[CTC] More on reactions, WH infighting to the NAFTA withdrawal "rumor"

[Arthur Stamoulis]

A few articles below…

http://thehill.com/policy/finance/330796-trudeau-trump-talk-again-about-us-canada-trade-relations <http://thehill.com/policy/finance/330796-trudeau-trump-talk-again-about-us-canada-trade-relations>
Trudeau, Trump speak for second night about US-Canada trade

By Vicki Needham - 04/26/17 08:12 PM EDT
Canadian Prime Minister Justin Trudeau and President Trump spoke Wednesday for the second straight night, following reports the United States is considering withdrawing from the North American Free Trade Agreement (NAFTA).

The Trump administration is weighing whether to issue an executive order <http://thehill.com/homenews/administration/330670-trump-administration-weighing-order-to-withdraw-from-nafta-reports> that would eventually lead the United States to leave the 1990s-era pact with Mexico and Canada.

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The Canadian statement Wednesday was more vague than the one released after Tuesday night’s call on softwood lumber and dairy as tensions over trade grow between the two partners. 
“The prime minister spoke this evening with President Trump of the United States,” the Canadian government said in a statement.

“The two leaders continued their dialogue on Canada-U.S. trade relations, with the prime minister reinforcing the importance of stability and job growth in our trade relations.”

Commerce Secretary Wilbur Ross on Wednesday night attempted to tamped down the talk surrounding the potential of an executive order on NAFTA.

“There was a rumor today there would be an executive order, just a rumor,” he told reporters on Wednesday evening. 

The executive order is unnecessary because countries are allowed to leave NAFTA six months after providing written notice to the other countries.

Still, Trump could provide that notice while sending his intent to Congress to renegotiate the agreement.

Trump and Trudeau talked on Tuesday night about the Commerce Department’s decision to levy a 20 percent duty on Canada’s softwood lumber imports.

Trudeau refuted what he called the "baseless allegations" about the his nation's lumber industry. He called the duties "unfair" while saying the leaders agreed to reach a deal on the dispute, which goes back to the 1980s.

A possible departure from the three-nation pact with Mexico and Canada brought expressions of concern from the agricultural sector, several lawmakers on Capitol Hill and labor unions. 

Ron Moore, president of the American Soybean Association, said the move to leave NAFTA would have “disastrous consequences” for the nation’s leading agricultural export. 

“Without mincing words, initiating a process to withdraw from NAFTA is a terrible idea, and it will only mean a longer and more difficult struggle for farmers to recover in this economy,” Moore said.

The AFL-CIO's Thea Lee said the U.S. should “make a good faith effort to fix” the agreement before withdrawing. 

“Better to get the details right than to rush into an ill-defined process,” Lee said in a statement.

“Clearly, major changes to NAFTA are needed. If that isn't possible, we'll have no choice but to withdraw. But we believe the changes we've outlined are the best solution for working families."

On Capitol Hill, lawmakers expressed concern about any move to scrap the long-standing North American agreement.  

House Ways and Means Committee ranking member Richard Neal (D-Mass.) said that if press reports are true “an executive order to withdraw the United States from NAFTA would create incredible uncertainty and hinder our ability to create jobs here in America.”

“Like most of my Democratic colleagues, I voted against NAFTA and want to see it fixed,” Neal said.

“But threatening to withdraw from NAFTA even before negotiations begin to fix the trade agreement won't give us more leverage."

Some experts have argued that the move is designed to give Trump more leverage during an anticipated renegotiation.

Several Republicans also questioned the move.

Sen. John McCain <http://thehill.com/people/john-mccain> (Ariz.) said leaving NAFTA “would be a disaster” and the U.S. “shouldn't abandon this vital trade agreement.”

Sen. Jeff Flake <http://thehill.com/people/jeff-flake>, also from Arizona, similarly called on Trump not to “abandon it."

And Sen. Ben Sasse of Nebraska, a state with major agricultural interests, said <http://thehill.com/policy/finance/trade/330787-gop-senator-leaving-nafta-disastrously-bad> that while the deal needs to be modernized “scrapping NAFTA would be a disastrously bad idea.”

Trump has long railed against NAFTA, calling it a “disaster for our country.” 

