NAFTA Renegotiations Don't Look Like A Trump Rewrite

One of the problems with the Trump era is that his and his party’s dysfunction manages to create so many daily outrages and absurdities that it is hard to keep focused on some of the other important but mundane actions of government. That is why so much of the Trump administration’s destruction of environmental regulations and attacks on voting rights flies somewhat under the radar. This seems to be true of the ongoing NAFTA renegotiations, which have largely gone unreported since they began. That is partly because the negotiations seem to be going nowhere right now but also because of the daily Trump outrages.

The critical fact that Donald Trump did not understand is that renegotiating NAFTA is probably far more difficult than the original agreement. Both Canada and especially Mexico are far more powerful today than they were in the late 1990s. Both have clear and specific agendas for their own countries which are much more limited than getting easier access to US markets as it was back in the day. Complicating these matters further, those agendas are in direct opposition to Trump and Republican stated policies. In fact, the only leverage the US seems to have in these negotiations seems to be to simply threaten to terminate the agreement entirely which could be as destructive to the US as it is to our neighbors in the north and south.

In these renegotiations, Canada is focused on workers’ rights, looking to get the US to eliminate “right to work” laws and Mexico to provide more favorable contracts for corporate sponsored unions. According to the Globe and Mail, “Ottawa’s negotiators are: pushing Mexico on its corporate-sanctioned unions, which are accused of negotiating collective agreements unfavourable to workers; agitating for both countries to offer a year of paid family leave, as Canada does; and targeting American right-to-work laws that allow workers in unionized shops to refuse to pay dues, draining money from unions.” I don’t imagine any of those ideas fit into Trump’s or Republicans’ view of what a renegotiation would look like.

Mexico, on the other hand, wants to bring its oil and gas industry under the NAFTA umbrella. That industry was not included in the original NAFTA because it was a state-owned monopoly. Today, Mexico’s President Nieto wants to open up the industry to foreign investment and NAFTA is a perfect vehicle for doing so.

The negotiating position of the US is largely unclear, as are most of Trump’s positions when details are required. According to a NY Times report, the focus of Robert Lighthizer, our trade representative, is on changing the “rules of origin” that would require more car parts to be made in the US and changing NAFTA’s dispute settlement system to give the US even more leverage. He is not opposed to Mexico’s wish to open up its oil and gas industry as that obviously creates more opportunities for US companies. But the US is adamantly opposed to striking down the states’ “right to work” laws.

None of this hardly sounds like the renegotiation of the “worst trade deal ever made” that Trump promised. It sounds more like the tweaking of the original agreement that most people expected and wanted. Even so, there is no love lost between both Trudeau in Canada and Pena Nieto in Mexico and Donald Trump. As one trade expert said, “I think they might be tougher than the Trump administration thought. Trade negotiations are always challenging.” So far, it seems like the parties are still far apart as the third round of talks begin in Canada later this month. And, in the end, the wild card will always remain Trump himself, who could simply decide at the end of this process that the deal is no good and terminate the trade agreement anyway.