Ready For The Trump Version Of NAFTA?

The North America Free Trade Agreement (NAFTA) was something that Reagan proposed in 1979 and was agreed on by George H.W. Bush with the heads of Mexico and Canada in 1992. Bush was unable to get it ratified by Congress and Bill Clinton promised (Wall Street) he would succeed where Bush failed. He added two bullshit amendments-- one on labor and one of the environment that everyone knew was just hot air. He also added Rahm Emanuel into the mix as a fixer and on November 17, 1993, it passed the House 234–200-- 132 Republicans and 102 Democrats. Three days later it passed in the Senate 61-38-- with 34 Republicans and 27 Democrats. It has hurt workers whose industries who most vulnerable to competition to low wage labor from Mexico, but has worked well for Big Business and Wall Street. Populists on the left (Bernie) and the right (Trumpanzee) have opposed it. Trump is trying to renegotiate it now but it is doubtful it could pass in the middle of an election year.

The Trump Regime thinks it can strong-arm Congress to ratify a new NAFTA, with a "take it, or leave it" approach. U.S. Trade Representative Robert Lighthizer's plan is to withdraw "from the existing pact even before the new one is ready. The thinking is that Congress will have to approve whatever terms are in the new deal quickly, lest the U.S. is left hanging without an agreement with two of its largest trading partners."

Trade votes have always been fraught affairs, but some legislative experts say such a move could elevate tensions between the president and Congress to a fever pitch. Forcing Congress’ hand on a deal which is likely to contain a number of elements unpopular among the majority of pro-trade Republican lawmakers could rally Congress to exert its Constitutional authority over trade.

“There will be, I really believe, a strong institutional, formal re-grasping of this congressional authority, but it also requires political will,” Brian Pomper, who served as chief international trade counsel on the Senate Finance Committee, said during an event this week.

Some in the Trump administration have strongly opposed the strategy, arguing it could further infuriate defenders of the underlying NAFTA deal. Senior aides have clashed during closed-door briefings about the wisdom of the move, according to a person familiar with the issue.

“As someone who counts votes that would not be a totally shocking scenario,” said one source who has advised Lighthizer on NAFTA. “If you actually want to get the vote done and you want to pass the damn agreement then you need to create the scenario of either nothing or something different.”

...[S]ome of the changes Lighthizer seeks in the new deal could potentially pick up support from Democrats even if it comes at the expense of some Republicans. They include strengthening labor language in NAFTA to force up wages in Mexico and more rules aimed at protecting domestic industries.

Lighthizer’s bipartisan vision for NAFTA, however, is threatening to upend decades of Republican trade orthodoxy with proposals that would jettison special protections for U.S. investors and tighten cross-border supply chains.

GOP trade leaders in Congress have clearly expressed that Lighthizer’s objective of getting rid of NAFTA’s investor-state dispute settlement mechanism could jeopardize support for the agreement. The provision allows companies to seek damages through tribunals if a government’s policies or actions violate the pact’s investment rules.

House Ways and Means Chairman Kevin Brady (R-Texas) warned this week that the negotiating objectives Congress had laid out in Trade Promotion Authority legislation “are pretty specific about what needs to be included in an agreement in order for the process to begin.”

...The trade chief has indicated that the same proposals that have raised the ire of Republicans and their corporate constituents could attract the Democratic support he needs to realize his bipartisan vision for trade policy.

But some worry that Lighthizer’s strategy could backfire-- failing to please a large number of Republicans as well as the demands of Democrats.

“I think he actually knows that at the end of the day he’s going to have to rely on overwhelmingly Republican votes to get this done-- votes that will come out of loyalty or fear of Trump,” said one senior trade lobbyist. “He knows that Rosa DeLauro and Elizabeth Warren are not going to form the whip team for NAFTA 2.0.”

So far, the Democrats whom Lighthizer wants to attract say they want a clearer picture of where the administration lands on some issues before committing to voting for the new pact.

“We’ve had some meetings with Mr. Lighthizer and I think there’s some areas that we had some, perhaps, common interest but I haven’t seen it laid out or articulated and that’s a big part of the problem,” Rep. Mark Pocan (D-Wis.), a co-chair of the Congressional Progressive Caucus, said this month during a call with reporters. His group has laid out its recommendations for NAFTA in a 10-page document.

Still, progressive House Democrats say they have received positive signals on the direction Lighthizer wants to take a new NAFTA deal. That includes Lighthizer’s proposal to strip the deal’s investor-state dispute settlement mechanism. Lighthizer views the process as government-paid political risk insurance; the left has long viewed the issue as evidence that recent trade policy has generally favored corporate interests.

Democrats would probably also be in support of a final deal that realizes Lighthizer’s goals on autos and labor as well as a more reciprocal-- and probably less open-- market for Canadian and Mexican firms to bid on U.S. government contracts.

