Monthly Archives: October 2018

Jane Kelsey: Nafta II is a game changer we need to confront

Donald Trump described the North American Free Trade Agreement as the worst agreement ever – even worse than the Trans-Pacific Partnership agreement – and vowed to rewrite it to put America first or rip it up. That promise resonated with swing state voters.

GameChangerLogo

American workers, small businesses, First Nations and the environment have suffered under Nafta. American corporations have been the big winners, as they would have been from the TPP.

Armed with threats, insults and sanctions, Trump has succeeded in replacing the 25-year old Nafta with the unimaginatively but honestly named US Mexico Canada Agreement (USMCA). We don’t know if this will be a new US template and supplant the World Trade Organisation that is also under attack from the Trump administration.

Some have dismissed the new deal as crude protectionism or a cynical rebranding so Trump appears to deliver his election promise. Both criticisms miss the bigger picture. Three salient points need noting.

First, Trump’s unilateralism is driven by a visceral aversion to China and its threat to US hegemony. That’s not new. Most Democrats share that view. Obama sold the TPP (unsuccessfully) as the US writing the 21st century rules, not China. Trump has gone further. The new pact says any party that negotiates a free trade agreement with a non-market country – meaning China – must disclose that fact, along with draft texts, and the other parties can kick it out of the USMCA.

If the US repeats this provision in its new and revised agreements, countries will be forced to choose China or the US. Prospects of a new cold war through free trade agreements are now very real and pose a huge challenge for Australia, New Zealand and many others.

Second, the Democratic Party is like a possum in the headlights. Its instinct is to oppose whatever Trump does. But that’s not enough. Trump is poaching the party’s voter base.

On automobiles, the new deal requires more content produced in the three countries and a minimum wage of US$16 an hour for 40 per cent of that content – Mexican auto workers generally earn less than US$2 an hour. The deeply unpopular right of investors to sue states will end between US and Canada after three years, and is severely wound back with Mexico, except for the powerful energy and utilities sector. The US even agreed to an exception on indigenous rights that goes beyond the Treaty of Waitangi exception in the TPP that the NZ Government insists cannot be improved.

Third, the big corporate gains from the original TPP text have been imported and strengthened by restoring the original US proposals. That includes even longer monopoly rights on new generation super-expensive biologic medicines, and an electronic commerce chapter basically written by and for Google, Amazon, Facebook and Big Tech to cement their oligopoly.

We need to think smarter and recognise that Nafta-II is a massive game changer. In the US recently, Prime Minister Jacinda Ardern seemed to suggest there are only two choices – the unilateral power plays of a populist and protectionist autocrat or the “multilateral rules-based system” established over 30 years of neoliberalism.

As with the US Democrats, we in Aotearoa need to confront these challenges and build the momentum and political will to advance an alternative paradigm of international economic relations.

Originally posted in the NZ Herald
Jane Kelsey is a professor of law at the University of Auckland.

A Democratic Majority Could Challenge Trump Trade Pact

The Trump administration included provisions in the new trade deal with Canada and Mexico to win Democratic support, but if the midterm elections hand Democrats the majority in either the House or Senate, the path forward for the revised agreement may be more complicated.

unnamedDonald Trump is expected to sign the agreement in principle on Nov. 30 and send implementing legislation to Congress sometime later. Trump also notified Congress on Tuesday that his administration plans to launch trade negotiations with the European Union, Japan and the United Kingdom in 2019.

Many congressional Democrats have long been skeptical of trade and the midterms may give them some leverage if they gain control of the House or Senate. The likely new chairmen of the committees that have jurisdiction over trade, Rep. Richard E. Neal of Massachusetts on House Ways and Means and Sen. Ron Wyden of Oregon on Senate Finance, would be the key lawmakers to raise their party’s concerns. While the two lawmakers are the presumed chairmen, their caucuses would make the final decision after the midterm elections.

Wyden could become chairman of the Finance Committee if Democrats win the Senate.  (Tom Williams/CQ Roll Call)

A Wyden aide told CQ the senator “would certainly expect to be Finance chairman” if the Democrats win the Senate.