But after meeting with Trudeau earlier this year, Trump appeared to change his view, saying he wanted to only pursue “tweaks” to Canada’s side of the deal.

A memo from the U.S. Trade Representative circulated last month around Capitol Hill suggesting a few changes to NAFTA. But the White House has stepped away from that policy document.

The Senate still needs to approve Trump's pick to run the trade office — Robert Lighthizer — who is expected to help shepherd through the White House's ambitious trade agenda.

The Senate Finance Committee on Tuesday unanimously approved Lighthizer for the trade job. 


https://www.bloomberg.com/politics/articles/2017-04-26/trump-aides-in-raging-debate-over-how-quickly-to-move-on-nafta <https://www.bloomberg.com/politics/articles/2017-04-26/trump-aides-in-raging-debate-over-how-quickly-to-move-on-nafta>
Trump Rules Out Swift Nafta Exit in Favor of Renegotiation

Jennifer Jacobs and Andrew Mayeda 
April 26, 2017, 7:47 PM EDT April 27, 2017, 7:37 AM EDT 
U.S. to pursue talks with Mexico and Canada, White House says 
Trump aides said to be divided over how aggressively to move 
President Donald Trump won’t immediately terminate U.S. participation in the North American Free Trade Agreement, the White House said, after he spoke with the leaders of Mexico and Canada about ways to renegotiate the accord.

“Both conversations were pleasant and productive. President Trump agreed not to terminate Nafta at this time and the leaders agreed to proceed swiftly, according to their required internal procedures, to enable the renegotiation of the Nafta deal to the benefit of all three countries,” the White House said in a statement late Wednesday. Mexico’s peso and Canada’s dollar jumped <https://www.bloomberg.com/news/articles/2017-04-26/caution-prevails-for-asian-stocks-ahead-of-boj-markets-wrap> after the White House’s announcement.

Trump on the campaign trail last year made a hawkish vow to pull out <https://assets.donaldjtrump.com/DJT_DeclaringAmericanEconomicIndependence.pdf> of Nafta -- which he repeatedly called the “worst trade deal ever” -- if the U.S. didn’t get a better deal through immediate renegotiation. His decision Wednesday marks a continuing softening of his rhetoric on trade, after he recently said he would not declare China a currency manipulator, another campaign promise.

Trump said <https://www.bloomberg.com/news/terminal/OP2F4CBE07I9> on Twitter on Thursday morning that he received calls from the leaders of Mexico and Canada, Enrique Pena Nieto and Justin Trudeau, “asking to renegotiate NAFTA rather than terminate.” Trump said <https://www.bloomberg.com/news/terminal/OP2FJKBE07I9> he agreed, “subject to the fact that if we do not reach a fair deal for all, we will then terminate NAFTA. Relationships are good-deal very possible!”

Advisers’ Debate

Trump’s top advisers had been embroiled in a debate over how aggressively to proceed on reshaping U.S. participation in Nafta, with hard-liners favoring a threatened withdrawal as soon as this week and others advocating for a more measured approach to reopening negotiations with Canada and Mexico.

Some of Trump’s advisers wanted a dramatic move before Trump’s 100th day in office on Saturday to fulfill a key campaign promise, while others said he could let the milestone pass and revisit the issue later through more formal procedures, according to two White House officials who spoke on condition of anonymity to discuss internal deliberations.

The dispute played out in the media Wednesday, with several outlets saying Trump would take the most dramatic available option-- issuing an order declaring his intention to withdraw from the treaty. In this case, threatening to withdraw would have amounted to a formal step that started the process of giving Mexico and Canada six months notice that Trump intended to start negotiating.

Exactly who in the White House sparred over the decision wasn’t known, but one of the most prominent anti-trade hard-liners is senior counselor to the president Steve Bannon, and Trump’s decision is sure to be viewed as a defeat for Bannon and his views. Bannon already is seen as being on the outs with Trump over reportedly sparring with Trump’s son-in-law Jared Kushner.

New Talks

Instead of announcing his intent to withdraw from the agreement, Trump is asking the two other nations to open talks on ways to make the deal more balanced from the U.S. perspective, which is allowed within the framework of the treaty. His conversations with Pena Nieto and Trudeau took place late Wednesday afternoon, according to the White House.

