NAFTA

The answer to that question requires reading the latest tweet.  In terms of the two countries that have the most direct impact on the North Country, Canada and China, the game is still “on”. 

The seventh round of NAFTA negotiations are set to begin in Mexico City in the next several weeks, with the word coming out of Canada that the Canadians are very pessimistic about this process.  In particular, they view the Americans as having little, if any, flexibility due to the policies and rhetoric of the Trump administration. 

More and more commentators on both sides of the border are indicating that they believe Mr. Trump will withdraw from NAFTA. The Canadian government has undertaken a full court marketing blitz including government ministers to reach out to state governors, state legislators, members of Congress and economic developers in the many states with whom Canada does significant trade.

This has been a National Day of Action for critics of the North American Free Trade Agreement or NAFTA. The critics, which include federal representatives from the region, want the current closed door renegotiations of the trade pact between the U.S., Canada and Mexico to be opened and are calling for labor-friendly provisions.

The Trump administration continues to stand outside the playing field as others move forward with significant trade deals. The most recent evidence is the agreement of eleven nations to move forward with the Trans Pacific Partnership (TPP) without U.S. participation. The new TPP Agreement includes not only Southeast Asian countries, but our neighbors, Canada and Mexico who are currently participants in NAFTA with us.

It appears that few of the critical issues have been resolved in the first two rounds of negotiations. Most of the press reports and insider commentary indicates that the process is not going particularly well, which was confirmed by two recent events. On Friday, October 6, 2017, the announcement by the U.S.’ chief negotiator that vehicles would have to have a specific level of US content as opposed to NAFTA content is a significant departure from previous positions held by the United States, though no specifics were provided. On October 11, 2017 Prime Minister Trudeau’s visit included threats from Mr. Trump to withdraw from NAFTA.

The United States, Canada and Mexico had their first day of negotiations on Wednesday August 13th, 2017. Prior to the U.S. Trade Representatives, Robert Lighthizer, remarks it was difficult to determine the direction those negotiations might take and their impact on our region. Most of what takes place in Washington has little direct impact on our region. NAFTA is a major exception to that axiom. 

We are all familiar with the children’s playground equipment known as a teeter-totter. As I pondered Mr. Trump’s Canadian policy, that toy came to mind. During the presidential campaign, Mr. Trump touted the fact that he would tear up NAFTA or renegotiate it. Following the election, he doubled down with little or no substance nor indication as to what his actual concerns or plans were. The selection of Mr. Ross as secretary of commerce and Mr. Navarro as a trade advisor brought a decidedly hostile view of trade agreements to the administration.

The presidential candidates have sent a spark into the free-trade wood pile.  Think softwood lumber—as “in the weeds” as it gets.

It seems most of the media coverage and much of the country is focused on the presidential election of 2016. What will impact your life more: oil and China, or presidential politics?