Wyden, now ranking member on the Finance Committee, has shown a willingness to needle Trump. He introduced a bill that would require a president at the start of U.S. trade negotiations with a country to disclose personal business or other economic interests in that country. The bill (S 408) has not moved this Congress, but Wyden as chairman would likely continue to raise questions about trade actions that could benefit the Trump family.

He also has been critical of Trump’s use of national security as a pretext for imposing steel and aluminum tariffs on trading partners and of trade tactics he says lack a strategic plan. While he questions the Trump administration’s approach to trade, Wyden often notes that trade is an important part of his state’s economy.

He has said he wants to delve into the revised pact to determine if it represents a significant improvement on labor and the environment. If approved, the agreement in principle would replace the 1994 North American Free Trade Agreement.

“The crucial test for a new NAFTA, or any new trade agreement, is whether it is enforceable, particularly with respect to promises to protect worker rights and the environment,” Wyden said after the agreement text was released Sept. 30. “Americans are sick of hearing speeches about the benefits of new trade agreements when the agreements in place aren’t even enforced and their opportunities don’t materialize.”

Wyden was elected to Congress in 1996, two years after NAFTA was implemented.

Neal, a Ways and Means Committee member since 1993 and now the panel’s top Democrat, voted against NAFTA and says he will scrutinize the proposed replacement.

“The bar for supporting a new NAFTA will be high,” Neal said in a statement this month. “NAFTA has had many critics over the years and its flaws are well-known. “

He added: “Like me, many of my colleagues did not support the deal originally. And those who did will have serious questions that they need answered before doing so again.” Neal’s office did not respond to a request for his trade priorities if he becomes chairman.

Neal could become the Ways and Means chairman if Democrats win the House.  (Tom Williams/CQ Roll Call)

Democratic Leverage

Trump’s Trade Representative Robert Lighthizer may have made inroads with Democrats with his outreach to those in Congress as well as to labor unions and liberal organizations that are part of the party’s base.

Sen. Sherrod Brown, D-Ohio, a Finance Committee member and staunch labor supporter, said he has spent hours on the phone over the past months with Lighthizer discussing policy. Lighthizer, a former Senate Finance staffer for Sen. Bob Dole, R-Kan., may have an edge over his predecessors in understanding lawmakers and their concerns.

The proposed United States-Mexico-Canada Agreement includes labor provisions in the main text and would greatly limit the use of a mechanism to settle trade disputes, a binding arbitration process corporations use to sue foreign governments over policies or laws that hurt profits.

Labor groups have spent years pushing for those changes. They also welcome language that would require 75 percent of the content of cars and auto parts made in North America to come from the three countries and a requirement that the Mexican government approve by January 2019 changes to its labor laws to give workers more protections.

“There are some good things on paper. Like we say in the labor movement, a collective bargaining agreement is only good when you see the final language and it gets signed,” said Cathy Feingold, director of the AFL-CIO’s International Department. “We are far from saying that this could be an agreement that is where we need it to be.”

Brandon Arnold, executive director of the pro-trade National Taxpayers Union, said despite the labor provisions Trump should expect Democrats to use their leverage as a majority to seek more concessions.

In 2007, House Speaker Nancy Pelosi, D-Calif., and Ways and Means Chairman Charles B. Rangel, D-N.Y., pushed the George W. Bush administration to renegotiate pending trade agreements with Peru and Panama to include a set of labor and environmental principles known as the May 10th Agreement.

It is unclear at this point what course of action Pelosi could take on the NAFTA replacement pact if she became speaker again in 2019, Arnold said. But he does not doubt, he said, that Pelosi would “use her negotiating power to the maximum extent that she possibly can” to press Trump to reopen the agreement or to add specific provisions in the implementing legislation sent to Congress.

“Will she get some concessions? Will she be able to get some deals that are pro-labor, pro-environment?” Arnold asked. “Quite possibly.”

Scott N. Paul, president of Alliance for American Manufacturing, said the Republicans’ need for votes to pass the proposed trade pact will determine how much the president is willing to offer Democrats. It’s a time-honored procedure.

