On the same day the Republican bid to overturn Obamacare began to fade into oblivion, the Trump administration embarked on a bigger quest: resetting a global trade consensus that has persevered for over four decades. US Trade Representative Robert Lighthizer released a set of negotiating objectives for the North American Free Trade Agreement, or NAFTA. Under fast-track rules adopted in 2015, the administration must present these non-binding objectives to Congress before it can enter into negotiations, and the talks with Mexico and Canada to refashion NAFTA will preview how the White House wants to handle trade around the world.
This was one of Trump’s major campaign promises, to write better rules for trade. And it’s a promise lots of Democrats might support. “People I represent were glad to hear that President Trump would renegotiate NAFTA,” said Representative Debbie Dingell (D-MI) on a conference call previewing yesterday’s NAFTA release. “He’s got to deliver on those promises he made to my constituents.”
At first glance, it’s a very mixed bag. The negotiating objectives for NAFTA are mostly vague, and in parts revisit the well-worn tactic of using trade rules to guarantee corporate profits. In fact, several provisions are ripped directly from the Trans-Pacific Partnership, the corporate-friendly deal Trump loudly rejected in January. “This document does not describe the promised transformation of NAFTA to prioritize working people,” said Public Citizen trade expert Lori Wallach in a statement. It looks like another case of Trump’s rhetoric’s being submerged in the swamp.
There are a few advances in the document, but even those suffer from lack of specifics. The administration wants to add assurances that NAFTA countries “avoid manipulating exchange rates” to make their goods cheaper and gain unfair advantage. While Canada and Mexico are not seen as currency manipulators, this inclusion of a currency chapter in NAFTA would be a first for a trade deal, setting a standard for future talks with potential currency cheaters like South Korea. However, enforcement would come only through “an appropriate mechanism,” with no explanation of what that mechanism would be. We already have a mechanism to fight currency manipulation: sanctions through the Treasury Department. Unless currency chapters are enforceable in trade agreements with tariffs or monetary awards they don’t advance anything.
The White House wants to put labor and environmental standards within NAFTA rather than in a side agreement, and it subjects violations to the same dispute-resolution process as violations of trade and investment standards. But while labor and environmental groups would have more ability to raise concerns, ultimately it would still be up to a government to dispute labor violations from another party to the agreement. The administration only promises “increased monitoring” to combat illegal activities.
Governments always claim that they’ll enforce labor and environmental standards: In 1993, Ron Wyden called a vote for NAFTA “a vote for less pollution.” But in this case workers or green groups would have to rely on a notoriously anti-labor, anti-environment regime in Washington to police violations by foreign exporters. They could not sue over NAFTA breaches directly.
Investors, however, would still have that ability under the controversial investor-state dispute settlement (ISDS) system, a secret extra-judicial court that gives corporations monetary awards for lost profits due to changes in law that run counter to trade agreements. While the document states that ISDS would have to be more transparent (hearings and judgments would be public) and “consistent with U.S. legal principles and practice,” it still exists, meaning corporations could still functionally overturn sovereign laws outside of the court system, and win billions of damages when governments try to write rules in the public interest.
In fact, much of the document seeks to achieve regulatory harmony between the participating countries. There are lines about “greater regulatory compatibility” and removing “unnecessary differences in regulation” in industrial and agricultural goods and “promot[ing] greater compatibility among US, Canadian, and Mexican regulations.” This is much like how the TPP would enable the blockage of regulatory improvements by tying them to a ceiling or international prohibition. I don’t think most Americans want our regulatory structure to be perfectly compatible with Mexico’s, particularly if “harmonization” means a race to the bottom to get industry-friendly regulatory ceilings imposed. This subordinates US law to another country’s standards.
The trade-in-services section is even worse. The administration aims to “prohibit discrimination” against foreign-services suppliers, including financial-services and telecom companies, while encouraging “fairer and more open conditions.” The goal is to force open state-owned enterprises (there’s a phrase about supporting state-owned enterprises “providing domestic public services,” but it doesn’t define what those are) and assume corporate control. And remember, this NAFTA renegotiation will serve as a template document, so it’s not necessarily about the impacts on just Canada and Mexico but also on the entire world.
This mirrors the entirely scary Trade in Services Agreement, a 51-nation pact currently being negotiated, as well as the TPP. One section serves as a good example. On a few occasions, the administration highlights a negotiating objective of rejecting measures that “restrict cross-border data flows.” This means that financial services or other countries could transfer personal data outside a host country, with no “localization” requirement that computer servers holding the data must stay within national borders. This breaks with thousands of years of precedent on locally kept business records, and has privacy advocates alarmed.
Back in 2013, an IBM lobbyist planted questions from an Obama USTR official in a public hearing about this very issue—preventing cross-border data restrictions. Trump is continuing a tradition of giving high-tech and Wall Street firms what they want, the ability to profit off acquiring and manipulating personal data from anywhere in the world.
Surprisingly, these issues of regulatory ceilings and data liberalization and enforcing intellectual-property rules (in other words, backing Hollywood and the pharmaceutical industry) are far more prevalent in the document than any strong benefits for workers. The administration does want to update “rule of origin” requirements in NAFTA so only products made in North America obtain duty-free benefits. And the document lays out the desire to “reduce the trade deficit” with Canada and Mexico, creating jobs and opportunity in the United States (I wonder what negotiating partners Canada and Mexico think of that!). But actually helping US workers is far more in the background than the rhetoric would suggest. On the job=offshoring incentives currently in NAFTA, or the ban on Buy American procurement policies, the document is mostly silent. “Much of the text repeats the negotiating objectives of the 2015 Fast Track bill, which GOP leaders and the corporate lobby loved,” said Public Citizen’s Lori Wallach.
It does appear that the globalists in the administration won this round before NAFTA negotiations even had a chance to begin. Some of the most ardent free-traders in the Republican caucus praised the contents of the draft. As Richard Neal, top Democrat on the House Ways and Means Committee, put it, “the ‘new’ NAFTA might not be new at all.”
NAFTA negotiations can now begin within 30 days. The biggest thing needed to truly assess whether the administration actually wants to fix NAFTA’s problems or further entrench corporate control is transparency. The European Union posts its formal proposals on the Internet for all to see before entering negotiations. Trump needs to do the same; otherwise we can assume he has something to hide from the working-class supporters who were promised a revitalization of US manufacturing. Workers have already seen those promises broken: Just look at Carrier, whose parent company received 15 government contracts after the company moved jobs to Mexico it said it would keep in the United States. They shouldn’t have to brace for being deceived again.