Trump and NAFTA

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Trump and NAFTA

Postby blehblah » Thu Apr 27, 2017 3:19 pm

Recently, Trump has been all up in Canada's grill about trade. His staff went so far as to say they have an executive order on deck which would withdraw the USA from NAFTA in six months.

http://www.huffingtonpost.ca/2017/04/26 ... 70838.html

The White House is telling U.S. media that it's mulling a notice of withdrawal from NAFTA, applying shock treatment on other parties to get cracking on negotiations under the threat of having the seminal trade deal obliterated.

Various media say Trump is considering detonating the trade equivalent of a nuclear option: An executive order to withdraw from the trade agreement, which would instill fear in members of Congress, industry and Canadian and Mexican trade negotiators.

The administration has complained lately that American lawmakers are dragging their feet on naming a trade czar and excessively slow in approving the 90-day legal notice to kick off negotiations.


Which was walked-back within hours because Trump had a couple of phone calls.

http://www.ctvnews.ca/business/no-nafta ... -1.3387133?

U.S. President Donald Trump swore off plans to cancel the North American Free Trade Agreement on Wednesday, after a day rife with speculation that he could be on the verge of threatening to obliterate the seminal trade deal.

The president made the announcement at the end of a dramatic day following an evening phone chat Wednesday with Prime Minister Justin Trudeau, followed by another call with Mexican President Enrique Pena Nieto.

Trump sounded satisfied that his peers had agreed to negotiate swiftly. This has been a top concern of Trump's administration, which has expressed frustration over the pace.


It doesn't seem to be clear if Trump can issue an executive order to withdraw from NAFTA, because even a statement like, "I'm going to tear it up" is woefully over-simplistic. Obviously, it would be an economic shock felt throughout North America. Most seem to agree that this is Trump trying to light a fire under Congress since he feels they are dragging their feet. It is also related to Trump's seeming complete randomness combined with being oblivious to consequences; a drunkard's walk as negotiating strategy.

This article nicely sums-up Trump's recent animosity toward Canada:

http://www.ctvnews.ca/politics/trump-s- ... -1.3383709

The issues around dairy and softwood lumber are headache-inducing in their complexity. On dairy, Canada has a managed system which controls production levels. It is far from perfect, but it works, for the most part. The US has a subsidy program, and a production problem in-that far too much dairy is produced. Adding to the fun, it's not really about milk (Canada doesn't allow growth hormones, for example) but also about products made from milk which are used for dairy product production. Generally, the woes of American dairy producers aren't being helped by Canada, but Canada isn't the root of the problem.

On softwood lumber, the issue has been lingering for decades. The USA tends to hold that Canada subsidizes the industry and dumps product in the American market. International trade organizations, like the WTO, have rarely ruled in favour of the USA on this, not that it matters that much. In the end, Trump has imposed an average 20% tariff. Predictably, that has led to things like the Premier of British Columbia advocating for a ban on thermal coal exports through British Columbia.

“We had an obligation to be good trading partners with our trading partners in the United States. They are no longer good trading partners to Canada, so that means that we’re free to make sure that we ban filthy thermal coal from B.C. ports. And I’m hoping that the federal government will support us in doing that,” Ms. Clark said.

Ms. Clark – who had one day earlier urged calm amid the softwood lumber dispute and said “cooler heads need to prevail” – said she had long considered the ban and felt requesting it was the right thing to do given thermal coal’s environmental effects.


Yup, Trump's favourite hydrocarbon, and it's all nicely wrapped in an environmental justification, and just happens to be being proposed by the Premier of the province which will suffer the most from the softwood lumbar tariff.

Ms. Clark said thermal coal is the most carbon dioxide-intensive form of conventional fossil-fuel energy production and banning its transport would be consistent with B.C.’s and Ottawa’s efforts to reduce global greenhouse gas emissions.

She said Washington, Oregon and California have already made commitments to eliminate the use of coal as a source of electricity and every proposed coal export facility on the U.S. West Coast over the past five years has been rejected or withdrawn.

If the federal government does not consider her request appropriate, Ms. Clark said, “British Columbia will use the tools we have at our disposal to discourage the shipping of thermal coal through British Columbia.”