“If I were a Democrat, I would say, you know we can get an infrastructure package, maybe we can find mechanisms that are going to guarantee worker rights the support that we don’t have right now,” Paul said.

But Arnold said there’s a limit to how far Democrats can go if enough of them believe a revamped pact is better than no trade deal.

“Absent approval of this new NAFTA deal, there is very little question the Trump administration will at least attempt to withdraw from the existing NAFTA agreement,” he said.

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The Citizens Trade Campaign (CTC) is a national coalition whose members include Americans for Democratic Action, Communications Workers of America, Friends of the Earth U.S., Institute for Agriculture and Trade Policy, International Association of Machinists and Aerospace Workers, International Brotherhood of Boilermakers, International Brotherhood of Electrical Workers, International Brotherhood of Teamsters, International Union of Bricklayers and Allied Craftworkers, International Union of Painters and Allied Trades, National Family Farm Coalition, National Farmers Union, Public Citizen’s Global Trade Watch, Sierra Club, TransAfrica Forum, UNITE HERE, United Methodist Church General Board of Church and Society, United Brotherhood of Carpenters, United Mineworkers of America, United Steelworkers, United Students Against Sweatshops and Witness for Peace, as well as regional, state, and city-based coalitions, organizations, and individual activists throughout the United States.

NAFTA 2.0 Text Analysis from Public Citizen

The NAFTA 2.0 text is not the replacement of the corporate-rigged model that Public Citizen has demanded. But if we fight to get swift and certain enforcement of the pact’s new labor standards — and achieve some other key improvements — then the final package Congress will vote on early next year could stop some of NAFTA’s continuing, serious damage to people across North America.

Screen Shot 2018-10-15 at 3.33.16 PMAfter a year of North American Free Trade Agreement (NAFTA) renegotiations, the September 30 publication of a revised text revealed some improvements that progressives have long demanded, damaging terms we have long opposed and important unfinished business.

Phase II of the battle to replace NAFTA and stop its ongoing job-killing, wage-crushing, environment-trashing destruction starts now!

Corporate Powers and Privileges

We demanded an end to NAFTA’s Investor-State Dispute Settlement (ISDS) regime that grants corporations rights to attack our laws and demand unlimited taxpayer compensation.

How does the NAFTA 2.0 text measure up?

Read the full analysis here

Job Outsourcing and Wages

We demanded the elimination of terms that promote the outsourcing of American jobs and create downward pressure on wages. 

How does the NAFTA 2.0 text measure up?

Read the full analysis here

Environment

We demanded the elimination of terms that undermine environmental policies and the addition of strong environmental standards that are subject to swift and certain enforcement.

How does the NAFTA 2.0 text measure up?

Read the full analysis here

Access to Affordable Medicine

We demanded no new terms be added that extend beyond the existing World Trade Organization patent rules or that limit countries’ abilities to negotiate lower prices for government health programs like Medicare or Medicaid.

How does the NAFTA 2.0 text measure up?

Read the full analysis here

Food Safety

We demanded that imported food must be required to meet U.S. safety standards, enhanced border inspection must be added and food labeling regimes must be protected so consumers can make informed choices. 

How does the NAFTA 2.0 text measure up?

Consumer Protections

We demanded that all imported goods and services meet U.S. standards and a safeguard for environmental, health and other public interest policies be added.

How does the NAFTA 2.0 text measure up?

Read the full analysis here

Sunset Clause

We demanded a sunset clause that requires the pact to be reauthorized every five years to increase democratic accountability and oversight.

How does the NAFTA 2.0 text measure up?

Read the full analysis here

New Replace NAFTA webpage breaks the whole thing down here.

PLOTTING NAFTA’S PATH FORWARD IN A DEMOCRATIC CONGRESS?

Completing a trilateral agreement was one thing, but pushing the renegotiated deal through Congress is going to be another task — one that could prove particularly tricky if Democrats succeed in regaining control of one or both chambers after midterm elections next month.

democratMost current polls show that the minority party should retake at least a slim majority in the House. Sending the new deal through a Democrat-controlled Congress would not necessarily mean it would be dead on arrival, but passage wouldn’t be a foregone conclusion either.

