Sunday, August 5, 2018

The Obama administration already renegotiated NAFTA


Throughout his run for the Presidency, Trump promised to get rid of TPP and soon after his inauguration he followed through, trashing the renegotiation of NAFTA with it.  You read that right.  Obama had already renegotiated 
the North American Free Trade Agreement, the 1994 agreement better known as NAFTA.  Gone were the trade barriers and tariffs that Trump promises to destroy. He's like a brood parasite that dumps his eggs into another species’ nest to avoid wasting time and energy. 

When Trump withdrew the United States from the Trans Pacific Partnership, he extinguished the opportunity, not only economically but geopolitically, to put China in check.  He threw away the chance to embed the United States in the future of Asia.

The Obama negotiators took advantage of a unique opportunity.  The Trans-Pacific Partnership would have given Mexico and Canada better access to sell their products in Asian markets, so they were willing to update and upgrade the terms of the NAFTA agreement.  When Trump tries to renegotiate NAFTA, he won’t have the same leverage now that he’s ditched TPP.

It was sensible to call for realignment of the NAFTA agreement.  After all, it was signed more than twenty years ago.  The world and commerce have changed in innumerable ways that needed to be accounted for.  Presumably, the Obama administration took all of that into account when they renegotiated NAFTA as a part of TPP.

Having learned from past agreements, including NAFTA, the aim was to upgrade existing standards and reset higher standards that reflected today’s economic realities. It took years of haggling, but President Obama’s negotiators eventually got a lot of what they wanted. And they got it making minimal concessions.  According to Michael Froman, Obama’s trade representative:
  • Canada agreed to give American farmers limited access to its tightly protected dairy industry and Mexico agreed to labor reforms that strengthened NAFTA’s laxed union protections. 
  • The new deal opened up service sectors like insurance, accounting and express delivery, along with e-commerce and other digital industries that didn’t exist when NAFTA was initially adopted. 
  • The United States also established new restrictions on government-owned businesses and secured new protections for intellectual property, as well as new safeguards for the environment.
Trump’s U.S. Trade Representative presented a letter to Congress laying out the goals and negotiations of NAFTA that resembled the Obama administrations presentation.  In some instances it used the exact same language.  Once again Trump’s promise of a departure from Obama was nothing more than campaign rhetoric.   

The Asia-oriented trade agreement was a pact among the three NAFTA nations and nine other Pacific Rim countries. President Obama had seen it as a way to renegotiate NAFTA, take on China's unfair trade practices and secure America's economic role in Asia.  The agreement consisted of 5,500 pages.  Think Trump read it? Of course not!  But once his attempt to renegotiate NAFTA failed,  he directed Larry Kudlow, his Economic Advisor and Ambassador Robert Lighthizer to negotiate reentry into TPP, but  the remaining countries had signed an agreement without the U.S.  Participants were no takers, declaring that "reentry might be possible under a new president."

Thus far, the great dealmaker has proven himself to be nothing more than a dealbreaker.  And just as President Obama warned, China moved to fill the economic vacuum.  Several TPP countries in Asia began looking into a China-led regional trade alliance that is unlikely to include any of TPP’s protections for labor, the environment, intellectual property or an open internet.

As Jeffrey Wilson, head of research at the University of Western Australia’s Perth U.S.-Asia Center, told the New York Times:
“. . . . The U.S. is really delivering the region to China.…The U.S. has gone from being a leader to actually being the No. 1 antagonist and No. 1 source of fear.” 

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