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Clicks HERE for last Friday's quote from Richard Cunningham.
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GOODBYE TO NAFTA
" I will be formally terminating NAFTA shortly. ... And so Congress will have a choice of the USMCA or pre-NAFTA, which worked very well."
Donald J. Trump
December 1, 2018
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These comments were made as Air Force One was flying back from Buenos Aires, Argentina, so after the G20 Summit, the working dinner with President Xi, and the signing of the new NAFTA. The President was fielding questions from reporters on the plane and one or two had to do with NAFTA.
In a sense, the context here is quite familiar. After all, President Trump was threatening to take the United States out of NAFTA well before he took office, and he has repeated that threat numerous times over the last two years. In all that period, however, the threat of withdrawal was aimed primarily at America's NAFTA partners, Mexico and Canada. Things are different now. Mexico and Canada have signed on to a NAFTA replacement. We have all seen the pictures. Last Friday in Buenos Aires, then-President Peña Nieto of Mexico, President Trump, and Prime Minister Trudeau of Canada put their signatures to the United States-Mexico-Canada Agreement, USMCA, an agreement to upgrade and replace NAFTA.
In some very important respects that changed the meaning of President Trump's statement that he will soon terminate NAFTA. Certainly the matter is still of some concern to Mexico and Canada, but the real target of this decision is Congress. And, for the record, we believe it is a decision, not a threat.
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The howls of protests, the insistence that this is a terrible, terrible idea have been almost instantaneous, and that chorus is likely grow. When the action is finally taken, the crescendo will be deafening. Let's look at one of the early voices of opposition, namely, the writer who penned today's Wall Street Journal editorial with the headline "Nafta Suicide Note." After quoting the President's comments on Air Force One, the editorialist went on to argue that
"As a political matter it [terminating Nafta] amounts to Mr. Trump holding a gun to his own re-election chances and daring Democrat Nancy Pelosi to let him pull the trigger."
The Journal's assumption is that the House Democrats will be happy to let USMCA go down to defeat and have President Trump take the blame for negotiating a bad deal.
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When we first read the President's most recent statement about withdrawing from NAFTA, two things that came to mind: Fernando Cortés and an old Army cadence. It isn't his conquest of the Aztecs that makes us mention Cortés but the fact that, after landing at Veracruz in 1519, he burned his ships. (There is some debate about that, but he certainly sank them.) The upshot was the same either way: forward was then the only option for Cortés and his men.
The Army cadence is much less dramatic. It is from your editor's memory of early morning runs in basic training when the cadence ran:
Ain't no use in lookin' down.
Ain't no use in lookin' down.
There's no discharge on the ground.
There's no discharge on the ground.
Am I right or wrong?
You're right.
Am I right or wrong?
You're right.
Sound off ... and so forth.
In short, there are times in life when the best thing to do is to close off options and focus on a single difficult course.
Ironically, it is Mrs. Pelosi herself who has made the President's decision all but unavoidable. Recall, that in April 2008, then-President George W. Bush sent the free trade agreement with Colombia up to Congress, assuming that his action would force a vote under the fast track rules in effect at the time. Speaker Pelosi was the harsh teacher who brought home the lesson that those "rules" are the rules of the House and can be changed. And she changed them, eliminating for the time being any requirement for the House to vote on the then pending FTA with Colombia.
It is reasonable to assume that a Speaker Pelosi in the next Congress would do much the same thing. She would change the rules. There would be no vote, and with NAFTA as the backstop, there would be no consequence other than the humiliation of the Administration. With NAFTA gone, however, the situation will be different. It is possible that the Journal is right, and that it is President Trump who will be blamed if there is a train wreck in North American trade. We are not so sure. More positively, we hope that some deference will be given to the fact that three countries have now signed on to the new deal, and some consideration for the risks. There are not likely to be any winners if USMCA fails and there is no NAFTA net to cushion the fall.
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On Air Force One is a link to President Trump's comments to reporters on the flight out of Buenos Aires, following the G20 Summit there and the President's working dinner with President Xi of China. This was the source for today's featured quote.
Suicide Note is a link to the Wall Street Journal editorial mentioned above.
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©2018 The Global Business Dialogue, Inc.
1717 Pennsylvania Ave., NW, Suite 1025
Washington, DC 20006
Tel: (202) 463-5074
R. K. Morris, Editor
Joanne Thornton, Associate Editor
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