[CTC] FW: Trump Plan Outlines Changes to NAFTA, Trans-Pacific Trade Pact

[Mark Harrison]

CQ NEWS
Nov. 14, 2016 - 5:00 p.m.
Trump Plan Outlines Changes to NAFTA, Trans-Pacific Trade Pact
By Ellyn Ferguson, CQ Roll Call
The Trump administration would formally notify Canada and Mexico of plans to renegotiate the North American Free Trade Agreement if it determines that the 22-year-old trade pact does not benefit Americans or create U.S. jobs, according to a document representing the new administration's plan of action.
The incoming administration also would impose higher tariffs on countries that it says engage in unfair practices and use provisions under the Trans-Pacific Partnership to withdraw the United States from the 12-nation agreement or to block implementation if President Barack Obama manages to win congressional approval for the deal before leaving office. China's trade practices also would face heightened U.S. scrutiny and trade enforcement actions.
Previous administrations "relied too heavily on foreign trade as a tool to promote unrelated foreign policy goals," says an executive summary of a Nov. 8 action plan obtained by CQ. "The Trump Administration will reverse decades of conciliatory trade policy."
President-elect Donald Trump's proposals in the sweeping plan is a populist potpourri with elements for unions, agriculture and industries competing with imported goods. But Trump's call for targeting specific countries for higher tariffs raised concerns that other nations will retaliate against U.S. goods with their own tariffs or policies that would limit U.S. imports. Some trade experts say conditions could be ripe for a global trade war similar to one during the 1930s that further depressed the American economy during the Great Depression.
According to the plan, the Trump administration would focus on smaller-scale trade agreements involving the United States and one other country at a time. However, the action plan appears to leave open the possibility of working to finish the Transatlantic Trade and Investment Partnership agreement with the European Union. Negotiations on the trade agreement appear to have stalled.
Trump made revamping trade a centerpiece of his campaign, winning over blue-collar voters in Ohio, Michigan and Wisconsin with promises to renegotiate or rip up existing trade agreements. He made NAFTA a frequent target in his speeches, blaming it for making it too easy for U.S. companies to send American jobs to NAFTA partners Canada and Mexico. Mexico was the primary focus of his wrath.
The action plan calls for recommendations on how to proceed after the Commerce Department and the International Trade Commission review the potential economic effects of a U.S. NAFTA withdrawal on "the middle class, manufacturing and service sector workers and foreign direct investment into the United States." The agencies also would determine what changes to U.S. laws might be necessary to facilitate a withdrawal.
The U.S. Trade Representative's Office also would formally notify Canada and Mexico that the United States wants talks on amendments to NAFTA to address immigration, currency manipulation, increased labor and environmental standards, trucking safety rules and other areas of concern and resolve the long-running soft wood lumber talks. The Trump administration would revisit the contentious World Trade Organization's final ruling<http://www.cq.com/doc/govdoc-4801762> in May 2015 that America's mandatory country-of-origin labeling for beef and pork products discriminated against the Canadian and Mexican hog and cattle industries.
Canada and Mexico successfully argue that the U.S. requirement that labels indicate where an animal was born, raised and slaughtered adversely affected them because they sell live cattle and hogs to the United States. To comply with the born, raised and slaughtered requirement, packers segregated the Canadian and Mexican animals to prevent commingling with U.S.-produced meats.
WTO gave Canada and Mexico the right to impose retaliatory tariffs on a range of U.S. goods if the United States did not end the practice. Congress repealed the labeling requirement of the law for pork and beef last year.
The United States could commence a NAFTA withdrawal procedure by August 2017 if negotiations fail and the report from the Commerce Department and International Trade Commission show "substantial" benefits for leaving the trade agreement. The administration would send Congress legislation detailing tariff changes required to protect U.S. businesses, although the action plan says presidential authority to adjust tariffs for the long term is legally ambiguous.
The Trump administration also plans to send Congress legislation that would give the Treasury Department "enforceable measures to protect against currency manipulation." The U.S. car industry, labor unions, congressional Democrats and some Republicans have pressed for action against countries such as China and Japan that they say have at times kept their currency at artificially low levels to make their products cheaper than U.S. goods.
Obama administration officials argue that defining currency manipulation is difficult and that other countries might label the United States a currency manipulator because of monetary policies it used to steady the economy after the 2008 recession.
The Trump plan also would add food security to the list of items that the Committee on Foreign Investment in the United States (CFIUS) will consider when it reviews proposed foreign acquisitions of U.S. companies. Concerns about the U.S. ability to produce food or retain agricultural or food production technology could be grounds for rejecting an acquisition. Some farm-state lawmakers, such as Senate Agriculture ranking Democrat Debbie Stabenow<http://www.cq.com/person/247> of Michigan, have argued that food security was just as important as national security considerations by CFIUS.
In a Trump administration, CFIUS also would take into consideration whether the home country of a foreign buyer would allow a similar acquisition by a U.S. company. The plan makes specific reference to Chinese companies buying firms in America although the Chinese government restricts foreign purchases of its companies.


Mark Harrison
Director, Peace with Justice Program
United Methodist General Board of Church and Society
Phone:  202-488-5645
Email:  mharrison at umc-gbcs.org<mailto:mharrison at umc-gbcs.org>

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