Clark also happens to be in an election year (May 9th, to be exact).

Trump is frustrated with the pace, and he's trying to cram-in as much as possible before Saturday (the 100 day mark, which he either does or doesn't deeply care about). I don't think he fully appreciates the complexity of agreements like NAFTA, and therefore has no clue about inevitable unintended consequences of tossing around ideas like trying to pull-out of NAFTA altogether.

Hell, does anyone have any idea what Trump wants to do to get "the best deal"?

http://www.theglobeandmail.com/news/pol ... e33715250/

Behind the scenes, Mr. Trump’s inner circle disagrees about what demands to make in NAFTA renegotiations, The Globe’s Adrian Morrow explains. One side wants an enhanced NAFTA that would make cross-border business easier for corporations, while others – including chief strategist Steven Bannon, who drafted the abortive executive order along with National Trade Council director Peter Navarro – want protectionism. If the executive order had gone ahead, it could have ignited new conflict within the White House over trade policy.


There is a lot of information in, and linked from, that article.

It seems Trump has no clue. I doubt he could point to a single thing he wants to see changed, and explain the change he'd like to see and why, in NAFTA. He just knows he said he'd do something-something NAFTA sad! and is going to let the factions within his team duke it out (always a great way to approach international negotiations).
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Re: Trump and NAFTA

Postby Absentia » Thu Apr 27, 2017 5:07 pm

I've said it before and I'll say it again: the POTUS does not have the authority to back out of NAFTA. Unlike the TPP, the NAFTA treaty has already been ratified by Congress, meaning that it would take another act of Congress to repeal it.
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Re: Trump and NAFTA

Postby aviel » Thu Apr 27, 2017 9:27 pm

Absentia wrote:I've said it before and I'll say it again: the POTUS does not have the authority to back out of NAFTA. Unlike the TPP, the NAFTA treaty has already been ratified by Congress, meaning that it would take another act of Congress to repeal it.


While it certainly seems like this should be the case, the Supreme Court hasn't been clear on the matter. In Goldwater v. Carter, 444 U.S. 996 (1979) the Supreme Court considered a complaint against President Carter's unilateral abrogation of a defense treaty with Taiwan. The Court dismissed the complaint, but had a patchwork of reasons. A plurality of the Court held that the question of whether a President could unilaterally withdraw from a treaty was a nonjusticiable political question on which the Supreme Court could not rule. If the Court were to stick to this position, then Trump probably would be able to unilaterally withdraw from NAFTA.

Other members of the Court, however, held that the question was justiciable, i.e., that the Court could rule on it. Justice Powell provided a fifth vote to dismiss the complaint, but only because he thought the complaint was not ripe for review because Congress had not yet formally challenged the withdrawal from the treaty.

The Court didn't produce a majority opinion, and there isn't any clear majority stance discernible from the various concurring and dissenting opinions. So as obvious as it seems that Trump shouldn't be able to withdraw from a ratified treaty unilaterally, that principle isn't well embedded in the case law.
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Re: Trump and NAFTA

Postby blehblah » Tue Feb 13, 2018 2:36 pm

Trump continues to say Canada is being a big, fat, bully, because numbers (which are wrong).

http://www.cbc.ca/news/politics/trump-c ... -1.4532053

"Canada does not treat us right in terms of the farming and the crossing the borders," Trump said.

"We cannot continue to be taken advantage of by other countries."

[...]

"We are going to charge countries outside of our country — countries that take advantage of the United States," Trump said.

"Some of them are so-called allies but they are not allies on trade… So we're going to be doing very much a reciprocal tax and you'll be hearing about that during the week and the coming months."


Clear enough? The article politely points-out that nobody has any idea what the hell Trump is talking about.

TorStar clears things up.

https://www.thestar.com/news/world/2018 ... order.html

Trump has sometimes struggled to speak clearly about trade specifics, and it was not at all clear what he meant by “the crossing the borders” or by “the farming.”


Erm... good job, TorStar!

There is some good news, as both articles point-out, though with Trump, the good news lies in interpreting his words, which is always a stretch.

