Fix one trade un­cer­tainty

The Progress-Index Weekend - - OPINION -

The trade truce this past week­end be­tween the United States and China gave U.S. busi­ness a dose of con­fi­dence - which Pres­i­dent Don­ald Trump un­did Tues­day with a series of Twit­ter mes­sages sug­gest­ing he is still "a tar­iff man" whose pa­tience with Bei­jing is grow­ing short. The Dow Jones in­dus­trial av­er­age, which had risen al­most 300 points on Mon­day, dropped al­most 800 points on Tues­day. Trump then sent up­beat sig­nals Wed­nes­day (when the mar­kets were closed for a day of mourn­ing in honor of for­mer pres­i­dent Ge­orge H.W. Bush). The up­shot is that un­cer­tainty about U.S. trade pol­icy con­tin­ues to plague an other­wise ro­bust econ­omy, and that much of it has been cre­ated by the pres­i­dent him­self, first by launch­ing var­i­ous trade wars, then by con­duct­ing them er­rat­i­cally.

Iron­i­cally, the best way for Congress, soon to be di­vided be­tween a Demo­cratic House and a Repub­li­can Se­nate, to help would be to give Trump some­thing he wants: ap­proval of the mod­i­fied trade agree­ment he has ne­go­ti­ated with Mex­ico and Canada to re­place the North Amer­i­can Free Trade Agree­ment.

The deal ex­ists be­cause Trump ex­ag­ger­at­edly blamed NAFTA for in­dus­trial job losses and pledged to ei­ther rene­go­ti­ate or end it. NAFTA needed a re­fresh after a quar­ter-cen­tury in force: new rules on dig­i­tal trade and a ban on lo­cal­ized data-stor­age re­quire­ments in the three mem­ber na­tions. Those are in Trump's pro­posed deals, along with use­ful changes (more U.S. ac­cess to Canada's pro­tected dairy mar­ket) and pos­si­bly coun­ter­pro­duc­tive ones (stricter rules on NAFTA-ori­gin in­puts for auto man­u­fac­tur­ers and, for Mex­ico, a $16-an­hour min­i­mum wage for cer­tain auto work­ers).

On the whole, how­ever, the new bar­gain rep­re­sents a tweak of NAFTA that, if en­acted, would sta­bi­lize a hemi­spheric trade area that Trump had threat­ened to desta­bi­lize. Trump's team ex­pects even­tual ap­proval be­cause many changes it ne­go­ti­ated - es­pe­cially the auto-in­dus­try rules - were on the wish list of the Democrats and their al­lies in or­ga­nized la­bor. But the temp­ta­tion for the likely next speaker of the House, Nancy Pelosi, D-Calif., would be to turn the deal down and thus deny Trump a vic­tory. On Fri­day, she said the deal still lacks "enough en­force­ment re­as­sur­ances" re­gard­ing her party's pri­or­ity is­sues. Mean­while, Se­nate Repub­li­can sup­port­ers of free trade ob­ject to the deal's at­tempt to man­age trade in au­tos. Trump pres­sured Congress by threat­en­ing to with­draw from NAFTA, which, if he fol­lows through, could present law­mak­ers with a choice be­tween ac­cept­ing his deal and a po­ten­tially dis­as­trous re­turn to the pre-NAFTA sta­tus quo.

The pol­i­tics of trade have been scram­bled by the si­mul­ta­ne­ous rise of a pro­tec­tion­ist Repub­li­can pres­i­dent and a shift in the Demo­cratic Party's base from union­ized in­dus­trial ar­eas to suburbs. The hope is that there may be enough strange po­lit­i­cal bed­fel­lows to cre­ate a bi­par­ti­san ma­jor­ity in each cham­ber of Congress.

Prompt rat­i­fi­ca­tion of this less-than-op­ti­mal deal, fleshed out, if need be, with lan­guage in the im­ple­ment­ing statutes to ad­dress Pelosi's con­cerns, would sta­bi­lize the hemi­spheric econ­omy, en­abling the United States and its al­lies to fo­cus ef­forts on the coun­try Trump has prop­erly, if hy­per­bol­i­cally, iden­ti­fied as a gen­uine ob­sta­cle to free trade: China.

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