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TUESDAY, SEPTEMBER 4, 2018
Click HERE for quote the August 24 quote from Kevin Hassett on U.S.-Mexico trade.
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DEAL WITH MEXICO, WHERE IS CANADA?
"It's a big day for trade. ... We're going to call it the United States-Mexico Trade Agreement."
August 27, 2018
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The last week of August was memorable for the now famous Oval Office telephone call between President Trump and President Peña Nieto of Mexico. The call was to confirm - which it did quite dramatically - that United States and Mexico have reached an agreement on a successor to NAFTA. President Trump made the above comment on the agreement's new name before President Peña Nieto came on the line. Then Mr. Trump repeated it in his conversation with his Mexican counterpart, saying,
I like to call this deal the United States-Mexico Trade Agreement. I think it's an elegant name. I think NAFTA has a lot of bad connotations for the United States because it was a rip-off.
No Canadian official was on the phone that morning, but Canada was very much part of the conversation. Early in the call, President Pena Nieto said:
It is our wish, Mr. President, that now Canada will also be able to be incorporated in all this.
It was an idea he returned to repeatedly but as an aspiration, not a condition. For his part, President Trump took note of three possible outcomes for the immediately following U.S. talks with Canada: i) Canada being incorporated into the newly announced deal with Mexico; ii) a separate U.S.-Canada agreement; or iii) no deal with Canada and new U.S. tariffs on cars and other imports from Canada.
"No deal yet" was the word out of Washington as Canada and the U.S. tried but failed to reach an agreement by the end of August. The goal now is to see if Canada can be brought in by the end of September. That should be possible, but Mercury, the god of commerce and poetry among other things, is juggling three balls and could well drop all of them. Two are negotiating issues, namely,
1. Chapter 19 - a dispute settlement tribunal which Canada regards as essential and the Trump administration as an anathema; and
2. Canada's supply management system, which largely keeps U.S. dairy products out of Canada.
The third item is a variation on a time-honored technique, which is to say,
3. Good-Cop, Bad-Cop with a twist. The twist is this. One usually thinks of the negotiators as the mean guys in the play with their more removed principals as both unflappable friends and beacons of the progress to come. But those roles are reversed in this case. President Trump and Prime Minister Trudeau are playing the heavies while USTR Lighthizer and Foreign Minister Freeland attempt to cobble together an agreement.
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Each of the above challenges is problematic, but, of the three, Chapter 19 is the most problematic of all. That's our sense of the situation. The other two are optical and/or pragmatic, but the Chapter 19 issue would seem to demand that one side or the other abandon a strongly held, philosophical position. That's a tough one, in part because it goes to the heart of the Trump Administration critique of American trade policy, the charge that past agreements have undercut American sovereignty.
In a larger context, the U.S. and Canada have been sparring with one another for more than two centuries. Take, for example, the Oregon question of the mid-19th century. President James Polk may have told the Congress in 1845 that America's claim was valid up to the border with Russian Alaska, and the slogan "54° 40' or fight" did have a certain ring to it, but soon thereafter the U.S. settled for a northwest border at the 49th parallel. (Alas, there was a war in 1846 - with Mexico, but that's another story.) To return to the immediate question, that is, will Canada be part of the next North American trade agreement? Canada's participation is not a sure thing, but it should be doable. The good cops now have until September 30 to pull it off.
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Oval Office Telephone Call is a link to the White House transcript of the proceedings in the Oval Office on the morning of August 27, including the telephone call between President Trump and President Pena Nieto. This was the source for today's featured quote.
On the Article 19 Issue takes you to an article on this topic from The Hamilton Spectator, one of many.
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