Democrats face eco­nomic dilemma with trade deal

Trump to ter­mi­nate NAFTA with or with­out re­place­ment

The Washington Times Weekly - - Politics - BY S.A. MILLER

Demo­cratic con­gres­sional lead­ers are loath to ac­knowl­edge it, but Pres­i­dent Trump has them cor­nered with his threat to ter­mi­nate NAFTA if his new trade deal with Mex­ico and Canada isn’t ap­proved.

Scrap­ping the North Amer­i­can Free Trade Agree­ment with­out a re­place­ment would de­liver a heavy blow to the U.S. econ­omy. In the short term, it would re­duce real U.S. gross do­mes­tic prod­uct — the to­tal out­put of goods and ser­vices — by as much as $231 bil­lion, more than 1 per­cent dur­ing the first five years, ac­cord­ing to an anal­y­sis com­mis­sioned by the Busi­ness Roundtable.

“Ter­mi­nat­ing NAFTA would have neg­a­tive im­pacts on jobs, ex­ports and out­put even af­ter new sup­ply chains are formed. In this longer run, we es­ti­mate that U.S. GDP would re­main de­pressed by over 0.2 per­cent, per­ma­nently,” said the re­port for the Busi­ness Roundtable, an as­so­ci­a­tion of chief ex­ec­u­tive of­fi­cers from ma­jor U.S. cor­po­ra­tions.

The im­pact on the U.S. GDP, about $19.3 tril­lion in 2017, would de­pend on the re­ac­tions of Mex­ico and Canada. Al­ter­na­tive sce­nar­ios in the anal­y­sis pegged the re­duced an­nual GDP at $119 bil­lion to $231 bil­lion, with job losses from 1.8 mil­lion to 3.6 mil­lion in the five-year win­dow.

Sen. Chuck Grass­ley, the Iowa Re­pub­li­can who next year will take charge of the Se­nate Fi­nance Com­mit­tee, which over­sees trade agree­ments, said the pres­i­dent has Congress over a bar­rel.

“It seems to me it is go­ing to force Congress to act — even if you dis­agree with parts of it,” he said in an in­ter­view on the “Adams on Agri­cul­ture” pro­gram on the Amer­i­can Ag Ra­dio Net­work.

“Now that is a hard-nosed ap­proach, but some­times a pres­i­dent has to use that if he wants to get things ac­com­plished,” Mr. Grass­ley said.

Capi­tol Hill Democrats shrugged off Mr. Trump’s threat and vowed to tin­ker with the pro­posed U.S. Mex­ico Canada Agree­ment (USMCA), po­ten­tially de­rail­ing a deal that leg­is­la­tures in all three coun­tries must ap­prove.

Mr. Trump and his coun­ter­parts in Mex­ico and Canada signed the agree­ment on Nov. 30, cap­ping a year of in­tense ne­go­ti­a­tions that pro­duced a trade deal that many said would be im­pos­si­ble to make.

Two days af­ter sign­ing the ac­cord in Buenos Aires while the three lead­ers were at­tend­ing the Group of 20 sum­mit, Mr. Trump put Congress on no­tice.

“I will be for­mally ter­mi­nat­ing NAFTA shortly,” he told re­porters on the Air Force One flight back to Wash­ing­ton. “Then Congress will have a choice of ap­prov­ing the USMCA, which is a phe­nom­e­nal deal. Much, much bet­ter than NAFTA. A great deal.”

The pres­i­dent threat­ened to rip up NAFTA, which he called the “worst trade deal ever made.” The threat helped force Mex­ico and Canada to the ne­go­ti­at­ing ta­ble.

Mr. Trump has found more agree­ment with Democrats than his fel­low Re­pub­li­cans in crit­i­ciz­ing the 24-year-old NAFTA, which is blamed for ship­ping jobs to Mex­ico and has­ten­ing the demise of U.S. man­u­fac­tur­ing.

But Democrats, who take con­trol of the House next month, have been less than en­thu­si­as­tic about ap­prov­ing an agree­ment that would al­low Mr. Trump to check off a ma­jor cam­paign prom­ise.

The USMCA sets new rules on agri­cul­ture, tech­nol­ogy and auto im­ports, pro­tects au­towork­ers’ jobs in the U.S. and opens Canada to Amer­i­can dairy prod­ucts.

House Mi­nor­ity Leader Nancy Pelosi, the Cal­i­for­nia Demo­crat who is poised to be­come speaker of the House, de­scribed the new pact as a warmed-over NAFTA that doesn’t go far enough.

She joked that it was “the bill formerly known as Prince,” a ref­er­ence to the late mu­si­cian who once changed his name to an un­pro­nounce­able sym­bol.

Mrs. Pelosi said Democrats will fight for mea­sures to ac­com­pany USMCA that en­force la­bor and en­vi­ron­men­tal re­quire­ments, as well as leg­is­la­tion in Mex­ico to ad­dress wages and work­ing con­di­tions.

“I said it was a work in progress,” she said. “I know it’s work; I hope it’s progress.”

Rep. Bill Pascrell Jr. of New Jersey, the top Demo­crat on the House Ways and Means Com­mit­tee’s trade panel, said he doesn’t be­lieve Mr. Trump would carry out the threat.


Pres­i­dent Trump signed the United States-Mex­ico-Canada Agree­ment with then-Mex­i­can Pres­i­dent En­rique Pena Ni­eto (left) and Cana­dian Prime Min­is­ter Justin Trudeau.

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