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Trump Administration Announces Its NAFTA Renegotiation Concerns

Many of them echo old labor union and Democratic Party complaints about freer trade.

Donald Trump's rhetorical hostility to free trade and his apparent desire to manage U.S. companies' investment decisions over an obsession with "balance of trade" has been one of his most alarming characteristics to some libertarians.

Michael Reynolds/EPA/NewscomMichael Reynolds/EPA/Newscom

Letters from Trump's U.S. Trade Representative Robert Lighthizer to various congressional leaders sent this week set forth the current contours of the Trump administration's concerns over renegotiating NAFTA, which can be summed up as, to quote the letter:

new provisions to address intellectual property rights, regulatory practices, state-owned enterprises, services, customs procedures, sanitary and phytosanitary measures, labor, environment, and small and medium enterprises.

It also notes they want "aggressive enforcement of...commitments made by our trading partners." And they start with the nerve-wracking declaration that a prime goal in trade deal renegotiating will be to "support higher-paying jobs in the United States" and "improving U.S. opportunities" (by which they almost certainly don't mean opportunities for citizens and companies to buy abroad as cheaply and efficiently as they'd like).

A lot of that language quoted above sounds like the Republican Trump administration just echoing lots of traditionally labor union and Democratic Party concerns over the alleged damage that allowing freer overseas trade causes.

Some trade reporters are pleased that the Lighthizer letters don't seem dedicated to completely upending NAFTA, an act which, whatever NAFTA's flaws, would be worse (with Trump's trade opposition ideology ruling executive policy) than the alternative.

John Brinkley at Forbes, for example, is pleased that Lighthizer's letters "included none of the bluster and hostility that President Trump has directed at America's NAFTA partners, Canada and Mexico" and notes that despite bluster about improving rule enforcement under NAFTA in a more U.S.-friendly direction, that "since 1994, the United States has prevailed in every NAFTA ISDS [Investor State Dispute Settlement] complaint that it has filed or has been filed against it and that has proceeded to a final ruling. It's going to be hard to improve on that."

Brinkley is hopeful that the reference to "small" enterprises in Lighthizer's letter, quoted above, might mean that the administration wants to "focus on ways to make it easier for small companies to qualify for duty-free treatment under NAFTA....It's easy for big corporations to comply with the myriad rules and regulations that cover imports, exports and free trade agreements; they can hire armies of lawyers and trade specialists to manage compliance with them. Most small firms can't do that and many find that compliance isn't worth the time and money. So, they don't export. Or they export without applying for duty-free treatment under NAFTA."

An article in Business Day is similarly optimistic, noting for those scared about earlier Trumpian rhetoric that the Lighthizer letters:

omitted many of the thorny points cited in an earlier draft, such as leveling the playing field on tax treatment and bulking up "Buy America" procurement provisions — goals that might meet stiff resistance from Canada and Mexico....

Still, Lighthizer made it clear the US wants to see Mexican manufacturing capacity return to America, an approach sure to create friction with Mexico ahead of a general election next year. Mexico would also likely oppose efforts to compensate US producers for Mexico's VAT, which refunds taxes charged on inputs used to produce exported goods. While US politicians have called the tax an unfair subsidy, Mexico argues the system is in line with international trade rules.

Talks with Canada could trip up over irritants including access to the country's supply-managed dairy sector or the ongoing dispute over softwood lumber exports to the US

The US president will be under pressure to reach a deal that shows his election promises weren't empty rhetoric, said Dan DiMicco, a former steel executive who advised Trump during the campaign. The administration will measure success in terms of its ability to stop US companies from building plants in Mexico, and reducing the $62bn deficit with that nation, he said.

That would be a terrible, though terribly Trumpian, way to measure the goods and bads of freer international trade. Still, learning the administration's specific goals as they'll effect American companies in practice will unfold as the negotiations unfold, with these Lighthizer letters starting a 90-day clock after which the official renegotiations can begin.

In other trade policy news, the Trump administration is officially not 100 percent behind House Republicans' plans for a "border adjustment tax" as CNBC reports in a story mostly about how many large U.S. retailers are lobbying against it:

The White House made no mention of border adjustment in the one-page summary of its tax reform principles released last month. However, [Treasury Secretary Steven] Mnuchin has said that the proposal needs to be revised.

"There's many aspects of it we like. There's certain things we're concerned about," Mnuchin said during a conference last month. "What we discussed with [Ryan and Brady] is we don't think it works in its current form, and we'll continue to have discussions with them about revisions that they will consider."

