Inside D.C.

U.S. Talks ‘Tough’ on NAFTA

The game is on!  This week in Washington, DC, was all NAFTA all the time as formal treaty renegotiation began in earnest.

The five-day session was much like the first day of school.  Everyone found their desks and then presented each nation’s priorities on various issues.  The effort was then organized into subgroups of each delegation to work on specific items.  Progress this week is defined as “agreeing to what new issues may be discussed for possible addition” to the trade pact.

There was no lack of tough talk flying around on opening day August 16, particularly when it came to the script from which Ambassador Robert Lighthizer, U.S. Special Trade Representative (USTR), read during a pre-opening press conference.

Canadian Foreign Minister Chrystia Freeland and Mexican Economic Secretary Ildefonso Guajardo waved their respective flags and said all the right things about the broad benefits of NAFTA to the three nations which signed the treaty 23 years ago.  Lighthizer seized the bully pulpit as host and decided it was important to 1) bash the treaty, 2) up the ante from “tweaking” the document to what sounded more like a wholesale rewrite, and 3) mention President Trump by name several times in just a few minutes.

Lighthizer lectured his audience that while agriculture and related industries have benefited mightily from NAFTA – which agriculture goes out of its way to remind the Trump White House at every turn – the tripartite trade pact has “fundamentally failed many, many Americans,” costing the U.S. 700,000 jobs because of shifting trade movements over nearly 25 years.

“We cannot ignore the huge trade deficits, the lost manufacturing jobs, the businesses that have closed or moved because of incentives – intended or not – in the current agreement,” Lighthizer proclaimed. “Let me be perfectly clear,” he proclaimed, “the U.S. is not interested in a mere tweaking of a few provisions and a couple of outdated chapters.”

As Lighthizer was talking tough trade, the chief executive officer of Cargill, David MacLennan, was telling the Financial Times in Great Britain that any contemplated U.S. action to withdraw from NAFTA, as Trump has threatened more than once, is a “big mistake.”  The overall impact of such a decision would be “destructive,” and not just to agriculture.  “It would be destructive to the American worker and manufacturing and agriculture.  It would be destructive to the American economy,” MacLennan said.  About 10% of Cargill’s $110 billion in 2016 revenue came from its trade with Canada and Mexico; corn exports alone totaled about $4 billion last year.

Back in Washington, three voices of reason joined the NAFTA chorus when a joint statement urging talks that “modernize NAFTA in ways that preserve and expand upon the gains already achieved” was delivered by the presidents of the American Farm Bureau Federation (AFBF), the Canadian Federation of Agriculture (CFA) and Mexico’s Consejo Nacional Agropecuario (CNA), the three NAFTA partners’ largest farm groups.

The letter reminded negotiators the success of North American trade comes from collaboration among the three countries, which together make up “one of the most competitive and successful regions in the world.”  Key to this success, they said, is “economic cooperation, integration and policy alignment.”  At the same time, while each negotiating team comes to the table with issues it wants addressed, “we should not allow these issues to undermine the overall success of trading relationship.”