Trump already appears to be cognizant that the road ahead for his new agreement is paved with political landmines, saying in the White House Rose Garden on Monday that he was “not at all confident” Congress would approve the USMCA. “Anything you submit to Congress is trouble,” he said.

Resist over everything: It’s not outside the realm of possibility that newly powerful Democrats, who despise the president and might be loath to give him a policy win that he craves, might do everything they can to block a deal on any grounds. They could focus on structure — for example, by saying that the Trump administration did not keep them adequately apprised of developments throughout the negotiation — or on substance — by saying that the new labor provisions are not fully enforceable.

Or make your mark: A second (and perhaps more likely) strategy is that Democrats will be keen on working with the administration to leave their own mark on the deal — potentially by pressuring the White House to work out additional side deals or through carefully crafted implementing legislation — while ultimately voting in favor.

Senate Minority Leader Chuck Schumer left the door open to the idea that the agreement could win his support through such a method, so long as it includes strong dairy provisions and enforceable labor standards.

“If a final agreement is signed by all three countries, I also look forward to working with my colleagues in Congress to write ‘implementing legislation’ to ensure the deal actually achieves these goals,” he added.

REPUBLICANS SEEM MOSTLY SUPPORTIVE

A number of Republicans said they wanted to review the agreement before taking a firm stand. But they also seemed generally supportive. Based on initial reports, the new agreement “will help Ohio workers, farmers and businesses by leveling the playing field on trade and expanding the export of American-made products,” Sen. Rob Portman (R-Ohio) said.

However, Sen. Pat Toomey (R-Pa.) was more critical, expressing concern about the sunset review mechanism, the “weakening” of investment protections and the failure to eliminate steel and aluminum tariffs on Canada and Mexico, as well as other provisions of the deal.

“I will closely review the text of this proposal to see whether the proposed changes, on balance, enhance or weaken the enormous economic benefit we have derived from the original agreement. I also plan to work closely with my colleagues to explore how we may correct some of the agreement’s flaws through the required implementing legislation,” Toomey said.

The critical question will be whether lawmakers’ concerns are enough to sink the overall package — especially if Trump follows through on his threat to withdraw from the current NAFTA deal. That could depend on whether business groups flock to the pact, or decide to oppose it, in coming weeks.

“The text of this new agreement has hundreds of pages and includes numerous new provisions, so it will take some time for us to fully assess its effects for our member companies and for countless businesses across our country,” said Rufus Yerxa, president of the National Foreign Trade Council.

From Politico Pro.

 

BROOKINGS SAYS COUNTERTARIFFS HITTING TRUMP VOTERS HARDEST

Counties that voted for Trump are more exposed to retaliatory tariffs than counties that voted for Hillary Clinton, according to a Brookings Institution report released last week. Tariffs on more than $120 billion worth of U.S. exports have been imposed by China, the European Union, Canada and Mexico.

Red_state,_blue_state.svg“Trade policy is inextricably linked with politics, and the retaliatory tariffs seem geographically and industrially targeted to mobilize political angst,” the report said.

Who’s to blame?: The finding supports the administration’s claim that China is trying to target voters in states Trump won in 2016. However, it also shows that allies like Canada, Mexico and the European Union are doing the same thing in response to Trump’s steel and aluminum tariffs.

The retaliatory duties hit about about 8.1 percent of exports from counties that voted for Trump, compared with about 4.2 percent of exports from counties that voted for Clinton, the report said.

Rural-urban divide: The duties tend to hurt rural areas the most because they affect a bigger percentage of a community’s exports. Only about 4.4 percent of exports in the 100 largest metro areas are in tariff-affected industries.

The tariffs also hurt an estimated 650,000 jobs — both direct exports jobs and those in supporting industries. The report emphasized that it was not estimating there would be that many jobs lost because of tariffs.

No talks yet: A senior Treasury official told reporters on Monday that China’s Vice Premier Liu He wasn’t expected to be in Bali, Indonesia, for the IMF/World Bank meetings. Treasury Secretary Steve Mnuchin, who is attending, is expected to meet with several counterparts, including Japanese Finance Minister Taro Aso.