He suggested again on Monday that he is willing to give his negotiators time to work rather than quickly initiating a withdrawal from the agreement, though he then suggested immediately that he is not worried about the possible harm of a withdrawal.

“Hopefully the renegotiation will be successful. And if it’s not, we’ll be more successful,” he said.


Canada has been consistent in rebutting claims of 'lost money', while also noting that focusing on trade surplus/deficits doesn't always make sense.

“The sum of our trade, including both goods and services, is essentially balanced. In fact, in 2016, the U.S. enjoyed a trade surplus with Canada of close to $8 billion (U.S.). In manufactured goods, your surplus was nearly $36 billion,” Prime Minister Justin Trudeau said in a speech Friday at the Ronald Reagan Presidential Library in California. “Those are American numbers, by the way, from the U.S. Bureau of Economic Analysis, in the Department of Commerce.”

Trudeau also rejected Trump’s conception of trade as a battle between winners and losers.

“Trade is not a hockey game. The truth is that both Canada and the United States are winning. And so is Mexico. And that’s how we should keep it. When trade is working as it should, all partners win,” he said.


The speech they are referring to was at the end of a recent trip Trudeau took through the US to promote NAFTA. As noted, the speech was held at the Reagan library. Here's a bit more on it:

https://globalnews.ca/news/4019049/anal ... -to-trump/

The speech seems to have been well received, though even in the lead-up, not everybody was happy.

http://www.washingtonexaminer.com/why-i ... le/2648413

Soon the Ronald Reagan Presidential Foundation and Institute will host Justin Trudeau. The smug Canadian prime minister will lay out his democratic socialist vision this Friday, as antithetical to Reagan's as anything could be. Although tickets have already sold out, it isn’t difficult to forecast the speech. Where Reagan reduced government, Trudeau has increased it. Where Reagan unbridled the economy, Trudeau has tried commanding and controlling it.

But the leaders of the Reagan Library are either unaware of, or are totally unconcerned with those ironies.


I have a slightly different view of what Reagan did for the US, economically, not to mention what Trump would like to do with it.

https://www.newyorker.com/news/our-colu ... ng-of-debt

How much bigger? After the Republicans and Democrats agreed last week to boost defense and non-defense discretionary spending, the Committee for a Responsible Federal Budget, a watchdog group, predicted that the deficit could rise to $1.7 trillion by 2027. If the temporary tax cuts in the G.O.P. tax bill were made permanent, which is perfectly possible, the deficit would be $2.1 trillion, the group said, and the debt-to-G.D.P. ratio would hit an all-time high of a hundred and nine per cent.


While it's all well and fine to talk about the GOP's habit, from Reagan to Trump, of "reduced government", they also reduce taxes (trickle, trickle) and increase military spending, resulting in higher debt, overall. "Reduced government", then, really means "less spending on services" while total spending doesn't actually diminish (but revenue does); it's just redirected to other parts of the government, like the military.

Oh, and NAFTA - yeah, that kinda got kicked-off by Reagan. Washington Examiner may want to try to square that with "The smug Canadian prime minister will lay out his democratic socialist vision this Friday, as antithetical to Reagan's as anything could be." I can understand the difficulty. GOP are traditionally globalist on trade, and hate, like really hate, government spending. Can't add a cent to the debt, and all that. It all must be terribly confusing these days, but "socialist, grrrr!" works, I guess.

I digressed a bit and got into the US budget. The NAFTA negotiations continue. The seventh round is upcoming.

Okay, one more digression.

Holy shit, do you guys know how to do libraries.

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Re: Trump and NAFTA

Postby blehblah » Tue Feb 27, 2018 9:03 pm

Trump... well... Trump.

https://www.thestar.com/news/world/2018 ... ricks.html

At a meeting with governors at the White House on Monday morning, Trump again wrongly claimed that the U.S. loses money on trade with Canada. Then he claimed that Canada has been trying to deceive him, smoothly, about the true state of the trade relationship.

“We lose a lot with Canada. People don’t know it. Canada is very smooth,” he said in a tone of knowing mockery. “They have you believe that it’s wonderful. And it is. For them. Not wonderful for us. It’s wonderful for them. So we have to start showing that we know what we’re doing.”

