As efforts to renegotiate the North American Free Trade Agreement kick off this week, Donald Trump will have an opportunity to take action he’s been promising since he started his campaign for President.
Your Turn: The Trump administration may still be trying to sabotage NAFTA talks, but there are reasons to be optimistic about the trade deal’s renegotiation.
It’s no secret President Donald Trump wants to nix the North American Free Trade Agreement with Mexico and Canada.
He almost succeeded last year with unreasonable demands. The administration’s intention was clear: fulfill a campaign promise by intentionally sabotaging the talks and walking away from the 23-year-old deal.
This week, Reuters reported that Canada officials are increasingly convinced Trump is poised to announce the U.S. will pull away from the deal.
The report sent tremors through Mexico and Canada, but we know the president’s volatility. He might be using the threat as a bargaining chip.
Besides, until this week, there was greater optimism as representatives from the three countries resume negotiations later this month. At stake are 14 million American jobs under the trade deal commonly known as NAFTA.
Why the optimism?
Industry is speaking up. That’s good
Two groups who were previously silent are finally speaking out: American industry and leadership in key NAFTA-dependent states.
Business leaders in the automotive, agriculture, manufacturing and retail industries are now sounding the alarm, publicly articulating just how devastating a NAFTA repeal would be for American competitiveness around the world.
Similarly, governors and political leaders in Wisconsin, Michigan, Ohio and Pennsylvania continue to be front and center touting NAFTA’s cross-border trade as essential to stimulate their state economies.
These states are home to a large percentage of American auto workers, manufacturers, and farmers as well, and I’m told their public support for completing a new agreement will sooner grow louder.
Arizona is leading the way on NAFTA
From exports to jobs to daily tourist spending, the economic impact really adds up. azcentral.com
NAFTA-dependent industries in Arizona include technological and electronic supply chain manufacturing, aerospace, and agriculture and produce.
As a former mayor of Nogales and director of the Arizona Department of Commerce, I know how crucial NAFTA is to the state’s economy. Hundreds of thousands of Arizona’s jobs are vulnerable without this trade deal.
Factories built by Mexican businesses in Arizona have invested hundreds of millions of dollars in the state.
It’s no coincidence that Arizona and other border states like Texas are ardent supporters of the trade deal. But even with the new influential voices, the complex political reality in the United States and Mexico make predicting the agreement’s fate in 2018 a perilous exercise.
Why criticism of NAFTA may be fading
It doesn’t take a rocket scientist to realize that many of the NAFTA-dependent states – Wisconsin, Michigan, Ohio and Pennsylvania – are the states that propelled Donald Trump to the presidency.
As the political pendulum swings away from protectionist ideology and Trumpist policies ahead of the 2018 midterms, the threat of crushing job loss and economic uncertainty looms large with voters.
White House sources also tell me that control over NAFTA strategy has shifted away from Commerce Secretary Wilbur Ross and U.S. Trade Representative Robert Lighthizer to Vice President Mike Pence and chief presidential economic adviser Gary Cohn.
Pence, a former pro-trade governor from the Midwest, and Cohn, a former Wall Street banker, have historically supported a free-trade agenda. The power shift away from hardliners Ross and Lighthizer, and the likely influx of pro-trade members of Congress in 2019, add to the deal’s growing optimism.
The political will of the United States tends to have considerable impact on the tone of Mexican politics.
Seal a deal. Period
Mexico’s presidential election is in July, and it faces its own rise of protectionists and anti-globalists, which many believe is in direct response to Trumpism.
It’s a free-for-all election. Candidates run the gamut from those with populist to nationalist ideals. I was a campaign adviser to current President Enrique Peña Nieto of the Institutional Revolutionary Party. The president and his party support free trade, and I still believe the PRI can prevail in July.
Nonetheless, the election adds a certain amount of uncertainty to the future of NAFTA should no deal be reached by then.
It remains to be seen whether politically influential states and pro-NAFTA advocates from American industry can ultimately save the deal.
But it won’t be for lack of effort. On one hand, the White House seems to be taking note of their concerns, thus markedly changing the trajectory of the negotiations set to resume Jan. 23. On the other, it may be sending signals it’ll end it.
What we know for certain is the outcome of ending the trade deal: America would lose billions of dollars and thousands of jobs, and the political ramifications would eventually spread throughout the country.
Marco Lopez is a former senior Department of Homeland Security official and adviser to President Enrique Peña Nieto’s successful presidential campaign, and is the founder and CEO of international corporate advisory firm Intermestic Partners. Twitter: @1marcolopez.
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