MORAN, SHAHEEN CALL ON OFFICIALS TO LOOK OUT FOR THE LITTLE GUYS: In letters sent today, the chairman and ranking member of the Senate Commerce appropriations subcommittee are urging Lighthizer and Ross to provide information to lawmakers about what the administration is doing to help small businesses affected by Trump’s tariffs.

Lawmakers have long complained that the exemption process is overly onerous and complicated. In the letters, Sens. Jerry Moran (R-Kan.) and Jeanne Shaheen (D-N.H.) asked Lighthizer and Ross to explain, among other things, what their agencies have done to help small businesses avoid the tariffs in terms of education and technical assistance.

“Unlike large corporations, most small businesses do not have the time or resources to devote to reading the Federal Register, understanding the Harmonized Tariff Schedule of the United States and making the case to federal agencies that their products should be exempt,” write the two senators.

“While we understand the need to rein in unfair trade practices, we have concerns with the administration’s approach to imposing tariffs, especially on our allies,” they add.

Public Citizen Analysis: How the New NAFTA Text Measures Against Key Changes We Have Demanded to Stop NAFTA’s Ongoing Damage

Note from Lori Wallach, Director, Public Citizen’s Global Trade Watch

Screen Shot 2018-10-08 at 3.00.31 PM

Here is our initial 14-page analysis of the NAFTA 2.0 text, following up on the statement after the text was released. We have reviewed how the text measures up to the changes to NAFTA that Public Citizen and many other progressive organizations have long demanded. After some digging, which has been exhausting giving the 900 pages of text and annexes, we have boiled down whole chapters into bulleted highlights and lowlights and assessed whether demands are met or there are mixed outcomes or it’s too soon to know or there’s been a fail.

Overall, the NAFTA 2.0 text reveals a work in progress with some improvements for which we have long advocated, some new terms that we oppose and more work required to stop NAFTA’s ongoing job outsourcing, downward pressure on wages and environmental damage.

The new text isn’t a transformational replacement of the entire corporate-rigged U.S. trade agreement model that NAFTA launched in the 1990s. But at the same time, in key respects, this deal is quite different from all past U.S. free trade agreements. The revised deal could reduce NAFTA’s ongoing job outsourcing, downward pressure on our wages and environmental damage if more is done to ensure the new labor standards are subject to swift and certain enforcement, and some other key improvements are made. There’s a ways to go between this text and congressional consideration of a final NAFTA renegotiation package in 2019.

Important progress has been made with the removal of corporate investor protections that make it cheaper and less risky to outsource jobs and a major reining-in of NAFTA’s outrageous Investor State Dispute Settlement (ISDS) tribunals under which corporations have grabbed hundreds of millions from taxpayers after attacks on environmental and health policies.

Termination of ISDS between the U.S. and Canada would eliminate 92 percent of U.S. ISDS liability under NAFTA and the lion’s share of total U.S. ISDS exposure overall. This, combined with the major roll back of corporate rights and ISDS coverage between the U.S. and Mexico would prevent many new ISDS attacks on domestic environmental and health policies after more than $390 million has been paid to corporation by taxpayers to date. That even this corporate-compliant administration whacked ISDS means future presidents cannot backslide and also sends a powerful signal to the many nations worldwide also seeking to escape the ISDS regime.

A lot more work remains to be done: Unless strong labor standards and environmental standards are made subject to swift and certain enforcement, U.S. firms will continue to outsource jobs to pay Mexican workers poverty wages, dump toxins and bring their products back here for sale.

Despite Donald Trump’s “Buy American/Hire American” rhetoric, the new deal maintains NAFTA’s waiver of Buy American rules that require the U.S. government to procure U.S.-made goods, so unless that gets fixed more U.S. tax dollars and more U.S. jobs will be outsourced.

The new deal grants pharmaceutical corporations new monopoly rights so they can keep medicine prices high by avoiding generic competition. This could undermine the changes we need to make medicine more affordable here and increase prices in Mexico and Canada, limiting access to lifesaving medicines.