In a report released last week, Trump’s own hand-picked Council of Economic Advisers confirmed the facts that Canadian officials, including Prime Minister Justin Trudeau, have long tried to convey to Trump: the U.S. has a trade surplus with Canada, not a deficit.


Pffft... report that Trump signed... sure, Canada - very smooth.

http://business.financialpost.com/news/ ... ade-canada

It contradicts a number of trade statements and policies already articulated by Trump.

One example involves the supposed trade deficit with Canada. Trump keeps insisting it exists, but the document he signed states Canada is among the few countries in the world with whom the U.S. runs a surplus.

The document states that in three different places. For example, it says, “All countries show a (U.S.) services surplus offsetting a goods deficit, with the U.S. running a net bilateral surplus only with Canada and the United Kingdom.”


Yeah, but, it's still a bad deal, because look at the jobs that have been lost, and stuff!

The report also contradicts the president by saying trade has helped the U.S. economy grow, that economies are shifting away from manufacturing, that foreign trade is increasingly important, that America has a good record of success in international dispute panels at the WTO, and that reworking trade agreements is no way to address a trade deficit.

“Trade and economic growth are strongly and positively correlated,” says the White House report.


Facts obviously don't matter to Trump. Then again, some articles have noted he may be using uncertainty as a way to discourage investment outside of the US. On the other hand, his protectionist leanings (like considering across-the-board tariffs on steel and aluminum) or tariffs on solar panel imports from China will hurt in other ways. While a company may invest in the US instead of abroad (or within NAFTA) if they must, uncertainty general leads to delays in investment. Tariffs have other repercussions; if you build stuff with steel or aluminum, and tariffs to get that stuff into the US are very high, maybe it still makes sense to build your stuff elsewhere and take the hit on a tariff on the finished product (and make no mistake, those things will simply end-up costing more for US consumers, either way).

Renewable energy is a good at-home example. Installers who were enjoying a boom of work installing ever-cheaper solar panels are going to see some problems. Consumers will look at the total cost, look at an administration which has zero interest in supporting renewables, and make the sane decision to delay investing.

Meanwhile, Trump seems to figure slapping tariffs on stuff is a way to make other countries "pay", and protect domestic industries. That was the thinking leading-up to the end of the 1920's. It didn't work-out. Sometimes, you can make stuff cheaper or better (yes, you, Germany) than other countries to then sell to those countries, and you can buy other stuff from other countries at a lower cost than you can produce it (rhymes with "Gyna"). Throw a boatload of tariffs in there, and suddenly the cheap stuff isn't cheap for anyone.

For example, if Trump figures the US will be a next exporter of energy while being protectionist on manufactured goods, he's entirely wrong. Other countries aren't going to sit with their thumbs up their asses while Trump treats international economics the same way he treats contractors.

Back to Trump's kinda-maybe strategy on NAFTA; stringing-out negotiations by insisting on impossible concessions will keep the uncertainty going, but Trump can keep that up for only so long. At some point, he's either got to go with a renegotiated NAFTA deal (and the US and Canada aren't going to pull their pants down) or he's got to walk away. Neither is a political win for Trump. Sure, his core will go with whatever he says is a win, but that's not going to win the mid-terms or his 2020 bid.

I think Trump doesn't know what to do, so he's dithering. He is going to make a decision by not making a decision, which he is really quite good at.

It has been clear for some time that Trump doesn't understand economics, domestic or otherwise. I think it is also clear he has no idea how to negotiate. I think back to all the contractors he screwed-over; he probably asked for insane shit (how about you pay me to lay that marble so you can brag about how you worked for Trump, huh?), the contractor said, "Nope, but I can do this for that amount", Trump agreed, and then to conclude his 'super-businessman uber-genius negotiation technique', he simply stiffed them.

To Trump, it's all zero-sum, in the moment. There are stories about contractors he stiffed being very confused when the Trump Org. would call them about new contracts.

