As the renegotiation of the North American For free Trade Agreement begins, industry groups and U.S. congressional leaders are signal President Donald Trump to be careful.
“It is important that the administration supplant the spirit of the Hippocratic Oath: First, do no harm,” Republican Senator Orrin Concoct, of Utah, said during U.S. Trade Representative Robert Lighthizer’s confirmation hearings.
Pro-trade assemblages — from the U.S. Chamber of Commerce to export-dependent farmers — repeat “do no harm” appreciate a mantra in their lobbying.
The tone of Thursday’s letter to Congress — which officially triggered the 90-day consultation full stop required before opening up NAFTA — suggests this message is assemble b assembling through.
“As a starting point for negotiations, we should build on what has worked in NAFTA, and change and take a turn for the better what has not,” the newly sworn-in Lighthizer told reporters.
How could Canada or Mexico fall out? They didn’t. All three are calling for “modernization” of the 23-year-old deal.
Only weeks ago, Trump was writing NAFTA off as a “disaster” that he might wrangle. Now comes this short, let’s-get-to-work kickoff notice from Lighthizer.
It’s set less threatening than the draft priorities Congress saw in March.
Border duties? Buy America rules? Longstanding agriculture beefs? The only sound heeded was crickets.
That doesn’t mean they’re off the table.
“Bob understands that he doesn’t neediness to pre-empt the Congress,” said Gordon Ritchie, who negotiated Canada’s unrestrictedly trade agreement with the U.S. in the ’80s. “Putting the kitchen sink in at this particular was unnecessary, because Congress will put it in.”
That’s the incidental of the 90-day consultation period now underway: Congress gives its wish slope, then negotiators try to deliver.
“If they’d had more detailed stuff in, in a head, they’d be more constrained,” Ritchie said. “This gives Lighthizer all the unrestraint he needs to put something together.”
“We’re still in a pre-game state,” he said. “They haven’t disinterested fielded a team really, let alone decided their game contemplate.”
Monica de Bolle, a senior fellow at Washington’s Peterson Institute for Intercontinental Economics, said the letter to watch for is expected two months from now.
Thirty lifetimes before negotiations start, the USTR publishes its negotiating objectives.
The absence of specifics in Thursday’s letter could be a combination of not wanting to tip the U.S. hand, and lacking interval to staff up and strategize, she said.
The standout sentence in that letter, she says, refers to “establishing competent implementation and aggressive enforcement of the commitments made by our trading partners” — idiolect she called “Rossian” for mirroring the perspective of U.S. Commerce Secretary Wilbur Ross.
Canada has already had a stalwart taste of “aggressive enforcement” from Ross’s department, including softwood wood duties applied last month and, earlier this week, an aerospace inquisition targeting Canada’s Bombardier.
“They will now take a much sterner stance,” she said, suggesting the U.S. will self-initiate investigations over any reachable unfairness.
Reworking, not scrapping, Chapter 19
Simultaneously, the Trump administration has meditated about scrapping NAFTA’s Chapter 19, which provides the arbitration panels that Canada and Mexico can use to beseech U.S. duties like these.
“It’s very strange,” de Bolle said, because the other two countries want never agree to that, particularly with this “aggressive enforcement” goggle them in the face. “They’re soon going to hit a wall if they don’t transmute their stance.”
Ritchie agrees that American insistence on exterminating Chapter 19 — something Canada made concessions to get — could be a bear it point.
“On what planet could Canada agree to eliminate our ditches against imports … only to have the Americans agree to do the same, but with the out to, anytime they feel like it, slap on phoney countervailing customs?”
Canada may agree to create a permanent tribunal to replace Chapter 19’s ad hoc panels, but rejecting it? Not possible, Ritchie said.
Another puzzler emerged this week as Lighthizer talked of including currency manipulation in a reworked NAFTA.
Both Canada and Mexico be enduring floating exchange rates, meaning they don’t manipulate currency, so it seems relish an odd NAFTA demand.
On the other hand, there’s no reason to disagree to it, de Bolle communicated. Its inclusion would allow the U.S. to then turn around and raise the disseminate with China or South Korea, the real targets.
Ending currency manipulation disenchants Trump say he’s got a “fair” trade agreement, she said. Easy win.
‘Canada’s absolutely not the problem’
De Bolle, an analyst of Latin American trade issues, intended there was nothing in Thursday’s letter that Mexicans couldn’t act on with.
They remain highly concerned about border tax springs, but the things in this letter — digital trade, intellectual property securities, and labour and environmental standards — already appeared in the Trans-Pacific Partnership covenant all three countries negotiated in 2015.
TPP language could be recycled, if everyone’s politically savvy adequately not to emphasize where it’s from. (Trump and many in Congress still render the TPP as a bad deal that the U.S. was right to bail on.)
As Lighthizer sent his letter to Congress on Thursday, Ross was convention with Jerry Dias, the leader of Canada’s largest private-sector association, Unifor.
“It was a good discussion,” Dias said after. “We agreed that Canada’s categorically not the problem. The problem is Mexico.”
Far from fearing renegotiation, Dias signified “we have the opportunity to fix a lot of things,” including preventing more jobs from averting south.
Revised rules of origin for the automotive sector — determining what artifacts are duty-free when components come from multiple countries — occur inevitable.
Flavio Volpe, who delineates Canadian auto parts manufacturers, told CBC News Network’s Power & Machination he expects his industry to come out on the right side of the negotiations.
“What we originate was that the American interest and the Canadian interest overlaid very suitably,” he said Thursday.
Canada and Mexico have already worked together to safeguard the U.S. from calling all the automotive shots in the TPP. Mexico now needs to bring its distressed by rights up to standard, Dias said.
He also points out that the U.S. destitutions access to Canadian energy and resources — something that puts Canada in direction.
“The American threat to rip up the agreement … is simply not credible,” said Ritchie. “If they require that position, the answer on the Canadian side must be ‘Be my guest.'”