“It is my privilege to bring Nafta up to date through renegotiation,” Trump said in the White House statement. “I believe that the end result will make all three countries stronger and better.”

Commerce Secretary Wilbur Ross told CNBC on Thursday that Mexico and Canada appear to be ready to start renegotiations of the trade pact. One of the issues he said the U.S. wants to target is the rules regarding country of origin of products sold under the deal. He said that Mexico’s trade deficit with China is approximately equal with their trade surplus with the U.S., indicating that products made in China are being sold under Nafta.

“The whole idea of a trade deal is to build a fence around participants inside and give them an advantage over the outside,” Ross said. “So there is a conceptual flaw in that -- one of the many conceptual flaws in Nafta.”

‘Bring Pressure’

Talk that Trump would revisit Nafta on Wednesday had caused Mexico’s peso, the Canadian dollar and shares of companies that rely on cross-border trade to plunge.

“Even if he notifies Mexico and the U.S. of his intentions, that doesn’t mean he has to leave,” said Beatriz Leycegui, who was Mexico’s deputy minister on foreign trade between 2006 and 2011. “This is a strategy to bring pressure on Canada and Mexico.”

Trump must give Congress 90 days notice that he seeks to renegotiate the accord. Ross said on Tuesday that the administration is busy working with lawmakers to kick start renegotiation of the deal, and that the U.S. was embarking on a more muscular strategy for trade-enforcement.

Trump has blamed Nafta for hollowing out America’s manufacturing sector by relocating jobs to lower-cost Mexico -- which his administration initially said was the main target of changes he was seeking to the accord.

‘Disastrously Bad’

Where Trump stands on Nafta has been hard to discern. After harsh rhetoric during the campaign, he has in recent weeks toned down his criticism, suggesting the relationship with Canada only needs tweaking. This week, he fueled <https://www.bloomberg.com/politics/articles/2017-04-26/lumber-nafta-and-mexico-signal-a-lengthy-canada-u-s-trade-spat> trade tensions by imposing new duties on softwood lumber imports from Canada and vowing to defend U.S. dairy farmers against quotas imposed in Canada.

A number of Republicans are strong backers of free trade and have cautioned the administration against walking away from the free-trade deal.

“Scrapping Nafta would be a disastrously bad idea,” Republican Senator Ben Sasse of Nebraska, who was a Trump critic during the campaign, said Wednesday in a statement. “It would hurt American families at the check-out, and it would cripple American producers in the field and the office.”

Republican Senator Jeff Flake of Arizona also blasted the idea on Twitter, writing, “Increasing trade barriers with CAN and MEX will result in lost jobs and higher consumer costs in #AZ. Strengthen #NAFTA, don’t abandon it.”

Without Nafta -- which reduced or eliminated tariffs on most trade products after taking force in 1994 -- commerce ties between the nations would need to be reset, raising the specter of more frequent trade disputes and higher tariffs.

U.S. trade with its Nafta partners has more than tripled <https://fas.org/sgp/crs/row/R42965.pdf> since the agreement took effect, rising to $1.1 trillion last year. Canada followed by Mexico ranked as the two biggest markets for U.S. exports, taking in a combined 34 percent of the total in 2016, according to a February paper published by the Congressional Research Service.

https://www.theatlantic.com/politics/archive/2017/04/is-this-the-end-of-nafta/524460/ <https://www.theatlantic.com/politics/archive/2017/04/is-this-the-end-of-nafta/524460/>
Trump Backs Away From Terminating NAFTA

The nationalists in Donald Trump's White House appear to have come very close to persuading the president to sign an executive order withdrawing from the North American Free Trade Agreement.

Rosie Gray <https://www.theatlantic.com/author/rosie-gray/>
Apr 26, 2017 
A proposed draft executive order that would pull the United States out of the North American Free Trade Agreement set off the latest round in a now-familiar series in Trump’s White House: The friction of Donald Trump’s nationalist campaign promises against the reality of governance, and the tension between moderating forces within the White House and more aggressive ideological purists.

