Trump touts a Mexico deal to replace NAFTA
President Trump this week announced a tentative “United States–Mexico Trade Agreement” that he hopes will supplant the 24-year-old NAFTA. The North American Free Trade Agreement, which Trump has often called “the worst trade deal ever,” has been a prime Trump target since the 2016 campaign. Canada was excluded from an intense round of negotiations, and major political and procedural hurdles stand in the way of the deal’s ratification by Congress. The prospective agreement would require cars to be 75 percent comprised of parts manufactured in North America, up from the NAFTA-mandated 62.5 percent. Additionally, 40 to 45 percent of each car’s parts would have to be made by workers earning at least $16 an hour, a salary markedly higher than the average Mexican autoworker’s $5.21 an hour. Auto industry groups expressed concern that any deal without Canada would drastically disrupt existing supply chains and make U.S. manufacturers less competitive.
Canadian Foreign Minister Chrystia Freeland cut short a European trip to come to Washington Tuesday to join negotiations on which the Trump administration has imposed a Friday deadline, rushing to finish before Mexico’s new senate is seated on Sept. 1. Freeland maintains that any overhaul of NAFTA requires Canadian approval, but she will be “looking for areas where we can find a compromise that everyone can live with.”
What the columnists said
“Impossible” is how one Republican congressman described Trump’s plan, said Haley Byrd in WeeklyStandard.com. The White House is required “to notify Congress 90 days in advance of signing” any new trade agreements. But Mexican President Enrique Peña Nieto leaves office November 30, to be succeeded by left-wing President-elect Andrés Manuel López Obrador. That leaves U.S. and Canadian negotiators just days to come to terms. The administration insists it will push ahead regardless of Canada’s involvement, though it’s “unclear why the Office of the U.S. Trade Representative thinks this is an option.”
At its best, this deal includes “helpful modernizations,” said The Wall Street Journal in an editorial. Agricultural producers, for instance, will be protected from “regulatory abuse.” But Trump’s domestic policy is all about deregulation. So what’s the “economic logic” of the added red tape and “costs on the auto industry to punish imports?” Even if this deal proves better for the U.S. than NAFTA, said Tyler Cowen in Bloomberg.com, it “doesn’t seem worth the price.” Canada is an ally on issues pertaining to water rights, border enforcement, counterterrorism, and intelligence gathering. Trump’s “take-it-or-leave-it” strong-arming will make Canada less inclined to support other U.S. initiatives.
The president “campaigned on fixing our ‘stupid’ trade deals,” said Catherine Rampell in WashingtonPost.com. But this deal would almost certainly “require an enormous expansion of the administrative state” to enforce the new “burdensome requirements” on manufacturers. It might also raise car prices and reduce the number of cars made in North America. This is what “we’ve come to expect from a president who doesn’t understand what his own administration is doing, or doesn’t care.”