The administration has recently been turning its renegotiation focus toward areas where prospects for progress appear the strongest at this point, including energy, John Murphy, U.S. Chamber senior vice president for international policy said.
After several months of sounding the alarm that the Trump administration’s North American Free Trade Agreement (NAFTA) proposals were overly aggressive and trade-prohibitive, U.S. Chamber of Commerce executives indicated Wednesday they have felt encouraged by the most recent course of talks between the pact’s parties.
During an October speech in Mexico City, Chamber CEO Tom Donohue outlined his organization’s reticence to the administration’s thenceforth approach to updating NAFTA, and he warned of several apparent U.S. “poison pill” proposals, including added restrictions to NAFTA’s automobile rules of origin, optional investor-state dispute settlement, and a tightened North American procurement policy.
However, Donohue changed his tone Wednesday, saying “in recent times,” he believes, the U.S. is “making progress” in renegotiating NAFTA and the U.S.-Korea Free Trade Agreement.
The administration has recently been turning its renegotiation focus toward areas where prospects for progress appear the strongest at this point, including energy, Chamber Senior Vice President for International Policy John Murphy told reporters after Donohue’s annual “State of American Business” address in Washington.
There’s a chance for ongoing talks to “capitalize” on recent openings in Mexico’s energy market, and make sure those policies are enshrined into an updated NAFTA, Murphy said.
Administration, Capitol Hill, Canadian and Mexican signals indicate a growing U.S. focus on the positive opportunities of talks, Murphy said.
“I’m feeling better about NAFTA as more and more stakeholders are speaking out, and I think, effectively communicating for their interests and concerns – senators, governors, members of the House – and so, I think everybody’s getting a little bit smarter between Congress and the administration about just how many different industries are touched by NAFTA,” he said.
It appears that a strong NAFTA advocacy push with the administration has “led to some contemplation” by officials about their approach to the negotiation, Murphy said.
“Some eyes have been opened” in the White House to several sectors and interests across many states, particularly “industrial states” like Michigan and Wisconsin, and “heartland agricultural states” like Iowa and Missouri, Murphy said, whose workers have a big stake in NAFTA’s future.
“These are areas that are also on the radar for the White House political operation this election year,” he said.
It would be reasonable to expect congressional Republicans and Democrats to join in active opposition to any action by the U.S. to withdraw from NAFTA at this point, Donohue said, listing a few political battleground states that would be affected by such a move, as well as Texas.
Per the agreement, a withdrawal notice by any party would be followed by a six-month review period by member governments, but the extent to which any country’s legislature could block such a move has been a topic of extensive debate among trade and legal experts since President Trump was elected.
Donohue, though, said a serious withdrawal threat would hurt the U.S. economy and have “a major effect” on members of Congress, who would likely “act accordingly” in the event of an exit move.
Privately, Congress has been closely engaging with the White House and Office of the U.S. Trade Representative on the question of how much support a NAFTA withdrawal would garner, Donohue said.
Trump told the New York Times last month that the U.S. was doing “pretty good” in the renegotiation, after months of raising the possibility of a U.S. withdrawal in speeches and Tweets, unless Canada and Mexico were to make adequate concessions.
However, Reuters reported Wednesday that members of the Canadian government “increasingly expect” the U.S. to withdraw from NAFTA, around when NAFTA governments’ officials attend the next negotiating round in Montreal later this month.
“There has been no change in the President’s position on NAFTA,” a White House official said in an email.
During the “State of American Business” speech itself, Donohue said a U.S. withdrawal from NAFTA would be a “grave mistake,” adding that it would undermine 2017’s strong economic growth, including two straight quarters of 3 percent GDP.
“The American economy has taken several big steps forward with regulatory relief and tax reform, and the administration deserves lots of credit,” Donohue said. “But a wrong move on NAFTA would send us five steps back.”
He also called for the U.S. to be more competitive in negotiating free trade agreements to sell American products to the 95 percent of the world’s population living outside of this country, noting that the Trump administration has recoiled from several trade agreement negotiations as other nations are “rushing” forward to build new trade alliances.
U.S.-China trade will also be “high on the agenda” in 2018, and the administration is “right” for recent trade actions against Chinese market access restrictions, subsidies, data and cyber policies, forced technology transfer, and intellectual property theft, Donohue said.
The U.S. should take a forceful but measured response to trade with China, he suggested.
“We have to remember that China is a major world power, and an extraordinary potential market, and somebody that we have to deal with, with respect and strength,” Donohue said. “The President says he wants more trade and more agreements with China. So do we. Let’s do it in a way that works.”
U.S. Chamber feeling more optimistic about NAFTA