The draft of the executive order, its existence first reported by Politico <http://www.politico.com/story/2017/04/26/white-house-nafta-withdraw-trump-237632>, is “in advanced stages of the process,” a senior White House official told me on Wednesday afternoon. But on Wednesday evening, the White House released a readout of a call between President Trump, President Pena Nieto of Mexico, and Prime Minister Trudeau of Canada, saying that Trump had “agreed not to terminate NAFTA at this time.” It quoted Trump as saying: “It is my privilege to bring NAFTA up to date at this time,” and said the three leaders had agreed to embark on renegotiation of the deal.

Earlier on Wednesday, The New York Times had reported <https://www.nytimes.com/2017/04/26/us/politics/nafta-executive-order-trump.html> that Trump was likely to sign the order; the president “wants to be more aggressive on trade, economic nationalism, America first,” the senior White House official told me. It’s still unclear what exactly is in the draft and how it would trigger the U.S. pulling out of the agreement, which requires six months notice before one of the signatories can withdraw.

As a candidate who ran on protectionist trade policy, one of Trump’s main bêtes noires was NAFTA, which he has called the “worst trade deal ever approved in this country.” Trump’s rhetoric on NAFTA helped endear him to the white working class voters in formerly manufacturing-heavy areas who helped put him in the White House. He has repeatedly promised to renegotiate the agreement, and if all else fails, pull out altogether. Early on in his administration, Trump lived up to one trade-related campaign promise by pulling the U.S. out of the Trans-Pacific Partnership.

But in the early days of his administration, Trump had shown signs of moderating on trade, or at least of entertaining more moderate views. Reports leaked out of a “civil war” <https://www.ft.com/content/badd42ce-05b8-11e7-ace0-1ce02ef0def9> over trade, with nationalist ideologues like Bannon and National Trade Council chief Peter Navarro on one side, and Wall Street-connected centrists like National Economic Council head Gary Cohn on the other. And a draft letter to Congress <https://www.washingtonpost.com/news/wonk/wp/2017/03/30/white-house-calls-for-changing-but-not-scrapping-nafta-in-draft-letter/?utm_term=.a01196ad7831> that leaked to the media appeared to show a more moderate posture towards NAFTA, suggesting less dramatic changes to the agreement and not proposing ditching it altogether.

The senior White House official told me that Cohn and his allies had been against this draft executive order on NAFTA. Cohn has been seen as one of the key figures in the faction associated with Trump’s son-in-law Jared Kushner and daughter Ivanka Trump; infighting between this faction and Bannon recently spilled into public view. The conventional wisdom had been that the Kushner allies came out as the victors, with Bannon’s fall from grace representing the sidelining of the populist nationalism Trump espoused as a candidate. Bannon was removed from his seat on the principals’ committee of the National Security Council, and Trump himself chastised the chief strategist publicly, saying in interviews that Bannon had joined his campaign late and that it was Trump who led the White House’s strategy, not Bannon.

But despite weeks of Washington gossip assuming Bannon’s imminent downfall, Bannon is still there. And whether or not the order is signed,  that it is even being considered ups the ante on the administration’s posture towards U.S. trading partners following increasingly heated rhetoric from the administration. Trump has become increasingly aggressive towards Canada, imposing a tariff on Canadian lumber.

"People don't realize Canada's been very rough on the United States,” Trump told a meeting of agricultural leaders on Tuesday. “They've outsmarted our politicians for years."

“Canada has made business for our dairy farmers in Wisconsin and other border states very difficult. We will not stand for this. Watch!” Trump tweeted on Tuesday.

Just last week, Trump told the AP in an interview that he was either going to renegotiate or terminate NAFTA, and that “If they don't treat fairly, I am terminating NAFTA.”

Bannon and Navarro reportedly wrote the draft of the order. Navarro is a trade protectionist academic who has sounded the drumbeat against China for years. The executive orders in which Bannon has had the largest hand haven’t had a great success rate; the first and second iterations of the travel ban targeting mostly Muslim nations did not stand up to legal challenges.

It’s also unclear whether Trump really could have unilaterally pulled out of NAFTA without congressional approval; a recent study <https://www.cdhowe.org/media-release/trump-can%E2%80%99t-unilaterally-withdraw-us-nafta> by a Canadian think tank concluded that he cannot. But politically, the fact that the order came close to being signed could be a signal that Bannon is not a spent force, the nationalist wing remains influential in the White House.


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