those communities/countries.

The ISDS provision threatens to undermine the tremendous progress made in terms of the universal recognition of the right to water over the last decade and a half. Over the last two decades, for example, governments in every region have been making concerted efforts to improve peoples’ access to drinking water and sanitation. This has meant enacting new laws, making new regulations and, in a few cases, also enshrining it as a constitutional right. In addition, globally, the states came together at the United Nations to recognize water as a fundamental human right. However, investors have increasingly been using ISDS during this same period to challenge public interest measures to address water pollution or to reduce water tariffs.

IATP’s research on ISDS and right to water shows that the presence of ISDS in trade and investment regimes help continue to protect investors—including water companies—even as they violate human rights. Once investors file a case through ISDS, the respondent States need to spend hundreds of millions of dollars to defend their case, and in payment to the investor if they lose, in addition to taking care of the domestic concerns arising from the fallout of these investments. States’ counterclaims related to violation of the economic social and cultural right are rarely considered by a tribunal.

Even in a recent case, the first time when the tribunal award considered the host state’s counterclaim related to violation of the human right to water, the tribunal ruled that for the human right obligation to exist and “to become relevant in the framework of the BIT [bilateral investment treaty], it should either be part of another treaty (not applicable here) or it should represent a general principle of international law.” In short, these tribunals, made up of unaccountable trade lawyers, are unlikely to rule in favor of states seeking to uphold their human rights obligations or any other public responsibilities as long as the ISDS system in place.

ISDS has no place in a world facing enormous environmental challenges and trying to achieve sustainable development goals around food and nutrition security, health and water security, amongst others. Nor is Canada’s current proposal (replacing ISDS with an Investment Court System similar to the one in its free trade deal with the European Union) enough. Such a replacement would still retain the worst elements of ISDS.

The NAFTA renegotiation is a great opportunity for all three countries to agree to get rid of ISDS in North America as a first step. Canada’s proposals in the context of NAFTA to uphold labor and environmental standards in all three countries provide important moral leadership, but its calls to “trade and protect” remains empty as long as it does not propose to eliminate the ISDS and analogous systems. The three countries should chart a path forward without ISDS—one that takes us closer to that third track.

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Mexican President Says He’s ‘Optimistic’ About NAFTA Deal

The next round of talks on reworking the 24-year-old trade agreement is due to take place in Montreal later this month.


Mexican President Enrique Pena Nieto said on Thursday he is optimistic that the United States, Mexico and Canada can successfully renegotiate the North American Free Trade Agreement (NAFTA) to the mutual benefit of the three countries.

“I have said so before, I am optimistic about the possibility of getting a deal which benefits the three member states,” Pena Nieto said during a speech in Mexico City, Reuters reports.

The next round of talks on reworking the 24-year-old trade agreement is due to take place in Montreal later this month.

Mexico had previously hinted it would exit NAFTA hours after Canadian officials claimed the US will most likely pull out of the agreement. The comments made Wednesday sparked fear in international markets and a devaluation of both the Canadian dollar and the Mexican peso.

Two government officials told Reuters earlier in the day that Canada is increasingly convinced that US President Donald Trump will soon announce that Washington is pulling out of the trade agreement.

Three Mexican sources, who know about the negotiations, then claimed Mexico would exit NAFTA if Trump decided to trigger the six-month process to withdraw from the pact. Initiating the withdrawal process would not be binding for the United States and such a move would need Congress approval.

One of the sources, Raul Urteaga, the head of international trade for the ministry of agriculture, said: “If Trump announces a US withdrawal from NAFTA, well at that moment the negotiations stop.”

The penultimate round of the NAFTA negotiations is due to be held in Montreal, Canada, between January 23 and 28.

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Dairy Farmer to Donald Trump: “Replace NAFTA, It’s Not Good For Farmers Anywhere”

There is a lot of angst in the U.S. corporate world. They are quite concerned that the renegotiation talks between the United States, Canada and Mexico (the three participants in the North American Free Trade Agreement, or NAFTA) may not deliver a new agreement that is as lucrative as the old NAFTA


NAFTA has been in place since 1994. It is one of those classic neoliberal trade deals that essayist George Scialabba describes as “investor rights agreements masquerading as ‘free trade’ and constraining the rights of governments to protect their own workers, environments, and currencies.” As such, it has served corporate interests well.

U.S. corporations counted on NAFTA and other trade agreements to keep wages low by the threat of, or actual movement of, manufacturing jobs to wherever it was easiest to exploit workers and the environment.

A renegotiated NAFTA, would, if U.S. negotiating positions were accepted, force Canada to scrap the price protections that give their dairy farmers a fair price for their milk. In Mexico, U.S. corporate interests would hope to prevent Andrés Manuel López Obrador, if elected president, from trying to bring Mexican farmers out of poverty. Obrador calls for expanding the country’s dairy industry and rebuilding its native corn production. (American agribusiness destroyed Mexican family farm corn production by dumping cheaper corn on the Mexican market—hence the spike in illegal emigration to the United States after NAFTA went into force.)

