Trump open to re­vis­ing NAFTA if it ben­e­fits U.S.

Forces Mex­ico, Canada back to bar­gain­ing ta­ble

The Washington Times Daily - - FRONT PAGE - BY S.A. MILLER

Pres­i­dent Trump said Thurs­day he was giv­ing Mex­ico and Canada a chance to rene­go­ti­ate the North Amer­i­can Free Trade Agree­ment, but warned them that he was ready to pull out if it wasn’t rewrit­ten as a win­ning deal for the U.S.

In back­ing away from the NAFTA exit, Mr. Trump nev­er­the­less checked off a top item on his 100-day agenda by forc­ing Mex­ico and Canada to the bar­gain­ing ta­ble over the three­coun­try trade deal that has been the bane of the pres­i­dent’s blue-col­lar base.

The ma­neu­ver even won be­grudg­ing sup­port from Mr. Trump’s foes within the Republican es­tab­lish­ment, who ad­mit­ted the decades-old free trade zone needed to be up­dated.

“I de­cided rather than ter­mi­nat­ing NAFTA, which would be a pretty big, you know, shock to the sys­tem, we will rene­go­ti­ate,” said Mr. Trump. “If I’m un­able to make a fair deal for the United States, mean­ing a fair deal for our work­ers and our com­pa­nies, I will ter­mi­nate NAFTA. But we’re go­ing to give rene­go­ti­a­tion a good, strong shot.”

The ad­min­is­tra­tion had been pre­par­ing to quit the deal us­ing an es­cape clause known as Ar­ti­cle 2205. That prompted Mex­i­can Pres­i­dent En­rique Pena Ni­eto and Cana­dian Prime Min­is­ter Justin Trudeau to call Mr. Trump and ask in­stead for a NAFTA redo.

“We have to make a deal that is fair for the United States. They un­der­stand that,” said Mr. Trump in the Oval Of­fice while meet­ing with Ar­gen­tine Pres­i­dent Mauri­cio Macri.

Mr. Trump stressed that he was still will­ing to quit the deal.

He later added that the rene­go­ti­a­tions were al­ready un­der­way. “It’ll start very soon. It’s ac­tu­ally start­ing to­day,” he said.

Fix­ing NAFTA or get­ting the U.S. out of it was a prom­i­nent cam­paign prom­ise for Mr. Trump. It topped his 100-day agenda for ac­tion to pro­tect Amer­i­can work­ers that he pro­moted dur­ing the race.

Since tak­ing ef­fect in 1994, the free trade zone cre­ated by NAFTA has been blamed for the rapid de­cline of Amer­i­can man­u­fac­tur­ing and job losses as com­pa­nies moved fac­to­ries to lower-wage Mex­ico.

It’s also blamed for sup­press­ing U.S. wages.

Mr. Trump’s tough talk on trade and NAFTA in par­tic­u­lar helped fuel his sup­port across the Rust Belt, which sealed his vic­tory in Novem­ber.

Tack­ling NAFTA fol­lowed a se­ries of get-tough moves on trade by the Trump ad­min­is­tra­tion, in­clud­ing slap­ping tar­iffs on Cana­dian soft lum­ber ex­ports and launch­ing in­ves­ti­ga­tions of im­ported steel and alu­minum.

The ad­min­is­tra­tion was ready to be­gin the exit from NAFTA within days. Un­der Ar­ti­cle 2205, which al­lows any of the par­ties to uni­lat­er­ally drop out, the exit would have been com­pleted in six months.

Mr. Pena Ni­eto and Mr. Trudeau phoned the White House Wed­nes­day evening to ask Mr. Trump to en­ter talks on NAFTA rather than quit, a move that would have left Amer­ica’s neigh­bors in an eco­nomic lurch.

Mr. Trump said his “very good” re­la­tion­ships with Mr. Pena Ni­eto and Mr. Trudeau, as well as his re­spect for their coun­tries, prompted him to give rene­go­ti­a­tion a chance.

He said he told them “let’s see if we can make it a fair deal, be­cause NAFTA has been a hor­ri­ble deal for the United States. It’s been very good for Canada. It’s been very good for Mex­ico. But it has been hor­ri­ble for the United States.”

Mex­ico and Canada gave a more sub­dued de­scrip­tion of the call, but all the par­ties said the re­sult was con­sen­sus on the need to “mod­ern­ize” NAFTA.

“Dur­ing the call, both Pres­i­dents spoke of the shared goal of mod­ern­iz­ing the North Amer­i­can Free Trade Agree­ment,” said a state­ment form Mr. Pena Ni­eto’s of­fice. “The lead­ers agreed on the ad­vis­abil­ity of main­tain­ing the North Amer­i­can Free Trade Agree­ment and work­ing with Canada to carry out a suc­cess­ful rene­go­ti­a­tion for the ben­e­fit of the three coun­tries.”

NAFTA hasn’t been all bad for the U.S. About one-third of all U.S. mer­chan­dise ex­ports go to Mex­ico and Canada, and ex­ports from Amer­i­can ser­vice in­dus­tries and from the agri­cul­ture sec­tor in­creased dra­mat­i­cally un­der the agree­ment, noted the con­ser­va­tive Club for Growth, which ad­vo­cates free trade poli­cies.

The pro­posed U.S. pull­out also faced re­sis­tance from free trade Repub­li­cans in Congress.

“We should im­prove NAFTA, not aban­don it,” Sen. Jeff Flake, an Ari­zona Republican and fre­quent critic of Mr. Trump, said on the Se­nate floor af­ter Mr. Trump’s an­nounce­ment.

He pointed to Ari­zona’s flour­ish­ing trade with Mex­ico, which ex­ceeded $15 bil­lion in 2016 and sup­ports about 100,000 jobs in the Grand Canyon State.

“The bot­tom line is that trade is good for Amer­i­can busi­nesses, it’s good for Amer­i­can work­ers, and it’s good for Amer­i­can con­sumers,” he said. “Trade is not a zero-sum game where one party wins and the other party loses. Free trade ben­e­fits every­one. I hope that we re­mem­ber this as we look to­ward NAFTA’s fu­ture.”

Ja­son Grumet, pres­i­dent of the Bi­par­ti­san Pol­icy Cen­ter, said Mr. Trump was tak­ing the right ap­proach in mov­ing cau­tiously to re­vamp “a com­plex set of in­sti­tu­tional and eco­nomic re­la­tion­ships that have de­vel­oped over the past 25 years.”

“NAFTA has cre­ated mil­lions of U.S. jobs that are now de­pen­dent on that trade. How­ever, as tech­no­log­i­cal ad­vances and shift­ing global dy­nam­ics re­shaped the busi­ness land­scape, NAFTA has re­mained largely un­changed,” he said.

“We com­mend the ad­min­is­tra­tion’s in­tent to up­date and re­form NAFTA to en­sure that U.S. in­ter­ests and work­ers are pro­tected, and to bol­ster our com­pet­i­tive­ness. How­ever, we should re­main cau­tious about tak­ing ex­treme steps that could dam­age Amer­i­can busi­nesses and the over­all U.S. econ­omy,” said Mr. Grumet.

AS­SO­CI­ATED PRESS

Mex­i­can Pres­i­dent En­rique Pena Ni­eto urged Pres­i­dent Trump to try to re­vise NAFTA in­stead of scrap­ping the en­tire trade deal out­right.

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