Areas of progress include a first-time-ever innovation of conditioning trade benefits for a percentage of autos and auto parts on the workers producing them being paid $16 per hour or more. Terms that forced countries to continue to export natural resources that they seek to conserve are eliminated. Longstanding safety and environmental problems relating to Mexican-domiciled trucks’ access to U.S. roads are addressed. Rules of origin that allowed goods with significant Chinese and others non-North American value were tightened.

Americans have suffered under NAFTA’s corporate-rigged rules for decades. Nearly one million U.S. jobs have been government-certified as lost to NAFTA, with NAFTA helping corporations outsource more jobs to Mexico every week. The downward pressure on U.S. workers’ wages caused by NAFTA outsourcing has only intensified as Mexican wages declined in real terms since NAFTA, with Mexican manufacturing wages now 40 percent below those in coastal China.

From Public Citizen Eyes on Trade

Stronger Drug Patents in New NAFTA To Cost U.S. Manufacturing Workers Jobs

The new trade agreement  has rules on drugs patents and related protections which are likely to cost the jobs of U.S. manufacturing workers. The deal includes a number of provisions that are explicitly designed to raise drug prices in Canada.

big_pharma3_1024x720

These provisions include a requirement of a period of ten years of marketing exclusivity for biotech drugs before a biosimilar is allowed to enter the market. The deal also requires Canada to grant a period of exclusivity for existing drugs when new uses are developed. In addition, it requires that the period of patent monopoly be extended beyond 20 years when there have been “unreasonable” delays in the granting of the patent.

The intended purpose of these provisions is clearly to make Canada pay more money to U.S. drug companies. Insofar as it achieves this result, it will mean that the United States has a larger surplus on intellectual products. That would imply a larger trade deficit in manufactured goods, and therefore less employment in U.S. manufacturing.

A basic accounting identity in economics is that the overall U.S. trade deficit is equal to the gap between domestic savings and domestic investment. This identity means that if this domestic balance is not changed, the overall trade deficit is not changed.

When the U.S. economy is below its potential level of output, a lower trade deficit can lead to more employment and income, which typically also leads to more domestic savings. However, economists typically analyze trade as though the economy is always at or near its potential level of output. If this is the case, the trade deficit is fixed by the balance of domestic investment and savings. In that case, if the trade surplus rises in one area, like intellectual products, then the trade deficit must rise to offset this increase in other areas, like manufactured goods.

The mechanism through which this would occur is, other things equal, more licensing payments to Pfizer, Merck, and other U.S. companies for their drugs will mean a rise in the value of the U.S. dollar against the Canadian dollar. If the U.S. dollar increases in price relative to Canada’s dollar, it makes goods and services produced in the United States relatively less competitive, leading to a larger trade deficit in areas other than prescription drugs.

Published on the CEPR website.

 

5 things to know about USMCA, the new NAFTA

The U.S. and Canada announced they had reached a compromise in their negotiations to update the North American Free Trade Agreement (NAFTA). With the U.S. and Mexico having previously reached an agreement to update the trade pact, the three partners hope to sign the new deal a couple months from now, and ratify it sometime next year.

What is this new agreement, how does it differ from the old NAFTA, and what does it mean for U.S. trade policy going forward? Here are five things to know.

