[CTC] Trump talks NAFTA with GOP senators as lawmakers grow warier about withdrawal

[Arthur Stamoulis]

INSIDE US TRADE

Trump talks NAFTA with GOP senators as lawmakers grow warier about withdrawal

December 05, 2017
 
While President Trump on Tuesday met with GOP senators to hear their concerns about NAFTA, a meeting that “pleased” one senator who is particularly concerned about agriculture, lawmakers are growing increasingly concerned Trump may soon issue a withdrawal notice as a negotiating tactic -- especially now that he appears close to a legislative “win” on tax reform.
 
Sen. Joni Ernst (R-IA), one of the six Republicans who met with Trump and U.S. Trade Representative Robert Lighthizer at the White House, deferred to the president when asked about withdrawal but said she would continue to weigh in.
 
“That’s up to the president to discuss that; all we can do is inform him on how important agriculture is,” Ernst told Inside U.S. Trade Tuesday afternoon. “We’re still in discussions and so I just keep emphasizing to the president the importance of trade as it applies to agriculture so we’ll continue having discussions. I am pleased the president was willing to sit down and visit with us, but we remain committed to strong agricultural trade.”
 
Sen. Jeff Flake (R-AZ), a frequent critic of the president who also met with him on Tuesday, told Inside U.S. Trade it was a “good” meeting and that the president “heard strong opinions” from the lawmakers. When asked about the possibility of withdrawal, he said “I never liked withdrawal so I don’t want to speak for the president; we certainly voiced our opposition to it.”
 
Others are not so sanguine. A senator told Inside U.S. Trade in recent days that the president was likely to trigger the withdrawal process after the sixth round of talks concludes at the end of January “because I think he will see it as the only way to break through kind of a negotiating impasse.”
 
But, the senator said on Dec. 1, Lighthizer has made clear a decision to withdraw, or not, will not be his to make, even if only as a negotiating tactic.
 
“When I said 'you can’t do this because it would be disruptive in and of itself' he said 'that’s not in his pay grade,'” the senator said of a recent discussion. “He’s saying 'it doesn’t do any good to convince me not to do it. You have to convince the White House.'”
 
Sen. Jerry Moran (R-KS) is also “very nervous <https://insidetrade.com/node/161200>,” he said last week, “when every indication seems to me to be that the administration is going to terminate NAFTA, then indicate that they have six months before it actually expires to get a better deal. In other words, using it as leverage.”
 
In addition to Trump and Lighthizer, White House Chief of Staff Gen. John Kelly, Director of the National Economic Council Gary Cohn and Director of Legislative Affairs Marc Short participated in the meeting this week with Ernst, Flake and Sens. Lamar Alexander (TN), Deb Fischer (NE), Cory Gardner (CO) and Lindsey Graham (SC).
 
None of the senators sit on the Finance panel that has jurisdiction over trade.
 
Finance member Sen. Pat Roberts (R-KS), who also chairs the Senate Agriculture committee, told Inside U.S. Trade on Tuesday that he remained “concerned with the overall policy with regards to trade and the proposition that we could start the clock on NAFTA without any repercussions throughout not only the farm economy but everywhere -- that could trigger a recession in farm country and then as well as other parts of the economy as well.”

Ahead of the Tuesday meeting, Trump noted the complicated time frame the negotiators are operating under, saying it was “not easy to have an election coming up so we'll see how that plays. But it's going to be very successful.”
 
Mexico is set to hold a presidential election next July. That election, as well as U.S. midterms later in 2018, have driven the time line for talks to date. Mexico’s ambassador to the U.S., Gerónimo Gutiérrez, this week put the chances of a NAFTA withdrawal at “about 50-50 <https://www.cbsnews.com/news/mexican-ambassador-50-50-odds-nafta-will-be-terminated/>” and said he was “moderately optimistic we can in fact reach an agreement in the next few months.”
 
Flake, before the meeting on Tuesday, told Inside U.S. Trade it would focus on lawmakers’ worries about NAFTA. He said the senators “have been wanting to get together” with the president on this issue.
 
Asked whether he believes a withdrawal from the agreement would be more likely after tax reform legislation was passed, Flake said “I don’t know; we’ll get a better sense after today.”
 
“We ought to keep it; mend it, don’t end it. That’s our view,” he added. Flake said he did not know whether Lighthizer agreed with that view.
 