Richard McKenzie, an economist writing for the National Center for Policy Analysis (who spoke to Reason TV back in 2010 on why the stimulus wasn't working), concludes that "If the BAT [border adjustment tax] has the intended effects on imports and exports...many of the prior mutual benefits of international trade will be lost and production costs around the globe will go up. The result: a necessary reduction in aggregate real income, but one that is unequally distributed. Some U.S. firms and workers would gain, but other worker groups would lose more than these gains."

Turning international trade policy into even more such a game of crony advantage seems to be one of Trump's core beliefs, if he has any. But for right now, Senate Majority Leader Mitch McConnell (R-Ky.) says, according to Fox News today, that such a tax would not get through the Senate.

Photo Credit: Michael Reynolds/EPA/Newscom

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  • Palin's Buttplug||

    Donald Trump's rhetorical hostility to free trade and his apparent desire to manage U.S. companies' investment decisions over an obsession with "balance of trade" has been one of his most alarming characteristics to some libertarians.

    Proof that the Con Man is a true fascist.

  • Philadelphia Collins||

    So, you're a fan now?

  • Sevo||

    Trump's an idiot regarding trade, but this:

    "new provisions to address intellectual property rights, regulatory practices, state-owned enterprises, services, customs procedures, sanitary and phytosanitary measures, labor, environment, and small and medium enterprises."

    sounds like what Obo was trying to pass off as a 'free-trade' agreement after he was forced to admit it wasn't a matter of state security and allowed people to take notes.
    IOWs, Trump sounds almost as bad as Obo regarding trade.
    Fortunately, he's far better with a lot of his hires.

  • Jerryskids||

    That "new provisions to address intellectual property rights" is the important one though, Hollywood paid a lot of money to get that one stuck in there.

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  • Agammamon||

    henrykiller, don't quit your day job. Because if you suck this bad at writing a single paragraph why in the hell would anyone want to use the essay writing service you're pimping?

    C'mon man - marketers used to be better than this.

  • SomeGuy||

    PSA: I have been sick and just posted on the net neutrality post. Reason posters seem to fail hard on how the internet works and how traffic should be able to move freely.

    Net neutrality is a very important thing for the internet to work properly but it needs a special law. Making the internet a utility is fucking retarded but the principle of neutrality is important.

    QoS is still possible under net neutrality. I.E. low bandwidth low latency dependent tasks like gaming, Voice and Audio of IP, webpages, and so on getting shorter routers while video streams and downloads get sent over fat but distance lines like Cogent (Cogent is known for having cheap large BW/data but not many Peer ports). Cogent networks wont get you the shortest route but the data gets there.

    https://tinyurl.com/ml3ahg6

  • SomeGuy||

    fair warning i tried to make it fast so i didnt fully flesh out many aspects so i'll check it if you have a question over the next 2 days and respond.

  • SomeGuy||

    my comment on Cogent is from like 2005 knowledge. No clue what their network today is...just making a point.

  • Sevo||

    "Net neutrality is a very important thing for the internet to work properly"

    No, it isn't.

  • SomeGuy||

    it is because it prevents monopolies from extorting and playing favorites and ensures a fast and equal internet.

  • Sevo||

    SomeGuy|5.20.17 @ 10:06AM|#
    "it is because it prevents monopolies from extorting and playing favorites and ensures a fast and equal internet."
    No it doesn't and no it isn't.
    Regulations everywhere and always stifle innovation.

  • SomeGuy||

    your absolutism on this is intellectually dishonest and if you dont think so your disillusion. There are times when government has helped protect companies from abusing market dominance and fixing prices. There are countless times in the past companies have resorted to price fixing and using market or government to push out competition. Even a libertarian can tell that monopolies are bad things.

  • Crusty Juggler aka "Chad"||

    Net neutrality is a very important thing for the internet to work properly

    It somehow worked fine before Net Neutrality.

    it needs a special law.

    I can't imagine why libertarian-minded individuals are troubled by a special law that promises to solve a problem.

  • SomeGuy||

    not really....it has had several issues (some i have stated) and as more large and monopoly type networks exists more control and power they have and the more they can influence and destroy competition and hurt the consumer. Comcast is a prime example of this.

  • Sevo||

    "Comcast is a prime example of this."

    Yep, just like Microsoft monopolized the computer industry.
    Ned Ludd walks among us.

  • SomeGuy||

    If you think it hasn't you lack any knowledge of the tech world.

  • DanO.||

    Donald Trump's rhetorical hostility to free trade and...an obsession with "balance of trade" has been one of his most alarming characteristics to some libertarians.

