‘Critical moment’ for NAFTA
Amid Trump’s tough talk, trade pact’s demise appears likely
WASHINGTON — The North American Free Trade Agreement, long disparaged by President Donald Trump as bad for the United States, was edging closer toward collapse as negotiators gathered for a fourth round of contentious talks here this week.
In recent weeks, the Trump administration has sparred with American businesses that support NAFTA and has pushed for significant changes that negotiators from Mexico and Canada say are nonstarters. All the while, the president has continued threatening to withdraw the United States from the trade agreement, which he has maligned as the worst in history.
As the trade talks began on Wednesday, Trump, seated in the Oval Office beside Prime Minister Justin Trudeau of Canada, said it was “possible” that the United States would drop out of NAFTA. “It’s possible we won’t be able to make a deal, and it’s possible that we will,” the president said. “We’ll see if we can do the kind of changes that we need. We have to protect our workers. And in all fairness, the prime minister wants to protect Canada and his people also. So we’ll see what happens with NAFTA, but I’ve been opposed to NAFTA for a long time, in terms of the fairness of NAFTA.”
Trudeau, in comments later at the Canadian Embassy, said he remains optimistic about the potential for a NAFTA deal but noted that Canadians must be “ready for anything.”
The collapse of the 1994 trade deal would reverberate throughout the global economy, inflicting damage far beyond Mexico, Canada and the United States and affecting industries as varied as manufacturing, agriculture and energy. It would also sow at least short-term chaos for businesses like the auto industry that have arranged their North American supply chains around the deal’s terms.
The ripple effects could also impede other aspects of the president’s agenda, for example, by solidifying political opposition among farm state Republicans who support the pact and jeopardizing legislative priorities like tax reform. And it could have far-reaching political effects, including the Mexican general election in July 2018 and Trump’s own re-election campaign.
Business leaders have become spooked by the increasing odds of the trade deal’s demise, and on Monday, more than 310 state and local chambers of commerce sent a letter to the administration urging the United States to remain in NAFTA. Speaking in Mexico on Tuesday, the president of the U.S. Chamber of Commerce, Thomas J. Donohue, said the negotiations had “reached a critical moment. And the chamber has had no choice but ring the alarm bells. Let me be forceful and direct,” he said. “There are several poison pill proposals still on the table that could doom the entire deal.”
The potential demise of the trade deal prompted supportive messages from labor unions, including the AFL-CIO and the United Steelworkers, as well as some Democrats.
“Any trade proposal that makes multinational corporations nervous is a good sign that it’s moving in the right direction for workers,” said Sen. Sherrod Brown, D-Ohio.
If the deal does fall apart, the United States, Canada and Mexico would revert to average tariffs that are relatively low.
But several agricultural products would face much higher duties. American farmers would see a 25 percent tariff on shipment of beef, 45 percent on turkey and some dairy products, and 75 percent on chicken, potatoes and high fructose corn syrup sent to Mexico.
For months, some of the most powerful business leaders in the country had hoped that the president’s strong wording was more a negotiating tactic than a real threat.
But now, eight weeks into trade talks that were originally supposed to conclude by year’s end, the administration continues to push for concessions that the business community warns would essentially undermine the pact, and which few observers believe Canada and Mexico could agree to politically.