  1. Overall, the changes from the old NAFTA are mostly cosmetic. After a year and a half of negotiations, the three parties are going to end up with a new trade deal that looks remarkably similar to the old NAFTA. The main structure of the deal is largely intact; the biggest changes include higher rules-of-origin requirements for the auto sector, marginally greater U.S. access to the Canadian dairy market, and a scale-back of the investor-state dispute settlement (ISDS) rules. Thus we shouldn’t expect to see any dramatic economic effects from this deal—though if it convinces businesses’ that U.S. withdrawal from NAFTA is no longer on the table, resolving this uncertainty may lead to a small increase in investment.
  2. The most revealing change might be the agreement’s new name. The United States Trade Representative press release announcing the new deal referred to it as USMCA, an acronym for U.S.-Mexico-Canada Agreement. This is, obviously, a terrible, unpronounceable name—but the shift itself is telling. It hints at the true underlying motivation for this renegotiation—Trump’s desire to overhaul the sullied “NAFTA” brand. On the campaign trail, Trump had denounced NAFTA as the worst trade deal ever; the administration seems to hope a new name will help sell these minor revisions as a substantial improvement. Yet, even if one accepts the idea of renaming the deal, there were some better branding options available to the negotiators: either MUSCA or CAMUS, for instance, would be far more pronounceable than the mouthful “USMCA.” Of course, neither of these alternatives would literally put “America First” the way USMCA does—perhaps explaining why they were passed over.
  3. The Trump administration got at least part of what it wanted. Coverage of the final U.S.-Canada talks have suggested it was a compromise outcome—the U.S. succeeded in winning a (modest) opening of the Canadian dairy market, while Canada persevered in preserving the Chapter 19 dispute settlement system and its special protections for Canadian cultural industries. While it’s true this was a compromise relative to the negotiating positions of the two sides, when judged against the standard of the previously existing NAFTA it’s clear the U.S. got more of what it wanted. Canada’s “victories” consisted of maintaining the status quo in many important areas; but while actual changes to NAFTA were modest, they were almost uniformly in the direction of what the U.S. wanted, and away from what Canada and Mexico wanted. Trump’s aggressive, threatening approach succeeded in eliciting modest concessions from two of its closest trading partners.
  4. While this might be a (modest) short-term victory for the U.S., it risks undermining America’s long-term interests. The fact that both Mexico (on autos) and Canada (on dairy) took some small steps to appease Trump’s demands should not be surprising—the U.S. is more important to their economies than vice versa. Does this imply Trump was right all along, that previous American trade negotiators had been foolishly taken advantage of? Hardly. Indeed, while the U.S. gained a few minor, discrete achievements in these talks, Trump’s approach in the renegotiations have likely undermined broader long-term American interests. As a global power, the U.S. has sought to exert influence by investing in “soft power,” the ability to convince other countries their own interests in fact align with those of the U.S. In seeking to squeeze a few more dimes out of Canada and Mexico, Trump is telling America’s allies that they should no longer be so inviting of American power. Since Trump’s election, a number of U.S. allies have already taken steps to balance against U.S. power, and diversify their interests away from America. The U.S. approach to NAFTA’s renegotiation should only accelerate this trend. In other words, the important question was never whether the U.S. could shake down its trade partners to extract some modest gains, but rather whether it should. Mexico and Canada won’t forget how the U.S. treated them—and will readjust their plans accordingly, as will other countries that observed these talks. In the long run, this will undermine America’s influence in the world.
  5. There’s still a long way to go until USMCA becomes law. By announcing the new deal by the September 30 deadline, the three parties are still on schedule for an official signing ceremony before December 1st, current Mexican President Enrique Peña Nieto’s last day in office. But that’s the easy part. The difficult step will be ratifying the agreement, which in the U.S. will mean a vote sometime in the next Congress. Clearly, how such votes proceed will be significantly influenced by this fall’s midterm elections. Yet whatever happens, there are reasons why both Republicans and Democrats may be reluctant to approve the deal. Republicans in Congress are wary of Trump’s protectionist instincts; Democrats, meanwhile, are unlikely to actively help Trump realize one of his key campaign promises. Thus, USMCA’s congressional path remains unclear. (Of course, for their part, neither Canada nor Mexico will likely protest too strenuously if the U.S. fails to ratify the new pact, so long as it allows them to keep the existing NAFTA.)

From Brookings Brief by

Geoffrey Gertz

USMCA FALLS FLAT FOR FARMERS, FOOD ADVOCATES

The reworked agreement between the United States, Mexico and Canada neglects the demands of farm groups

AgricultureIssue_sduck409

MINNEAPOLIS—In response to the release of the text of a “New NAFTA,” now called the United States-Mexico-Canada Agreement (USMCA) between the three North American nations, IATP Executive Director Juliette Majot issued the following statement:

“The reworked NAFTA agreement entrenches agribusiness control over supply chains, seeks to streamline approval and trade of controversial agricultural biotechnology products, fails to protect consumers’ right to know what’s in their food and where it is produced, and worsens the devastating impacts of climate change.

IATP and our allies in farming communities in the United States, Canada and Mexico have demanded a different kind of trade deal for decades. We want trade rules that support strong, sustainable and fair food systems and rural economies.