    Good thing nobody here is a libertarian, or they'd be alarmed. Instead, we get anarchists who think intellectual property is a fraud because you can't see it or hold it in your hand.

  • Sevo||

    "Instead, we get anarchists who think intellectual property is a fraud because you can't see it or hold it in your hand."

    And lefty dimwits who should read instead of posting arguments with those voices in their heads.
    Oh, and fuck off.

  • DanO.||

    Turd, Daddy, Fuck.

  • Sevo||

    Oh, and fuck off.

  • OldMexican Blankety Blank||

    Re: DanO.

    Instead, we get anarchists who think intellectual property is a fraud because you can't see it or hold it in your hand.


    And the anarchists would be right. But it is not because IP is intangible where the fraudulent nature of the faux property right lies, but because ideas cannot be POSSESSEX, i.e. ideas SPAWN in people's minds upon realization. REAL property doesn't behave like that, or we would all be Gods.

  • OldMexican Blankety Blank||

    Possessed. Damned these puny phone keyboards...

  • MikeP2||

    "because ideas cannot be POSSESSED"

    Stop embracing your ignorance. IP is not "ideas". It is a defined body of documented work that is uniquely different than current practiced art. Ideas are not patented. Specific practicable chemistries, applications, processes, etc are patented.

  • Gaear Grimsrud||

    The bad news for your team is that all of those union dues confiscated from America's minimum wagers are going to Trump in 2010. Hell LBJ did with the Negroes. Trump gonna steal your base.

  • Gaear Grimsrud||

    duh 2020

  • eyeroller||

    Let's quit beating around the bush and go full Smoot-Hawley. Hollywood could use another world war.

  • Rebel Scum||

    Many of them echo old labor union and Democratic Party complaints about freer trade.

    I wonder if I can make my lefty Bernie-bot friends heads explode by explaining to them how similar Trump's and The Bern!'s ideas on trade and immigration are.

  • NotAnotherSkippy||

    It didn't work on the first comment of this article... You have to have some ability to think logically for logic to be used against you.

  • DanO.||

    Every libertarian knows that in order to promote free trade, Americans must wait until every country everywhere removes every barrier to free trade. Otherwise hard-working Americans are played for suckers while our Heartlanders lose their jerbs. We must never let the imperfect get in the way of the impossible.

  • OldMexican Blankety Blank||

    Re: DanO.

    Most Americans know jackshit about economics. The fact that they vote for the same charlatans and mountebanks is proof positive of this.

  • DanO.||

    Most Americans know jackshit about economics.

    It has always been thus. Savages will always defend the tribe. This goes for Hit & Run "libertarians" as well, sadly.

  • Devastator||

    So China dumping government subsidized aluminum and iron on American markets is free trade? Pinning your currency to another country's currency? There's some free trade for ya. Yeah I don't think so, until they are willing to play ball fair, fuck 'em.

  • ||

  • Devastator||

    I'm all for free trade, but Trump has a point, other countries too often block our goods and services (especially China) and expect us to just suck it up. Fuck that shit. Check out how much easier it is for a Chinese company to buy a majority ownership in an American company than an American company to get a controlling share in a Chinese company.

  • stellapalmer4545||

  • MikeP2||

    Another whiny article on trade.

    https://www.cbp.gov/trade/nafta

    Before you go write another one, perhaps some background reading of NAFTA agreements is in order.

    To proclaim that renegotiating it, or making efforts to tilt it to be more favorable to the US, is in some way a bad thing, just highlights a complete ignorance of what NAFTA actually is and how It works. The complexity and tariff structures within NAFTA were written to support each country's pet industries. It is not free trade. It is managed trade. The labor and economic considerations when NAFTA was first negotiated are vastly different than they are today. It must be re-looked at if for no other reason than to update for the current regional and global economy.

    Like any regulation, NAFTA encouraged companies and countries to game the system and implement manufacturing and supply chains that would not survive in a true free-trade environment. Point of origin restrictions within NAFTA specifically encouraged manufacturing investment in Mexico that utilizes cheap labor and avoids tariffs.

    Arguing that NAFTA should not be renegotiated is little more than arguing between two protectionist policies. Free trade it is not.

  • Uncle Jay||

    RE: Trump Administration Announces Its NAFTA Renegotiation Concerns
    Many of them echo old labor union and Democratic Party complaints about freer trade.

    What is the difference between the democratic and republican parties again?
    I read a quote from someone a lot more intelligent than me said, (and I'm paraphrasing) "the democratic party embraces socialism eagerly, while the republican party embraces socialism reluctantly."
    Can anyone here dispute that?

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