There is currently another round of negotiations going-on in Mexico City.
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Re: Trump and NAFTA

Postby blehblah » Fri Apr 06, 2018 1:08 pm

It's so lonely in here. *candle sputters*

Things are looking up, maybe, or likely not, perhaps.

http://www.cbc.ca/news/politics/nafta-r ... -1.4605938

The next formal round of NAFTA talks has been put on hold, to make way for a series of high-level political meetings in Washington.

The U.S. side had been expected to host the eighth round of trade talks as early as this Sunday in Washington, but a source with direct knowledge of the situation told CBC News that no formal negotiations are planned at this time.

Instead, Foreign Affairs Minister Chrystia Freeland is travelling to Washington for meetings with her U.S. and Mexican counterparts.

The change in plans lends credibility to the suggestion that all three countries are comfortable with reaching a symbolic agreement-in-principle in the coming weeks.


That sounds positive! I wonder what changed?

Bloomberg first reported that U.S. President Donald Trump wants to have a formal framework in place by the time he, Prime Minister Justin Trudeau and Mexican President Enrique Pena Nieto meet next week at the Summit of the Americas in Peru.

And last month, U.S. negotiators dropped a demand that all vehicles made in Canada and Mexico that are bound for the U.S. market contain at least 50 per cent American-made components.


Trump wants a photo opp. I wonder if this has anything to do with the stock markets, or something.

If a NAFTA deal is reached within a short timeline, it could be presented to U.S. lawmakers in Congress before new representatives take office in January following mid-term elections.

U.S. trade law requires a six-month consultation period with congressional committees before a final vote on a ratified NAFTA.


Okay, so there's that, also... and elections in Mexico which could change the game.

http://business.financialpost.com/news/ ... -obstacles

Craft’s comments regarding NAFTA negotiations come as the Trump administration reportedly pushes to quickly reach a preliminary deal that could be announced at the Summit of the Americas in Peru, which begins April 13.


Overall, it seems as though Trump has told his negotiators to get a move-on. While the adults have been plugging-away, Trump has blustered. As Trump has sprayed spittle on the works via Twitter, and peppered it with baffling, outright lies, the negotiations have quietly proceeded. There were demands which were considered poison pills, but some of those have been softened. Trump's 'great deal' now seems to be 'any deal'.

Canada’s Ambassador to the U.S. David MacNaughton, who was at Craft’s speech, told reporters the summit in Peru would provide “a good chance” for the three leaders to “work really hard to try and get as far as we can.” However, he noted that despite recent progress, there are still major outstanding issues that need to be overcome.

“I don’t know what an agreement in principle looks like, really,” MacNaughton told reporters. “There’s still lots of issues. There’s differences of opinion and we are going to work hard to try and narrow down the gaps, and try to get to as much of an agreement as we possibly can.”


There are still a few high-profile blockers. Canada's dairy supply management system (I don't really understand what the big deal is on that one) and the sunset clause, which would have the agreement expire in five years unless the deal is extended (that one is highly problematic for everyone; how are businesses supposed to make large investment decisions?).

In MacNaughton's comments, he hits on something which gives me pause; "I don’t know what an agreement in principle looks like, really". That's Canadian for, "This seems like a pile of horseshit, but whatevs, we can roll with it".

What Trump has done is push to have the big-dogs meet in Washington to hammer-out something for the sake of having anything, while letting the details get sorted-out later. In Trump's mind, all you have to do is get the CEO's in a room and let the magic happen, because the professional trade negotiators are just peons who worry about stupid shit like 'details' and 'ramifications' and 'realities'. Canada and Mexico are happy to play along, but things like the sunset clause are non-starters (and it's probably difficult for the American negotiators to demand it with a straight face). Not to mention that perennial pains in the trade-ass like softwood lumber are, once again, not going to be dealt with, which is a shame.

Trump will probably get his announcement, and maybe that will ease some pressure and give him a chance to brag about what a big-league deal-maker he is. They may even give him a giant pair of scissors, a shiny trophy, or a gigantic piece of paper he can sign. However, that puts him in a bit of a corner. Declaring 'mission accomplished' only to later have to either concede major points, or go back to threatening to scuttle the whole thing, wouldn't be a good look.

Time will tell.
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