Technology & Trade

NAFTA: Don’t Expect a Short, Smooth Train Ride

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By William Reinsch

Authors of novels sometimes say that the characters write themselves — they speak to the author and tell her what to say. The result is that the book often does not end up taking the path the author envisioned in the beginning. So it is with my columns, which have frequently started out with one idea and ended up with a different one in an unexpected location. A good example was last week’s piece about NAFTA. It was supposed to make the point that the negotiations are likely to be longer and more contentious than the parties, particularly the United States, expect, and that if we are smart we will prepare for that. 

Instead, it ended up arguing that NAFTA renegotiation could be TPP in disguise as the parties incorporate the already written and agreed to language of that agreement in order to address new issues and upgrade old ones. So, this week I’m going to go back and try again to stick to my original goal.

Despite oft-stated interest in moving quickly, particularly by Mexico and the United States, there are a number of reasons why that is not likely to happen. First, a lesson I learned on the Hill and then learned again in the Executive Branch: everything takes longer than predicted. Government is not the private sector. There are procedures to be followed, as we saw very clearly in the process of formal notification of the negotiations; people who have to be consulted because of their ability to derail the end product if they are unhappy at not being consulted; opponents whose arguments have to be countered; the media who have to be fed regularly; and, of course, there is the time it takes to do the actual work — not only the talking in negotiating sessions but the writing of agreed-upon text. 

The U.S. practice is usually to set deadlines keyed to political events or holidays — the August Congressional recess, Thanksgiving, the Christmas recess, the end of the calendar year, etc. — and then miss them, leading to a new commitment to meet the next one. The lesson from many years of watching this: never believe the first deadline; take the second one seriously; and plan for the third one.

Second, everybody has issues. Media attention in the U.S. has focused largely, albeit ineffectively, on what the U.S. president wants. That remains to be seen in detail but will probably include measures that he can argue will bring manufacturing back to the United States. It may also include resolution of issues that have proved intractable when dealt with separately like sugar and lumber unless they are settled beforehand. Then there will be the issues other American interests want to add, some of which I detailed last week. 

Of course, Mexico and Canada have issues too. Some of them are defensive — resisting new tariffs or trade restrictions or anything else the Americans want that will cost the other two countries jobs — and some of them are offensive like increased market access for various agricultural products, agreement on energy trade issues and more open government procurement, to mention a few. None of these are unusual for a trade negotiation, but most of them are not easily or quickly resolved.   

Third, it is not just TPP redux. I know I made the point last week that there is plenty of TPP language out there waiting to be re-used in another agreement, and it makes sense to look at that in the NAFTA talks. But not everything that the three agreed to in the context of a twelve party agreement can be simply transferred into a three party agreement. TPP reflected a balance of concessions among all the parties. The absence of nine of them disrupts the balance, and it would be a mistake to assume that just because a country agreed to something in TPP two years ago, they will quickly agree to it again in NAFTA. 

Fourth, remember the opposition. As trade agreements have gone beyond the low-hanging fruit of tariffs and moved on to complex non-tariff barriers as well as rules, opposition to them has grown. We certainly see that in the U.S., and while support for NAFTA appears stronger in Canada and Mexico, concessions from either of them will provoke resistance from affected members of their publics. Here in the United States, while very few politicians or NGOs are willing to say flat out they are against all trade agreements at all times, for many of them it is hard to find one they supported or describe one that they would support. Already we see some of them complaining that Trump has “betrayed” them and broken his campaign promises because of his presumed NAFTA objectives. These people should not be discounted. They affected the last election, and they will affect the way NAFTA plays out.

So, if you’re expecting a short, smooth train ride, don’t, unless you want a minimal agreement that adds little beyond non-controversial language on new issues. Of course, for many of us, that would be a big victory and something devoutly to be hoped for, but I’m not holding my breath for that or for any quick result. 

William Reinsch is a Distinguished Fellow with the Stimson Center, where he works principally with the Center’s Trade21 initiative.

Photo credit Kim via Flickr
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