On Global Trade & Investment
Published  by
The Global Business Dialogue, Inc.
Washington, DC   Tel: 202-559-9316
No. 13 of 2018

Click  here for Tuesday's NAFTA quote from Amb. Lighthizer.


"The suggestion here is that, currently, it is best to leave the negotiations to the negotiators." 

Stephen Lande
March 7, 2018  (publication date)

Steve Lande is the president of the consulting firm Manchester Trade, a former USTR negotiator, and a concerned and provocative trade policy professional. A member of the Global Business Dialogue, Mr. Lande sent us a paper last week with his thoughts on the current NAFTA negotiations. Today's quote is taken from that paper. The full text is available on the GBD website. The paragraph with the above quote reads:

The suggestion here is that, currently, it is best to leave the negotiations to the negotiators. An agreement appears to be within reach, especially between the United States and Mexico. One should not be misled by negotiating statements emphasizing the remaining differences, the slow progress, and the unwillingness of the other NAFTA countries to offer meaningful concessions. This is normal negotiator talk to keep the pressure on the other side to make concessions in the final phases of the negotiations. 
That is not to say that Mr. Lande is sanguine about a deal being concluded soon. He is not because, like many others, he is concerned that if it isn't done quite soon it may not get done at all. He makes that point right up front. His article begins: 

On the 1st of July, voters in Mexico will go to the polls to elect a new president. Both the Mexican and U.S. governments should emphasize the importance of completing at least the substance of a new agreement before then.

The danger is that without a full or substantive agreement in place before the end of April or early May at the latest, negotiations will take an electoral hiatus. If the current, left-wing front runner, Manuel López Obrador, popularly known as AMLO, wins, the considerable progress that has already been made in the negotiations will be lost.

Mr. Lande covers a lot of ground in his paper. What follows is a snapshot of some of his points. 

Tariffs on Steel and Aluminum. Yesterday President Trump announced that the Administration will be imposing 25 percent new tariffs on selected steel imports and 10 percent new tariffs on selected aluminum products. For the time being at least, Canada and Mexico will exempted from the new tariffs. Mr. Lande's article was written after the President promised such action on March 1st but before yesterday's formal action, though it aptly anticipated it. For NAFTA, he suggested, the threat of these tariffs should increase the pressure on Canada and Mexico to conclude a deal. His larger concern, however, is that:

The longer the negotiations drag on, the greater the possibility that there will be an intervening event that will prevent a successful conclusion.

Ambassador Lighthizer and the Other Negotiators. Mr. Lande had nothing but praise for all of the negotiators, especially, Ambassador Lighthizer, who has had to operate without three key deputies and the chief agricultural negotiator. They have all been confirmed now, but they were not able to participate in the work to date. Mr. Lande's larger point is that, in fact, the negotiators from all three countries appear to have made significant progress despite the highly charged political atmosphere in which the talks are taking place.

Advice for the U.S. Private Sector. Mr. Lande gives high marks to the major business groups in the United States. He writes:

NAFTA was on life support, with only the smallest chance of recovery. Yet since President Trump's assumption of office, political support for NAFTA has increased significantly. This is due in large part to the private sector which, by focusing on NAFTA's constituents in key states, has made everyone - the public and the politicians - aware of the serious dislocations that would follow quickly on the heels of a U.S. withdrawal from NAFTA.

But now, he believes, the U.S. private sector - especially the pro-NAFTA business groups - needs to shift its focus, writing: 

The private sector's priority now should be urging the administration to complete the negotiations quickly and getting an agreement in place before the Mexican elections.
There is an irony in the NAFTA negotiations. In his speech at the White House yesterday (March 8), President Trump went well beyond the national security argument for new tariffs on aluminum and steel. His plea for reciprocity - contrasting for example America's 2.5 percent tariff on passenger cars with China's 25 percent tariff on the same products - is potentially a serious challenge to the whole WTO system of bound rates. 
We'll deal with that issue in subsequent entries. Our first impression, however, is that, as trade fights go, that one would dwarf NAFTA by quite a bit. Whether that particular battle is on the trade policy horizon on not, we're pretty sure there is more rough weather ahead. It's time to batten down the hatches. The sooner that Canada, Mexico, and the United States can nail down a new NAFTA agreement, the better.
NAFTA: The Next Three Months is a link to the Stephen Lande article on the GBD website. This was the source for today's featured quote.

Proclamation on Steel is document signed by President Trump yesterday and imposing tariffs on imported steel, but exempting steel from Canada and Mexico.

Proclamation on Aluminum is the document signed by President Trump yesterday and imposing new tariffs on aluminum, but exempting aluminum from Canada and Mexico.

President Trump at the Proclamation Signing Ceremony. This is the YouTube clip of the President comments yesterday (March 8), including his stated goal of reciprocal taxes.


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©2018 The Global Business Dialogue, Inc.
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Tel: (202)  559-9316
R. K. Morris, Editor
Joanne Thornton, Associate Editor