[CTC] War rooms, spreadsheets and a 'charm offensive:' How North America is gearing up for NAFTA 2.0

[Arthur Stamoulis]

POLITICO
War rooms, spreadsheets and a 'charm offensive:' How North America is gearing up for NAFTA 2.0

By Megan Cassella 
07/13/2017 05:02 AM EDT

This article is part of a continuing series examining the finer points and nettlesome issues as the United States, Canada and Mexico revisit the North American Free Trade Agreement.

It's a 23-year-old trade agreement that all three parties involved agree is due for an update. But with a U.S. president vowing to pull out of NAFTA if he does not get the changes he wants, Canada and Mexico are appealing to leaders of American states and regions to build support for trade goals in the coming renegotiation.

President Donald Trump and his team of negotiators have not yet revealed specific planks when talks begin. Yet for months, public- and private-sector groups in Canada and Mexico have been getting their research lined up when it comes to the reopening of the agreement.

The goal is, in part, to arm themselves with data to illustrate the various effects of any potential changes — such as pinpointing which U.S. states or companies would be hit the hardest by, say, heightened tariffs or tighter rules of origin.

Both countries have also taken the additional step of moving beyond the White House to work directly at the state level. The aim is to make allies among key governors and lawmakers who they hope can wield influence in Washington to protect rural and urban states' interests and keep NAFTA more or less intact. 

One platform will be the National Governors' Association summer meeting in Rhode Island, which kicks off today. Canadian Prime Minister Justin Trudeau is slated to give a keynote speech and Canadian Foreign Minister Chrystia Freeland is expected to be in attendance. State- and provincial-level groups from both Canada and Mexico will also be in attendance to present a trilateral, united front.

"Canada has done a good job on the charm offensive," while Mexico has been involved in its own "active engagement strategy," said international trade lawyer Dan Ujczo, who focuses on U.S.-Canada bilateral relations.

"If all politics is local, all trade is personal," he added.

The Office of the U.S. Trade Representative plans to publish <http://go.politicoemail.com/?qs=7e4d44abc731289f8b47f2059c2d3fd986602f0bf437d7710d8d0478b4baf4245741f17a21694ed4bc79f828818a5da88331df175374cb49> its NAFTA negotiating objectives on Monday, giving a roadmap to the Trump administration's goals. But with talks expected to begin 30 days after that, the pre-emptive efforts to line up American allies and spokespeople will aid in any defense against potential new barriers that the U.S. proposed.

Trade observers and experts described an elaborate, targeted engagement effort that has involved sending various government officials and corporate executives to key congressional districts to highlight how many jobs NAFTA had created in the district, or what percentage of exports were sent to either Canada or Mexico. 

Canada has made senior-level in-person meetings around the United States a priority, with members of Trudeau's Cabinet and Parliament meeting with senior U.S. officials more than 170 times between Inauguration Day and the end of last month, according to a tally from the foreign minister's office. That included visits to 23 U.S. states plus Washington, D.C., with a heavy focus on big cities, coastal states, and Rust Belt towns throughout Michigan, Ohio and Pennsylvania.

Those meetings come on top of continued discussions between the Prime Minister's office and the White House. Later this week, Trudeau and Vice President Mike Pence are expected to meet in Rhode Island.

"Their working premise is that members of Congress are going to have strong opinions about NAFTA," said Scotty Greenwood, a senior adviser for the Canadian-American Business Council. "So the government of Canada wants to make sure that, as members are forming their opinions, they have an appreciation for how integrated their economy is with Canada."

In Mexico, an expensive private-sector effort has been underway that seeks to pair up major U.S. industry groups — the Chamber of Commerce, the National Association of Manufacturers, Business Roundtable and the American Farm Bureau Federation — with their Mexican counterparts to ensure that organizations in both countries are on the same page.

"And we're in agreement 97 percent of the time," said Moises Kalach, a Mexico City-based businessman who leads private-sector engagement with Mexico's government on trade issues. "And we're doing this hand-in-hand with the Mexican government."

Trudeau also began increasing his cabinet's attention on its relationship with its southern neighbor by creating a "war room" inside the prime minister's office dedicated to bilateral issues. At the helm of that office is Brian Clow, who previously worked as chief of staff to Freeland when she served as Canada's trade minister.

"They're kind of adapting their staffing structure to be nimble enough to deal with a big NAFTA conversation," Greenwood said.

Various provincial premiers have also made visits to Washington — or, if they can't come themselves, have hired "K Street-type people" to mind their interests and keep a close eye on the United States' evolving position on NAFTA, Ujczo said. "Everybody's trying to read the tea leaves of the administration," he added. 

The other challenge for Canada and Mexico has been preparing their own set of offensive interests for renegotiation, which they have not revealed themselves.

Kalach said his team had mapped out all potential objectives the U.S. might pursue by dividing policy areas into three buckets: those currently covered under NAFTA; those that had been negotiated in the Trans-Pacific Partnership; and those that administration officials have mentioned in passing but which do not fall into either category, such as ways to reduce the trade deficit. They have then analyzed each bucket, and then prepared data and negotiating points to help them respond to U.S. proposals.

"With this matrix, basically you have most issues covered," Kalach said, estimating that at least 90 percent of whatever the U.S. lays out in its negotiating objectives has already been analyzed by his team. "Maybe some issues are not as in depth as I think they're going to be, but we're ready for the negotiations."

The preparation on both sides of the border comes as the embattled U.S. administration continues to navigate internal differences of opinion to sort out its own objectives, which lawmakers on Capitol Hill expect to be briefed on some time this week.

That document, mandated under Trade Promotion Authority legislation to be released at least 30 days before talks can begin, should give the most detailed indication yet of what the administration wants to see in NAFTA 2.0, though there has so far been disagreement over how narrow Trump might want the objectives to be.

"People in the administration are very nervous about the notion that he'll want them to put on the table U.S. negotiating objectives that are going to be impossible for Canada and Mexico to agree to," one Washington trade association source told POLITICO.

"There are going to be certain favorite ideas that the [Peter] Navarros and [Steve] Bannons of the world have that they want to use NAFTA for, and it's everything from going after value-added tax to what's an acceptable trade deficit," the source said, referring to two of Trump's more nationalistic advisers on trade. "But those would be completely and totally non-starters."
-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://lists.citizenstrade.org/pipermail/ctcfield-citizenstrade.org/attachments/20170713/f30fb33d/attachment.htm>