President Donald Trump never wastes an opportunity to waste an opportunity. Even when, by some miracle, his ill-considered, ill-advised rhetoric and actions lead to a positive development, he quickly rushes in to promote chaos and ruin any chance of reasonable dialogue. The latest example is the re-negotiation of the North American Free Trade Agreement (NAFTA), which was signed in 1994 with the intent of increasing commercial activity between Canada, the United States and Mexico.
Throughout his campaign for the presidency, Trump railed against NAFTA. With classic Trumpian hyperbole, he incessantly referred to it as “the worst trade deal ever signed” by the United States, or even “the worst trade deal maybe ever signed anywhere.”
Opposition to the agreement fit well with his campaign rhetoric, which focused on protecting American interests and bringing back jobs to workers in the long-depressed American heartland. A new agreement, much more beneficial to the U.S., was possible, said Trump, thanks to the supernatural negotiation skills of a certain “Art of the Deal” author. The Trump campaign also made a point of connecting NAFTA to Trump’s main policy promise, the building of a border wall that would stop illegal immigration into the U.S. from Mexico.
Following his electoral victory, Trump maintained his aggressive stance towards Mexico, while making conciliatory gestures towards Canada. With classic Trumpian disregard for coherence, he threatened to withdraw from the deal one day, while promising he would’t do such a thing the next. The strategy, incredibly, worked. Mexico and Canada agreed to re-negotiate the deal rather than have the U.S. simply rip it apart. Last week (Oct. 11-15), representatives from all three governments met in Washington D.C. for a tense and combative fourth round of negotiations.
It did not go well. In a nutshell, Trump’s negotiating team is demanding changes to the deal that neither Mexico nor Canada will accept. These include eliminating Chapter 19, which deals with mediation in case of improper behavior by one of the signatory countries.
Currently, NAFTA allows for companies who feel unjustly affected by policy decisions to call for the creation of a binational panel of arbitration. This does not fit into Trump’s strategy, which includes pressuring American manufacturers to leave Mexico and build facilities in the U.S.
Other demands look for the U.S. to be able to unilaterally impose tariffs on specific Mexican and Canadian products and have a bigger influence on the value of currency in those countries, and for NAFTA to be re-certified by the signatory countries every five years. Canada and Mexico oppose all of these provisions. So do influential American interest groups like the U.S. Chamber of Commerce, which has called the Trump proposals “highly dangerous” and warned that the collapse of NAFTA would lead to “the loss of hundreds of thousands of American jobs.”
The latest negotiation round was further disrupted by a last minute provision from the Trump team regarding the percentage of American-made parts to be used in cars manufactured in Mexico. To make matters worse, the Washington Post has reported that Peter Navarro, a top Trump adviser on trade, prepared and circulated a memo that blames NAFTA for rises in the divorce rate, the number of drug overdoses, abortions, and the overall mortality rate in U.S. areas affected by factory closures resulting from NAFTA. In classic Trumpian fashion, the document offers no evidence to support its preposterous allegations. The consensus is, at least according to media reports, that NAFTA is on its last legs.
Here’s the rub: Trump is right that NAFTA is far from a perfect deal. There are many aspects that could and should be revisited in order to make the agreement fairer, more effective, and more environmentally conscious. The three American presidential administrations that preceded Trump’s — those of Bill Clinton, George W. Bush and Barack Obama – touted the benefits of NAFTA: the rise in GDP in all three North American countries, the torrential flow of cross-border trade, the millions of manufacturing jobs created in Mexico, and the lower prices consumers enjoy in all three countries.
But they usually neglected to mention that all of these boons have been achieved because NAFTA relies on a simple formula: Corporate profits equal benefits for all. The problem is that the formula is not obviously valid.
Trump’s claim that NAFTA has been bad for United States is only half ridiculous. As measured by GDP, the U.S. has clearly benefitted, as have the bottom lines of many corporations. But American workers, as Trump has often pointed out, have suffered. Both Republican and Democrat administrations have failed to provide an alternative to manufacturing, forcing millions of formerly-middle-class workers into insecure, low-wage jobs, and steadily down the economic ladder.
The fate of Mexican workers has not been much better. True, millions of Mexicans (and Central Americans who migrated to the Mexican north) are now employed in sweatshops run by some 1,200 foreign firms. But, as some observers point out, this has not translated into better standards of living, since neither the companies nor the Mexican government have invested in infrastructure, education, or other basic needs of workers and their families. Moreover, as Mexican sociologist Jorge Carrillo Viveros has found, although these workers are nominally represented by unions, they are afforded essentially no labor protections. The harmful environmental effects of the trade deal have long been recognized, but little has been done to ameliorate them.
The Trump agenda does not fit neatly with Republican conservative values. On issues of trade, in fact, Trump is closer to the left-leaning Democrats, labor unions, and social movements who opposed NAFTA in the 1990s and continue to do so today.
In the last few days, for example, the president of the AFL-CIO, one of the U.S.’s largest labor organizations, rebuked corporate America’s steadfast defense of NAFTA: “negative reaction to even discussing creative trade solutions reveals a lot about how much corporate CEOs benefit under the NAFTA status quo.”
If he were a skillful, or even rational, political leader, Trump would seek the support of these groups to advance his agenda, perhaps even to gain concessions from Mexico and Canada. An obvious example would be the Trump team’s demand that Mexico raise wages and labor protections of its workers, which would reduce incentives of American companies to set up shop there. There are powerful commercial interests on both sides of the border who claim that this is impossible, just another Trump jeremiad. It isn’t. NAFTA is, as Trump claims, unfair. He’s just, in classic Trumpian fashion, severely misguided as to who the true victims are.