- The Washington Times - Monday, May 8, 2017

President Trump moved quickly and aggressively in his first days in office to advance his trade agenda, launching investigations into dumping of foreign products in the U.S. and establishing an office to protect American manufacturing, but the promised NAFTA do-over stands as a tantalizing brass ring that remains out of reach.

Nearly two weeks ago, the president prodded Mexico and Canada to agree to renegotiate the 24-year-old trade pact. But Mr. Trump has barely started the process and has yet to even give the required notice to Congress.

“Right now there is nothing to share,” White House press secretary Sean Spicer said when pressed by a reporter Monday about progress toward opening the renegotiations.

Either reworking or quitting the North American Free Trade Agreement, which Mr. Trump has repeatedly called the “worst trade deal in the history of the world,” was one of Mr. Trump’s top campaign promises and key to the appeal to Rust Belt voters who helped swing the November election his way.

Mr. Trump rushed to fulfill many other trade promises he made to blue-collar workers, who were suffering after their jobs moved to Mexico or other lower-wage countries. He officially pulled the U.S. out of the Trans-Pacific Partnership trade deal with a dozen Pacific Rim nations, began a large-scale review of U.S. trade deficits and trade deals, and opened investigations into imported steel and aluminum. He also threatened to rip up a trade deal with South Korea approved five years ago under President Obama.

The president got tough in a trade dispute with Canada, slapping tariffs of up to 24 percent on Canadian softwood lumber shipped into the U.S.

With NAFTA, however, not so fast.

Part of the holdup is the stalled Senate confirmation of Mr. Trump’s pick for U.S. trade representative. Senate Democrats have slow-walked the nomination of Robert Lighthizer, an experienced negotiator who would lead the talks.

He won unanimous approval from the Senate Finance Committee late last month, clearing the way for what should be an easy confirmation by the full Senate as early as this week.

After that, the Trump team must strike a deal with Congress before beginning to haggle with Mexico and Canada on a revised NAFTA. A month ago, Commerce Secretary Wilbur L. Ross Jr. was already exasperated with the snail’s pace for trade talks in Washington.

“It’s been frustratingly slow,” he fumed on Fox News.

Mr. Ross and other top Trump officials met with the House Advisory Group on Negotiations, a first step toward trade promotion authority for the president to fast-track any deal with Mexico and Canada.

Mr. Trump’s aides have yet to meet with the Senate Advisory Group on Negotiations or provide formal notice to Congress of their plans. The notice begins a 90-day waiting period for intensive negotiations between the administration and Congress to set parameters and objectives for the NAFTA rewrite. A leaked draft of the proposed NAFTA notice in late March proved a disappointment to trade hawks, seeking what appeared to be far more modest concessions from Mexico and Canada than Mr. Trump had talked about on the campaign trail.

Rising leverage

When the Trump administration does reach the bargaining table, it will face two neighbors with significantly more leverage on trade than they had a quarter-century ago when NAFTA was first approved.

Mexico’s more muscular stance is on display this week with a delegation of government and business leaders in Argentina and Brazil to explore alternative sources of corn, soybeans, wheat and rice. The U.S. is Mexico’s biggest supplier of these agriculture products.

Francois-Philippe Champagne, Canada’s minister of international trade, plans to be in Washington for a trade conference on Wednesday and is emphasizing the integrated nature of the North American economy.

“Maintaining strong economic ties is vital to our mutual success,” said Mr. Champagne. “Canada strongly supports open, principled and progressive trade throughout the Americas to create greater prosperity that leads to good-paying middle-class jobs for all of our citizens.”

Last year, Canada had a trade surplus in goods with the U.S. of $12.1 billion, and Mexico had a goods trade surplus of $63.2 billion.

The Trump administration also must contend with a tangle of competing U.S. business interests and political forces on Capitol Hill, many with strongly vested interests in the free trade arrangements.

“His effort to repeal and replace Obamacare will seem like child’s play compared to the effort that would be needed to get a massive rewrite of major trade legislation through Congress,” said Democratic strategist Jim Manley, who served as a top adviser to Harry Reid when he was Senate majority leader.

“One of the biggest issues will be the fact that despite some legitimate criticism of trade policy, there are major business groups fighting tooth and nail to protect their interests,” said Mr. Manley.

Mr. Trump already backed off plans to pull out of NAFTA, saying the threat of a pullout prompted Mexico and Canada to agree to reopen the deal. However, Mr. Trump quickly determined that NAFTA had plenty of winners in the U.S., especially border states. U.S. agriculture and energy industries have prospered greatly in the free trade zone.

“They don’t want to hurt the progress that has been made for American workers,” said Theresa Cardinal Brown, a researcher heading a NAFTA project at the Bipartisan Policy Center. “You have several million jobs in the United States, manufacturing and otherwise, that are dependent on NAFTA. You don’t necessarily want to trade those jobs for other jobs.”

She was optimistic that something positive would come out of renegotiations.

“At the end of the day, whatever is negotiated, the president is going to say he won,” said Ms. Brown.

Mexico and Canada indicated their approach to the talks by describing the need to “update” the agreement.

Indeed, there are areas of trade that have evolved dramatically since NAFTA was signed in 1993, such as e-commerce.

Success for Mr. Trump will hinge on the size of concessions he wants from Mexico and Canada, said Gary Burtless, an economist at the Brookings Institution in Washington.

“I don’t know the administration’s ultimate aims here. If a small political victory is all the president is looking for, I think he can achieve his goal,” he said. “If instead he wants concessions large enough to move us to huge U.S. trade surpluses with Mexico and Canada, the road to achieving his goal will be much, much rougher.”

He noted the range of businesses involved in cross-border commerce as a result of NAFTA, including automakers that assemble cars on both sides of the Rio Grande and U.S. retailers that rely on low-cost winter produce from Mexico to keep their shelves stocked.

“I’m not sure whether the U.S. defenders of NAFTA are all that powerful, but the more U.S. industries that feel they are losers under a revamped NAFTA deal, the more political opposition will spring up to stop a new deal,” said Mr. Burtless. “Compared with 1993, there are now a lot more players on both sides of the border who have a big stake in keeping the trade relationship strong and tariff-free.”


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