This reworked agreement achieves none of this.

One of the key sticking points was the U.S. demand that Canada dismantle its successful dairy supply management program. The Canadian government has agreed to end certain restrictions on dairy imports and grant additional market access for U.S. dairy. These concessions will weaken the Canadian system with no clear benefit for U.S. dairy farmers, especially the small, family farms bearing the brunt of the current crisis.

The U.S. dairy crisis stems from massive oversupply produced through mega-sized dairy operations where dairy farmers continue to suffer from prices below the cost of production. In Canada, the supply management system has kept a majority of dairy farms in the hands of family farmers, without reliance on public subsidies. Trade agreements and the U.S. Farm Bill should prioritize local production and rural livelihoods. Weakening Canada’s successful supply management program will do nothing to achieve those goals.

 Rather than doubling down on policies already proven unsuccessful, the U.S. should be negotiating for Mexico and Canada to stop opposing Country of Origin Labeling (COOL) for meat. COOL would restore consumers’ right to know where their food is produced and help U.S. ranchers and food workers bargain for fair prices and wages in a struggling agricultural economy. Instead, new language in the text requires that measures like COOL be the least trade restrictive possible, rather than the most effective to satisfy public interest.

The reworked agreement squandered key opportunities to address agricultural dumping across borders and to reform NAFTA’s enforcement system. This enforcement system sustains oil, gas and other industry challenges to governmental environment and climate policies in corporate-friendly forums where they seek billions of dollars in damages for claimed lost profits. While we welcome the exclusion of Canadian firms from this unjust mechanism, it leaves Mexican and U.S. energy and climate policies vulnerable to future legal challenges. Any agreement will ultimately be judged on whether it contributes to fair and sustainable outcomes for the people of each country.

 Up to now, IATP and other trade watchdogs have had to rely on bits and pieces of information about the actual text of NAFTA and the wish lists submitted by hundreds of corporations, which together pointed to a deal based on the rejected Trans-Pacific Partnership. We will examine the newly released text in detail and provide analyses on the ramifications of this deal for emerging food technologies, food labels that truly inform consumers and the rules we need to protect our soil, waterways and public health.”

Based in Minneapolis with offices in Washington, D.C., and Berlin, Germany, the Institute for Agriculture and Trade Policy works locally and globally at the intersection of policy and practice to ensure fair and sustainable food, farm and trade systems.

www.iatp.org

Tell Your Members Of Congress to Oppose Trump’s Climate-denying NAFTA Deal

After more than a year of secretive backroom dealing, the text of Trump’s NAFTA deal is finally out.

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What’s in the rebranded U.S.-Mexico-Canada trade agreement? A shameless handout to Chevron and ExxonMobil, terms that encourage the outsourcing of jobs and pollution, a weak environmental chapter that would fail to protect our air, water, and wildlife, and rules that promote fracked-gas exports and pipelines.

Trump’s NAFTA even includes new rules that could prolong Trump’s polluting legacy for years after he leaves office.

What’s NOT in the deal? There’s not a single mention of climate change, even after more than two decades of corporate polluters outsourcing their climate pollution under NAFTA.

Tell your members of Congress to oppose the U.S.-Mexico-Canada trade agreement — a climate-denying deal that would perpetuate NAFTA’s damage to our communities!

The shameless handout to ExxonMobil and Chevron gives you a sense of the role corporate polluters played in shaping this toxic deal. While the new deal curtails the outrageous rights that corporations have used to sue governments in unaccountable investor-state dispute settlement (ISDS) tribunals, it then offers those same rights to the worst offenders: Big Oil and Gas.

That’s right — some of the biggest corporate polluters in history would still get to challenge environmental policies in Mexico, using the same broad rights that they’ve used to attack policies from Ecuador to Canada. It’s like saying, “From now on we’re going to protect the hen house by keeping away all other animals…except for foxes.”

What happens next? The deal must go to Congress for a vote, and cannot be submitted to Congress until 2019.  That means a new Congress will determine the fate of the new deal, raising the stakes in November even higher.

Take a action now