U.S. Trade Policy: It Ain’t Over ‘Til It’s Over
March 24, 2017 6:25 PM
There’s been a flurry of meetings in Washington, DC this week between members of Congressional trade committees and President Trump’s trade policy team. Observers say that the pace of activity is likely to quicken in order to show some progress by summer.
What are they talking about? High on the list is opening talks on NAFTA, the trade agreement between the U.S., Mexico and Canada. The president routinely cited NAFTA on the campaign trail as a terrible deal that he’d gladly rip up if partner countries were unwilling to make concessions. Members of Congress are receiving briefings and being asked for input on what their business constituents would like to see improved. Based on this input, the administration will then send a letter to Congress, triggering a fact-finding period of 90 days, at the end of which formal negotiations can begin. Canadian and Mexican officials said their open to talking.
So far, Commerce Secretary Wilbur Ross is spearheading trade policy. The U.S. Trade Representative has not yet been confirmed, but even when he his it it believed that Ross will run the show. He like the president prefer bilateral deals rather than multilateral ones. It’s possible but unlikely that NAFTA will will end up on the floor in pieces. But the president wants to make good on his campaign promise, so look for some updating of the agreement to improve rules for e-commerce, raise the limit on which duties are charged on low-value imported goods made in participating countries, tighten labor regulations and harmonize more standards. The prize for Trump would be to get concessions on the way local origin is determined in order discourage the use of non-NAFTA components. To get the break on duties, more of the finished product would have to feature made in NAFTA (read made in the USA) components. There will be a fight over that one.
It will be business as usual while negotiations proceed, and they may take a year or more, though the U.S. side hopes it’s sooner.
TTIP déjà vu all over again?
Meanwhile, the German leader Angela Merkel, who meets with Trump soon, is expected to discuss reopening the scrapped talks on a free trade agreement between the EU and the U.S. She is expected to argue that TTIP is really a bilateral deal of the kind Trump prefers because the agreement would apply to all EU countries, hence a single market—a mega one though it is.
No one has thrown cold water on the notion, yet. Actually, it a pretty clever formulation.
What are the chances of TTIP succeeding where TPP failed? We’ll soon find out, but sweeteners for the U.S. beyond what ‘s been offered may be required—and it’s unclear whether Germany or any other EU country will be interested in providing them. Europeans are as or more skeptical of globalization than Americans.
Also during the past couple of weeks, Vietnam has declared its interest in a bilateral trade deal with the U.S. As much as this might be good news at the White House, U.S. businesses were glumly watching a meeting of the 11 countries involved in the TPP negotiations, recall there were 12 until the U.S. dropped out. The remaining 11, including the economic heavyweight Japan, agreed to keep agreeing in the hopes of completing an agreement in the not too distant future.
There was no doubt that the U.S. was missed at the meeting. But as one representative said, “At the end of the day, we’re all economic nationalists,” meaning they want a deal that will advance their individual interests rather than waiting for the U.S. to come courting.
You can almost hear the grumbling from Kansas to California, as companies involved in the multi-billion-dollar agriculture industry imagine Australian beef and New Zealand dairy shoving their products aside in the lucrative Japanese market. From the sidelines, the Americans are hoping that when it comes to trade, like other issues that this new presidency has made seemingly definitive pronouncements on, in the words of the immortal Yogi Berra: “It ain’t over ‘til it’s over.”
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