[CTC] White House’s Nafta Approach Frustrates Businesses, Panicked Emails Show

[Arthur Stamoulis]

https://www.nytimes.com/2018/06/06/us/politics/trump-nafta-businesses-frustrated.html <https://www.nytimes.com/2018/06/06/us/politics/trump-nafta-businesses-frustrated.html>
 
White House’s Nafta Approach Frustrates Businesses, Panicked Emails Show

By Ana Swanson
June 6, 2018
 
WASHINGTON — A rocky process has plagued President Trump’s attempt to renegotiate the North American Free Trade Agreement from the start, as internal divisions and a thinly staffed bureaucracy often left big American companies with much at stake shut out of deliberations, according to internal administration emails.
 
The White House approach has put the future of the 1994 trade pact in doubt and left Canada, Mexico and many of the biggest American companies frustrated and bewildered.
 
Documents show corporations and trade groups — such as the U.S. Chamber of Commerce and the National Association of Manufacturers, or NAM — struggling to get their voices heard within a supposedly business-friendly administration and sending increasingly panicked emails to the United States trade representative’s office about its approach to rewriting the pact.
 
Throughout last spring and summer, high-level trade negotiators repeatedly canceled meetings with the chamber, instead finally sending a 24-year-old deputy to meet with a delegation that was expected to include representatives from more than 50 of the largest American companies and organizations, including Walmart, U.P.S., the Walt Disney Company, General Electric, General Motors, Caterpillar and Boeing.
 
Last August, ahead of the second round of Nafta negotiations in Mexico, an official at the United States Council for International Business pleaded for “an urgent meeting with you and your team before you head to Mexico for Round 2.”
 
“I cannot emphasize enough the degree of concern in the business community based on the press reports we have seen of major changes in U.S. policy,” the official, Shaun Donnelly, wrote. A trade official set up a meeting for the next week.
 
Even the manufacturing industry — which Mr. Trump has put at the core of his economic agenda — has found its concerns to be largely an afterthought, struggling to change the White House’s approach.
 
“It is hard to have a discussion when no details are provided of where the administration is really going even at a broad level until after decisions have essentially been made,” Linda Dempsey, the vice president for international economic affairs policy at the National Association of Manufacturers, said in an email to a top United States trade representative official in October, just before another round of talks between Canada, Mexico and the United States was about to take place.
 
The email and other documents were obtained through the Freedom of Information Act by American Oversight, a nonprofit set up to investigate the Trump administration. The documents, which include emails to the United States trade representative, cover the period from February 2017, when many of the agency’s top staff members had yet to be appointed, through November, when the United States had shared its primary negotiating goals for Nafta with Canada and Mexico.
 
The emails reveal a bare bones operation as the United States embarked on a rewrite of a trade deal that has become critical to the many North American businesses that have built up supply chains around Nafta. The talks are now at a standstill over deep divisions among the three countries. The Trump administration has hit Canada and Mexico with tariffs on steel and aluminum to force concessions, but the measure has so far only prompted retaliatory levies.
 
The White House approach has fueled widespread criticism from both business and Republican lawmakers, who have publicly and privately tried to persuade trade officials not to undermine a pact that is critical to companies in their states.
 
On Wednesday, Representative Jeb Hensarling, Republican of Texas and the chairman of the House Financial Services Committee, criticized the Trump administration for throwing “a huge wet blanket of uncertainty on an economy that otherwise they were responsible for making red hot.”
 
“I’m just dumbfounded,” Mr. Hensarling said during an interview on Bloomberg Television.
 
On issues ranging from reducing taxes to cutting regulation, the administration has moved largely in lock-step with business groups like the U.S. Chamber and the National Association of Manufacturers. But on trade, Mr. Trump’s populist bent has put those alliances at odds.
 
The administration has been unapologetic about its approach, viewing the rewrite as necessary to fix a trade deal that it believes has benefited multinational corporations at the expense of American workers.
 