A White House official said Tuesday’s meeting was “the result of a request from this group of Senators to discuss trade priorities and their shared goal of American economic dominance and, as a result, immense job creation. The administration looks forward to further cooperation with members of Congress in order to make this vision a reality.”
 
Roberts, asked last week about the status of NAFTA talks and the likelihood of a withdrawal notice, said he has had “I don’t know how many people in my office asking me the same question.”
 
“And I always talk to Mr. Lighthizer and I really think that we have to just get this settled so we have some consistency and predictability cause there’s people making plans now in case that the clock would start moving,” he said.
 
The Agriculture Committee chairman last spoke to the president about the trade pact with Mexico and Canada in late November, he said, when Trump attended the Republican caucus luncheon and Roberts told him U.S. farmers were “a little worried about NAFTA.”
 
“I didn’t say ‘don’t start the clock’ or anything else, and he said ‘I’ll get back to you,’” Roberts said. “So I hope he will.”
 
Roberts also said he recommended to Lighthizer that he call members of the Agriculture Committee and said the USTR has done so with “quite a few” of them.
 
“So that’s a good thing,” Roberts added, “but he’s still wrapped around the axle. If you’re going to do a trade agreement that ought to be terminated in five years, if you do that you’re going to have many agreements.”
 
Roberts’ counterpart in the House, Rep. Mike Conaway (R-TX), told Inside U.S. Trade last week that “the president's talking” about withdrawal, “but he's a negotiator, and he's negotiated a whole lot more deals than I've ever even thought about, and so I'm not going to second-guess him.”
 
Conaway met with Lighthizer on Nov. 30 said the USTR has a “tough job to get this thing renegotiated on a timely basis.”
 
“I'm not in on the details of what's going on, but he knows that he's got a clear understanding of how important trade is to production agriculture and that side of it and understands the anxiety that many folks are feeling, and so I trust Lighthizer to be doing the right thing.”
 
He also communicated with him “how important it is that he not swap agricultural interests for those other things, and he certainly understands that,” Conaway said.
 
U.S. officials at the fifth round of talks in Mexico City showed frustration with what they perceived as a lack of engagement by Canada and Mexico. One official said the president was willing to follow through on his promise to end NAFTA <https://insidetrade.com/node/161092> if the other countries showed no appetite to seriously negotiate -- particularly on contentious proposals like automotive rules of origin -- by the next round, at the end of January.
 
Negotiators will sit down next week in Washington, DC, for an intersessional meeting that will not involve Lighthizer or his counterparts.
 
The senator who spoke on background also noted that Agriculture Secretary Sonny Perdue recently claimed the U.S. was working on a contingency plan should the president decide to issue the notice.
 
Perdue would soon walk back those comments, saying on Nov. 11 “I was probably prematurely thinking out loud <http://www.desmoinesregister.com/videos/money/agriculture/2017/11/10/ag.-secretary-talks-nafta-contingency-plan-premature/107533104/>, as a planner.”
 
“I think it’s my responsibility to think about what-if kind of scenarios when I talked about contingency plans for that. I want to make the administration aware that there could be some devastating commodity price changes if NAFTA is not renegotiated and we need to be prepared to deal with that because we would need a more effective safety net for farmers if we lose our trade to Mexico and Canada,” Perdue said.
 
The senator told Inside U.S. Trade the agriculture secretary walked back those comments “because he didn’t want to send the wrong signal” -- and said that despite Perdue’s statement, “I think there is a contingency plan. I think he’s preparing it.”
 
“I just want to get to the point where there is enough pressure on the administration not to issue the notice,” the senator added.
 
USDA did not respond to a request for comment on Perdue’s remarks or whether the department has embarked on a contingency plan.
 
While Trump was meeting with a small number of GOP senators at the White House, Vice President Mike Pence attended the Republican caucus luncheon at the Capitol.
 
Sources told Inside U.S. Trade that stakeholders and members of Congress have been increasingly reaching out to Pence because they feel their concerns have not been heard by USTR.
 
The sources said Pence is telling those worried about the administration’s trade agenda and its approach to NAFTA that nothing will happen while the tax reform debate is going on. After that, however, many private-sector and congressional sources say the direction is unclear.
 
Sen. Pat Toomey (R-PA) noted on Tuesday that tax reform “is not done -- we’re going to get it done.” When asked how the issue might impact the NAFTA talks, Toomey added, “I don’t know what the president’s plans are.”

“But NAFTA is enormously helpful to the American economy and we need to keep it in place,” Toomey said.


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