Major NAFTA changes? Good luck with that
According to President Donald Trump, he had decided to pull out of NAFTA until, at the last minute the other day, he talked with the leaders of Canada and Mexico, who convinced him to first try renegotiating the 23-year-old trade agreement with them instead.
According to other sources, Trump’s economic team showed him the actual numbers involved in the existing trade among the three nations. And the businessman who cast himself as a godlike job creator saw a real danger in simply walking. Let’s be honest here: That would create political devastation in the heartland for someone’s 2020 re-election bid.
Either way, it’s encouraging that the man who was so full of stark campaign absolutes last year is also subject this year to pragmatic persuasion by his team. Call it flipping or learning, it’s quite a change from the less-than-nuanced candidate Trump. In September, he told a North Carolina audience, “We have some of the worst trade deals ever made, headed by NAFTA. Other countries have ripped us like you’ve never seen.”
“Take a look at NAFTA,” Trump told conservatives as recently as February, “one of the worst deals ever made by any country, having to do with economic development.”
Last week, Trump turned tempered. The leaders of Mexico and Canada “called me and they said, ‘Rather than terminate NAFTA, could you please renegotiate?’ I like them very much. I respect their countries very much. The relationship is very special. And I said, ‘I will hold on the termination. Let’s see if we can make it a fair deal.’”
Trump’s presidential style resembles his real estate deal-making. Open with the most extreme position: “This house is a mess; I’ll give you 10 grand for it.” Then adjust during negotiations, settling where you wanted to be in the first place, but the other party thinks you’ve given in.
If the deal-maker-in-chief can so easily bargain away currency manipulation charges against China in exchange for its pressure on North Korea, the U.S. president surely ought to be capable of good deals with America’s closest neighbors. It’s in America’s own self-interest!
Take Canada, for example. The U.S. and Canada have the largest bilateral economic relationship in the world, along with the world’s longest undefended border, 5,524 miles. Imagine the costs of that wall.
They’re tied by vast electrical, financial, intelligence and law enforcement networks. Nearly $2 billion in trade flows across that border every single day. More trade transits the old bridge between Detroit and Windsor, Ontario, each year than flows between the U.S. and Japan.
Americans have $380 billion directly invested in Canada, while Canadians have about $260 billion in investments down south. Exports of goods and services to Canada support about 1.7 million U.S. jobs. The U.S. trade deficit there narrowed to $11 billion last year.
Fully 40 percent of U.S. imported oil comes from Canada, before the Keystone XL pipeline.
As for Mexico, exports there support around 1.2 million U.S. jobs. The exchange of goods and services last year totaled about $597 billion, with Mexico earning a surplus of around $55 billion, compared to the $336 billion U.S. deficit with China in 2015, the last year for which figures are available.
Americans have about $92 billion in direct investments in Mexico. Mexicans have about $17 billion in the U.S.
The social, family and cultural ties among the three nations run even deeper. So the economic, cultural, political and social reality of North America is that the countless interwoven links on all levels among Canada, Mexico and the U.S. are so profound and so deeply embedded that Trump and the others can talk all they want.
They might alter a few fringe rules for appearance’s sake. But the familiar fundamentals of North American life are not seriously subject to the vagaries of passing political promises — or renegotiations. Clay Bennett, Chattanooga Times Free Press