USTR Says NAFTA Far From Being Done Deal

On May 17, the supposed deadline for having a NAFTA deal ready so that Congress could vote on it in 2018, the U.S. Trade Representative said ratifying a deal this year is unlikely. Earlier that day Canada's Prime Minister Justin Trudeau, speaking in New York, said, "We're down to a point where there is a good deal on the table. Mexico has put proposals on the table that actually will go a long way towards reducing the trade deficit the U.S. has with Mexico, and indeed, bringing back some auto jobs from Mexico to the United States. It's right down to sort of the last conversations."

Mexico wasn't quite so positive, with its Economy Minister Ildefonso Guajardo tweeting in response to Trudeau's speech that "any renegotiated #NAFTA that implies losses of existing Mexican jobs is unacceptable."

But a 6:30 p.m. statement from U.S. Trade Representative Robert Lighthizer that threw cold water on the idea that a deal will be done anytime soon, even if May 17 wasn't a drop-dead deadline, as House Speaker Paul Ryan said. "The NAFTA countries are nowhere near close to a deal. As I said last week, there are gaping differences on intellectual property, agricultural market access, de minimis levels, energy, labor, rules of origin, geographical indications, and much more."

Whenever a deal is reached -- if one is -- it must pass Congress, but members of Congress on both sides of the aisle have been publicly questioning Lighthizer's negotiating positions. House Ways and Means Committee Chairman Kevin Brady, R-Texas, put out a statement May 18 that again said Republicans want the Investor-State Dispute Settlement system preserved. Lighthizer wants it gone. Brady said, "We want an agreement that creates certainty for American workers and companies and high-standard rules that don’t automatically sunset after five years." Lighthizer has not wavered from a demand for a five-year sunset, which both Canada and Mexico oppose.

Rep. Gregory Meeks, D-N.Y., met with Lighthizer on May 16, when the USTR privately told a group of pro-trade Democrats that a vote during this Congress was not going to happen. Meeks sat down for an interview with International Trade Today to talk about his view of how NAFTA can go forward.

Mexico will not compromise on auto rules of origin unless Lighthizer drops his demand to get rid of ISDS, said Meeks. "That's what the president of Mexico told me when I was in Peru," he said. But he said Lighthizer gave no indication he will bend. "You don't know what the strategy is," Meeks complained, saying that the Trump administration's message to trading partners is: "You need us," and that if those countries don't do what America wants, it will punish them through tariffs or by pulling out of a deal.

Meeks said during the meeting with the New Democrat Coalition, Lighthizer was asked how he would protect U.S. auto manufacturing jobs in South Carolina and Alabama, given that the BMW and Mercedes vehicles built in factories there may not reach the 75 percent quota of NAFTA regional content he's seeking. Part of the American proposal is to set a quota for content made by workers paid at least $16 per hour, and Lighthizer said "that would be the way around," with German parts qualifying under that standard. The USTR's office didn't comment on that issue.

Meeks said he's heard rumors from the White House that the president's strategy to get a rewritten NAFTA through Congress will be to deliver the deal at the same time he announces he'll withdraw from the current NAFTA. Meeks called that strategy: "You vote for this, or forget about it." Meeks, who supported the Trans-Pacific Partnership, said that's not an approach that would motivate him to try to convince more Democrats to vote for NAFTA 2.0.

In public speeches Lighthizer has alluded to the possibility that Democrats will win a majority in the House of Representatives in November, and that they could have different priorities for a deal than the current Congress does. Meeks said he doesn't know how such a shift in power would affect the possibility of NAFTA passage, because shifts to the left may result on lost votes from Republicans, who usually are the majority of votes for trade deals.

But Meeks said he would hope that if a withdrawal announcement came without any new NAFTA to replace it, both chambers of Congress, no matter who's in the majority, could assemble a veto-proof majority to stop it. He said a withdrawal would be devastating to the American economy. He drew a parallel to the 2008 financial bailout, or TARP, the Troubled Asset Relief Program. Initially, on October 29, the majority-Democratic House rejected the bailout bill. The stock market plunged when the bill failed. A few days later, both chambers passed TARP, with more Democratic than Republican votes, but with significant support on both sides of the aisle. "I think when we're really in a crisis, in a crunch, then we come together," Meeks said.

Meeks, whose district covers a large part of Queens, said he is not hearing from constituents about NAFTA. "Even labor has been very quiet," he said. Where he's lobbied on preserving NAFTA and getting a new NAFTA that is not more protectionist is from the JFK Airport Chamber of Commerce, Queens Chamber of Commerce and large multinational corporations. Meeks sees Trump's view of trade as trying to restore a manufacturing sector as it existed decades ago, and he said that's often been the message from labor, too.

"You can't give false promises," Meeks said. "You can't go backward, you've got to go forward. It's a smaller world than ever before." Meeks said with the size of the population in China, India and Africa, and the fact that those countries are gaining purchasing power, that's where the markets of the future are, and we need to open them to U.S. services and goods. By trying instead to reverse globalization, "we're putting handcuffs on ourselves," he said.