“Talking in a positive vein about the Trump administration is sometimes a hard circle to square,” Rep. Rosa DeLauro (D-Conn.) admitted in the same call with reporters. “We may not go down the same road as the president does, but we can’t brush aside either and lose an opportunity to do what is right by American workers.”

Ultimately, large numbers of Democrats won’t flock to the deal unless labor unions support it.

Crucial to labor support is a commitment by Mexico to press forward with a major overhaul of its labor rights. That includes getting rid of employer-controlled unions and creating an independent labor arbitration process.

U.S. labor unions are also nervously watching the Mexican Senate, which is considering legislation they say could undo any progress on those reforms.

“Enactment of that proposal into law in Mexico would frankly undermine the NAFTA talks,” said Celeste Drake, trade policy specialist with the AFL-CIO.

In recent meetings and conversations with labor leaders, Lighthizer has said he is keenly aware of what’s at stake if Mexican lawmakers move ahead with the legislation, but it’s still uncertain how that issue might play in the negotiations, said sources familiar with those exchanges.

But labor groups haven’t been shy about applauding the Republican administration for lavishing attention on their trade concerns, especially in contrast to the somewhat icy relationship that existed with the Obama administration during Trans-Pacific Partnership talks.

Still, even those in the labor movement can’t foresee yet if they would ultimately support a deal given the broader mistrust between Trump and the left.

“Will the left, including labor, at the end of the day prove the [U.S.] Chamber [of Commerce] right that we simply are never gettable and that Lighthizer is wasting his time talking to us and giving us things?” another labor source asked.

Trump allies in House leadership think they could get this done in a lame duck session (the way Clinton did), although Congress could react badly toTrump trying to force them to act-- especially the dozens of Republicans retiring and the scores having just been defeated for reelection. The big new Democratic majority will be feeling its oats and is unlikely to want to give Trump anything without its won imprint.

Tim Canova agrees with one part of this-- that NAFTA needs to be renegotiated. "But," he wrote, "not because Mexicans and Canadians are somehow taking advantage of Americans, but because it allows large multinational corporations to take advantage of the people in all three countries. NAFTA’s Investor-State Dispute Settlement (ISDS) system gives these huge corporations the right to sue governments for the cost of complying with regulations to protect public health and safety, the environment, and labor standards. These suits are not brought in any courtroom, but before off-shore arbitral panels with arbitration judges recruited from the ranks of the corporate law firms that regularly represent these companies in ISDS lawsuits. Under NAFTA, these arbitral panels have awarded private investors more than $392 million as compensation for complying with national, state or local regulations-- effectively shifting the cost of compliance from corporations to taxpayers. NAFTA’s ISDS provision has become the model for hundreds of bilateral investment treaties, the stalled Trans-Pacific Partnership (TPP), and many other multilateral agreements. It’s time to strip it from NAFTA. NAFTA also represents a so-called 'race to the bottom' that allows big corporations to move their operations to jurisdictions with weak protections for labor, the environment, and human rights. Instead, we need to harmonize these standards and norms prior to liberalizing trade in goods, services, and hot money capital flows. Political liberalization, social safety nets, and the rule of law must come first. Otherwise, these kinds of bad trade deals will only benefit the large corporate interests that call the tunes in Washington, D.C."

Bernie beat Hillary in Michigan and when the Democrats served up Hillare, Trump won. trade was a big issue for voters there. Ellen Lipton is a candidate for an open seat in the suburbs north of Detroit. "Michigan's 9th Congressional District has been hit particularly hard by NAFTA," she told us this morning. "From 1994-2016, Michigan lost 182,288 manufacturing jobs. I have heard stories from so many people who remember packing up their manufacturing jobs on flatbeds and watching them drive off into the proverbial sunset, never to return. International trade agreements must support good jobs in this country, protect the rights and interests of working people, and also be pro-environment. We have to stop corporations from outsourcing jobs to take advantage of cheap labor, poverty, and lax environmental standards. Otherwise, so-called free trade becomes extremely costly for working families and the health of our planet."

Paul Clements may be running for a seat in a chillier climate that Canova's south Florida district, be he has an outlook on NAFTA that is similar. "NAFTA," he told us, "has been bad for workers in my home state of Michigan and across the United States. Any new trade deal with Mexico and Canada needs to be evaluated in terms of how it helps workers. At a minimum, to protect the interests of American and Mexican workers and to avoid undermining democratic powers of local jurisdictions, any revised deal must include:

•      A major expansion of labor rights in Mexico, getting rid of employer-controlled unions and creating an independent labor arbitration process.

•      Getting rid of the investor-state dispute settlement mechanism that allows companies to seek damages through tribunals if a government’s policies or actions violate the pact’s investment rules.

So far-- no surprise-- the Trump agenda has been all about helping the rich get richer. But with a Democratic majority in the House in January, we can begin to turn the tide. Certainly we will let the Trump administration know we will not accept take-it-or-leave-it approaches or other strong-arm legislative tactics."