Protectionist policies on the part of Canada and Mexico? Yes, but what is the function of government if not to protect its citizens? Trump says “America first” but it goes both ways. Presumably, our government was not founded with the intent of protecting corporate interests. In fact, as Thomas Jefferson noted:

“The end of our democracy … will occur when government falls into the hands of lending institutions and moneyed incorporations.”

Looks like we’re there.

If farmers, union members and small businesses were the intended beneficiaries of free trade agreements we should all be doing quite well financially. Dairy farmers should be getting a fair price for their milk, workers should be earning a living wage and small businesses should be lining the main streets of America again—but we know that is not the case.

Multinational corporations, the real beneficiaries of free trade agreements, write the rules, stash their profits in offshore tax havens, all while they cleverly tout the agreements as being in the best interests of the farmer and wage earner.

As a dairy farmer I am told trade agreements have and will continue to help me “compete globally.” Through NAFTA we can increase our sales of dairy products to Mexico and crack Canada’s protection of their farmers’ milk price. Notice they do not say this will increase our profitability, only our sales—so why should I want to produce more, sell more, when there is no profit? It only means farmers will need to work harder to make the same or less, at the expense of Canadian and Mexican farmers.

Of course, that is not the concern of the “dairy industry.” Their profit is ensured by the willingness of farmers to produce more and never question why they cannot get a fair price. If dumping our cheap corn on Mexico or putting Canadian dairy farmers out of business is the price of increasing corporate profit—so be it.

President Trump promised to make NAFTA better or pull out. What he and his administration would define as better is a very loaded question. I have seen little in the past year to indicate the administration wants to do anything to raise farm prices or wages, or curb the influence of corporate interests on government. Just look at the new tax bill—let the good times roll for the rich and the corporations!

Wisconsin Assembly Speaker Robin Voss is wrong when he says “NAFTA has worked for Wisconsin. It’s not the time to put new obstacles in place that would hurt the very markets that our business owners and farmers depend on.” If NAFTA has worked, why are farmers being told to expect continued low prices in 2018?

So, rather than more of the empty populist rhetoric that fueled his campaign and election, the president, for once, actually needs to follow through on a promise: NAFTA should be replaced not renegotiated.

As Public Citizen’s Global Trade Watch noted, “Trump launched the promised NAFTA renegotiation in August, but U.S. corporate interests have persuaded Canada and Mexico to not engage on U.S. proposals to transform NAFTA in ways that U.S. unions, small businesses and consumer groups have long argued would slow job outsourcing and downward pressure on U.S. wages.”

Anyone who supports the continuation of NAFTA without questioning who actually benefits really has no concern for the best interests of farmers or workers in the United States, Canada or Mexico.

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NAFTA to Collapse As Trump’s Bullying Tactics Yield No Results

The penultimate round of NAFTA negotiations will be held in Montreal, Canada between Jan. 23-28.


Mexico announced it would exit the North American Free Trade Agreement, known as NAFTA, just hours after Canadian officials claimed the U.S. will most likely pull out of the agreement. The comments made Wednesday have sparked fear in international markets and a devaluation of both the Canadian dollar and the Mexican peso.

Two government officials told Reuters earlier in the day that Canada is increasingly convinced that United States President Donald Trump will soon announce that Washington is pulling out of the trade agreement.

Few hours later three Mexican sources, who know about the negotiations, claimed Mexico would exit NAFTA if Trump decided to trigger the 6-month process to withdraw from the pact. Initiating the withdrawal process would not be binding for the U.S. and such a move would need Congress approval.

One of the sources, Raul Urteaga, the head of international trade for the ministry of agriculture, said “if Trump announces a U.S. withdrawal from NAFTA, well at that moment the negotiations stop.” The announcement will complicate attempts by the U.S. to use threats of withdrawal as leverage in the upcoming, and penultimate round of the NAFTA negotiations to be held in Montreal, Canada between Jan. 23-28.

Trump’s threats and demands have garnered criticism by many analysts who have accused him of attempting to bully Mexico and Canada.

The three countries agreed in July to hold seven rounds to renegotiate NAFTA, however not much progress has been made on key issues.

Among them: the U.S. attempt to establish a minimum limit of U.S. content for automobiles, a clause that would automatically terminate the agreement if it is not renegotiated every five years, and the elimination of the chapter 19 provision in NAFTA’s disputes mechanism, which allows for an alternative binational panel to review domestic courts’ determinations on antidumping and countervailing duty cases.

Other related issues remain as Canada also filed Wednesday a 32-page complaint with the World Trade Organization challenging U.S. investigations on subsidies to Canadian-exported goods, such as dairy products and lumber wood. In early 2017 the Trump administration imposed tariffs on these Canadian goods.

The NAFTA has faced increasing criticism by Trump, who has called it the “worst trade deal in the history of the world” and repeatedly vowed to pull out of it during his campaign.

However the U.S. president’s view on the pact is not shared by his country’s Chamber of Commerce CEO,Tom Donohue who had warned that pulling out of NAFTA would be a “mistake” and would mean an “absolute destruction […] to economic growth.”

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