[CTC] Ross: ‘Easiest’ issues in NAFTA talks will be those that were not part of original deal

[Arthur Stamoulis]

Inside US Trade
Ross: ‘Easiest’ issues in NAFTA talks will be those that were not part of original deal
May 31, 2017
Commerce Secretary Wilbur Ross on Wednesday said “the easiest issues” to be addressed in North American Free Trade Agreement modernization talks “should be” those that were not part of the existing agreement, which entered into force in 1994.
 
“The easiest ones will be the ones that weren't contained in the original agreement because that's new territory; that's not anybody giving up anything,” Ross said at an event hosted by the Bipartisan Policy Institute on May 31. “And by and large, those should be the easiest issues to get done.”
 
Ross added that those new issues are important “because one of our objectives will be to try to incorporate in NAFTA kind of basic principles that we would like to have followed in subsequent free-trade agreements, rather than starting each one with a blank sheet of paper.”
 
Among those issues -- which he called “big holes” in the old agreement -- he listed the digital economy, services, and financial services.
 
He also mentioned intellectual property rights, regulatory practices, Customs procedures, sanitary and phytosanitary regulations, labor, environmental issues, and small and medium-sized enterprises.
 
“And most of all,” he continued, “enforcement; because there's not much point going to all the trouble and making an elaborate trade agreement if you're not going to enforce it and really get the benefits of it that you bargained for.”
 
Ross reiterated the administration’s stance that the “guiding principle is do no harm” in redoing NAFTA, while the second “rule of thumb” is to view concessions made by Mexico and Canada in the Trans-Pacific Partnership negotiations “as sort of a starting point” for NAFTA talks.
 
Hitting on another of the administration’s talking points, Ross mentioned the reduction of the U.S. trade deficit, which he said is “one of our big objectives.”
 
“There are lots of ways of doing that. The way that we think is the easiest -- not just for these two countries, but for anybody with whom we partner would be to divert to U.S. sources products they're already buying from abroad but from a country other than the U.S.,” he said.
 
“For example, some of the agricultural products they buy come from Brazil. Well, they could just as well give us a better market share than we have now. And that's just one example of many,” Ross added.
 
Business leaders from a variety of industries, in a May 25 letter to President Trump <https://insidetrade.com/sites/insidetrade.com/files/documents/may2017/05252017%20CEO%20Letter%20to%20President%20Trump%20on%20NAFTA%20Modernization.pdf>, urged the administration not to return “to the high tariffs or other trade barriers that preceded NAFTA” and to pursue NAFTA talks “quickly and trilaterally.”
 
“Uncertainty about the future of America’s terms of trade with Canada and Mexico would suppress economic growth and may cause political reactions that undermine U.S. exporters and their significant growth opportunities in these markets,” the CEOs wrote.
 
They also cited a pledge made by “Secretary Ross and others” to follow the Trade Promotion Authority law, which they said “will provide a more predictable environment for business.”
 
“Pursuing the TPA statute’s negotiating objectives and following its consultation procedures will build broader support in Congress and the U.S. business and agriculture communities for this effort,” they added.
 
Asked whether he considered “all trade deficits equal,” Ross on May 31 said “there's no question that trade surpluses are more beneficial to a country than trade deficits” -- but added a distinction between certain causes of deficits.
 
“Within deficits, there are two categories. One is what I would call blameless deficits,” he said, noting that the U.S. is “not yet self-sufficient in energy so naturally we're going to have something of a deficit caused by importation of hydrocarbons.”
 
“That’s an important consideration because relative to Canada, that's more than our entire deficit comes from both hydrocarbons and electrical energy that they export to the U.S. I don't call that blameful exports,” he added. “What is blameful are things that are subsidized or are not with a level playing field or come from some other inappropriate source of behavior rather than the natural course.”
 
On the timing of NAFTA talks, Ross said it “would have been preferable” to start negotiations earlier while acknowledging the time lines governed by TPA, which he said the administration will adhere to because “any big change would need congressional approval.”
 
He defined as the “best window” for negotiations the period “from now until December or early January,” citing the Mexican presidential elections set to take place next summer.
 
“The closer you get to it, the more complicated it will become, particularly in terms of getting the Mexican congressional approval,” Ross said. “But we also shouldn't forget two other things: The Trade Promotion Authority expires July of next year and we too have elections. The midterm elections, and those will undoubtedly have some impact on congressional views.”
 
Asked whether the administration has set itself up for “unrealistic aspirations” on NAFTA -- promising to return to the U.S. jobs that the president has often claimed were lost due to the agreement with Mexico and Canada -- Ross cautioned against viewing a retooled deal as a “silver bullet.”
 
“Well, not all the unemployment problems and not all the joblessness problems are a result of NAFTA or any other trade agreement,” he said. “Some of them are due simply to increased automation, robotics, artificial intelligence, things of that sort. And those are problems that will recur on an even broader basis in the years into the future. So no one is saying that this is the silver bullet that solves every problem for the country.”
 
“But,” he added, “it's one of the ones where we have some degree of control and therefore it's one that very much should be addressed.” -- Jenny Leonard (jleonard at iwpnews.com <mailto:jleonard at iwpnews.com>)
 
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