After Thomas J. Donohue, the president of the U.S. Chamber of Commerce, accused the administration in October of engineering “poison pill proposals” that would sabotage Nafta, Emily Davis, a spokeswoman for the United States trade representative, shot back in a statement, saying that such comments were expected from “entrenched Washington lobbyists and trade associations.”
 
“We have always understood that draining the swamp would be controversial in Washington,” she continued.
 
Later that month, in comments to reporters, Robert E. Lighthizer, the United States trade representative, compared the proposed changes in Nafta to taking “a little of the sugar away” from American corporations.
 
But administration officials have not always been aligned on the approach or the message.
 
In May 2017, John Melle, the chief Nafta negotiator, criticized comments by Commerce Secretary Wilbur Ross, who had remarked publicly that the Nafta talks were likely to be “long and complicated” and could potentially result in separate bilateral deals.
 
“Not helpful — and not the message ARL was delivering!” Mr. Melle wrote, referring to Ambassador Robert Lighthizer. The response came in an email to Ms. Dempsey of the National Association of Manufacturers, who had forwarded Mr. Melle the commerce secretary’s remarks.
 
In spring 2017, employees from the trade representative’s office described their team as “thin” and compared their work to “drinking out of a fire hose.”
 
Austin Evers, the executive director at American Oversight, said the emails showed an administration trying to rewrite a trade deal with huge economic implications largely on the fly.
 
“In order to match the president’s highly charged and aggressive public statements, officials are left scrambling to turn tweets into policy,” Mr. Evers said. “You have Trump promising major wins on trade negotiations, while an inside look at what’s going on shows they were building the airplane while they were flying it.”
 
Mr. Trump tasked his trade negotiators with enormous responsibilities, including renegotiating an agreement with South Korea and carrying out a sweeping investigation into China’s potential intellectual property violations. That also included seeking significant changes to the sprawling North American pact that governs nearly every industry on the continent, a task that Trump advisers initially said could be completed in a matter of months.
 
But it took months for the administration to nominate — and for Congress to confirm — many of the appointees for the trade office’s top posts, including those assigned to oversee trade. Mr. Lighthizer was not confirmed until May 2017, and three of his top deputies were not confirmed until the next March.
 
Those staff shortages and an ambitious timeline for rewriting Nafta curtailed the agency’s ability to communicate with some of America’s biggest firms, the emails show, adding to uncertainty and anxiety that have prompted some North American companies to halt investment.
 
Ms. Davis rejected the idea that staff shortages have had any effect on the outcome of Nafta negotiations.
 
“We couldn’t be prouder of the outstanding work done by the career professionals at U.S.T.R. in helping to advance the administration’s trade agenda,” she said.
 
“Obviously, it would have been better if Congress had not waited eight months after Ambassador Lighthizer’s confirmation to confirm his deputies. Nevertheless, this delay had no effect on our efforts to revise Nafta or Korus,” she said, referring to the United States trade agreement with South Korea.
 
Even once the bodies were in place, many industries found they were getting information about significant changes only after the administration’s plans had been cemented and straining to confirm rumors about a potential withdrawal from Nafta.
 
“There are all sorts of disturbing rumors about a withdrawal notice being issued,” Ms. Dempsey wrote in April 2017. “I would hope that there would be actual conversations with the NAM and others before that happens. We are very much interested in a Nafta renegotiation, but withdrawal puts at risk millions of manufacturing jobs.”
 
The rift between the business community and the administration stems largely from the differing views about the benefits of Nafta. Mr. Trump’s America First policy has prompted the United States to make demands like scrapping investment protections that large companies favor but that the president’s administration criticizes as corporate welfare. The White House has also proposed drastically raising the threshold for the proportion of an automobile that needs to be manufactured in North America to qualify for Nafta’s zero tariffs.
 
Those demands have angered Canada and Mexico and worried many businesses, which argue that the administration’s policies will actually end up hurting the people they intend to help — including manufacturers.
 
As rumors of a potential withdrawal swirled last spring, Ms. Dempsey pointed out in an email to the administration that over one-third of American manufactured exports were sold just to Canada and Mexico. “I can’t emphasize enough that North America is U.S. manufacturing’s largest market,” she said.
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