NAFTA survives
The North American Free Trade Agreement reportedly reemerged from the ashes of President Trump’s trade hostilities late Sunday. While the details of the renegotiated deal were still trickling out, they appeared unlikely to justify months of manufactured drama that rattled markets, frayed alliances and hurt business.
Running up against an administration-imposed deadline to rework NAFTA, the self-styled deal artist was facing the midterm elections without a sketch of a bargain. Hence the weekend’s last-ditch talks between U.S. and Canadian officials, who had reached a stalemate amid threats and insults from the president.
Trump had vowed to cut Canada out and end the three-party agreement altogether when he and Mexican President Enrique Peña Nieto announced a deal to tinker with automanufacturing and other provisions in August. Having failed to reach an accord with our northern neighbor in the ensuing weeks, Trump reiterated the threat of a two-party deal last week before negotiations with Ottawa resumed.
The trouble for Trump was that Congress authorized him to renegotiate NAFTA, not repeal it, and his compulsion to explode trade deals violates one of the few principles still dear to Republicans in Congress. Complicating matters further, final approval is unlikely until next year, when Democrats may be in power.
Canada, our No. 2 trade partner and largest export market, hadn’t proved susceptible to bluffs and bullying by Trump, who is even less popular there than here. Prime Minister Justin Trudeau stressed his obligation to his country’s consumers, workers and businesses — a characteristically polite Canadian counterpoint to Trump’s America-first fulminations.
The Canadians’ 11th-hour agreement salvages for now the preliminary deal between Trump and lame duck Peña Nieto. Any delay beyond Sunday would have brought populist Presidentelect Andrés Manuel López Obrador to the table, with unpredictable results.
One key Canadian concession could expand U.S. access to dairy markets there — which, as it happens, would have been achieved by the Trans-Pacific Partnership that Trump promptly withdrew from upon taking office.
A new NAFTA would build on a recent trade detente with South Korea that likewise yielded incremental adjustments to an accord Trump once disparaged in overheated terms. The president had called the U.S.Korea pact a “horrible deal” and reportedly meant to withdraw from it, along with NAFTA, if his chief economic adviser hadn’t purloined the paperwork.
Given the high risk and low rewards of Trump’s trade wars, it’s fortunate that his bluster about blowing up NAFTA also appears to have been overblown.