Congress expresses broad support for Trump's plan to renegotiate NAFTA
Lawmakers on both sides of the aisle are lining up in support of President Donald Trump's latest call to renegotiate the 1994 North American Free Trade Agreement (NAFTA) with Canada and Mexico after a tumultuous week of White House threats to withdraw from the agreement and talk of a trade war with America's top trade partners.
Rumors were churned out from the White House earlier this week indicating that Trump was considering an executive order to withdraw the United States from NAFTA, potentially jeopardizing the largely tariff-free exchange of more than $1.2 trillion in goods and service.
Trump's tough campaign rhetoric on NAFTA, calling it "a disaster" and "the single worst trade deal," added credence to the rumors. In making the threat to withdraw from NAFTA, Trump also made good on his contract with the American voter, where he said he would announce his intention to "renegotiate NAFTA or withdraw from the deal" in his first 100 days in office.
On Thursday morning, Trump announced via Twitter that he had moderated his position. After receiving calls from President Enrique Pena Nieto of Mexico and Canadian Prime Minister Justin Trudeau, Trump said that the three parties agreed to renegotiate NAFTA. The president left the option of ending the deal on the table, saying that if the three nations could not "reach a fair deal for all, we will then terminate NAFTA."
Press secretary Sean Spicer repeated the president's message later in the day, saying that the United States would "hold" on terminating the agreement until the three countries can negotiate a "better and fairer deal" for American workers. The White House did not fill in further details on what changes it would like to see in NAFTA, stating that "modernization," addressing trade imbalances, and taking up sectors that had previously "fallen outside" the agreement would all be discussed.
After more than two decades of NAFTA, all parties are ready to take another look at the deal. During the 2016 presidential campaign, both the Canadian and Mexican governments said they were willing to "modernize" or "renegotiate" the trade agreement.
In Congress, the idea of renegotiating the deal has a great deal bipartisan support. That support will be key for President Trump who needs lawmakers to give him the authority to reopen trade talks.
The Senate started an important part of the renegotiation process earlier this week when the Finance Committee unanimously approved the nomination of Robert Lighthizer to be the next U.S. Trade Representative, the man who will be in charge of the talks. The nomination will now move to the full Senate for a vote.
In order to start the renegotiation process with Mexico and Canada, the Trump administration will first need to get fast track authority from Congress. Finance Committee chairman Sen. Orrin Hatch said on Thursday that the Trump administration has "not yet" reached out to Congress about fast track authority, but he expects it to come up.
Sen. Sherrod Brown (D-Ohio) has been a tough advocate for fair trade deals and reworking NAFTA during his years in Congress and even introduced his fellow Ohioan, Robert Lighthizer during his confirmation hearing last month.
Immediately after the election, Brown sent a letter to Trump outlining specific areas of NAFTA that he wanted to see renegotiated. The senator urged Trump to make good on his campaign promise to "overhaul U.S. trade policy" and renegotiate the "flawed trade agreements [that] have closed factories and offshored jobs, devastating communities in Ohio and across the country."
President Trump responded to Brown's appeal with a handwritten note saying, "I will never let our workers down."
So far, Brown hasn't seen any specific actions from the president to address his proposals, including updating the labor and environmental standards that currently disadvantage American workers, and getting rid of the investor-state dispute settlement provisions that allow companies to challenge government trade policies in a private court.
"I don't see any of those proposals out there yet," Brown said. "I have seen nothing really from the administration, a little dancing on NAFTA, but nothing substantive yet on really beginning the negotiations."
Ohio's other senator, Republican Rob Portman, served as President George W. Bush's trade representative and has been a strong advocate of free trade agreements.
On Thursday, Portman told Sinclair Broadcast Group that it is "appropriate to renegotiate NAFTA and update it." Among the issues he would like to see incorporated into the new round of talks are new provisions to reflect updated U.S. labor and environmental provisions and also measures that take into account the growth of electronic commerce.
"For Ohio its really important. We send more exports to Canada than any other country," he said. "So we have to be sure its done right ... but as we update it lets make sure it continues to benefit all three countries."
Other senators expressed some caution about the lack of detail accompanying Trump's announcement on NAFTA.
"I don't know the specifics of what hes thinking of but NAFTA has been in effect since before I was a member of the Senate and I think it would be healthy to take another look at its provisions," Sen. Susan Collins (R-Maine) said. Maine is one of more than 30 states where Canada is the number one export market, and for Collins, she would like to see Maine able to export even more goods and services across the northern border.
Michigan Senator Debbie Stabenow when asked if she would support Trump renegotiating NAFTA said simply, "It depends on what they do," but like other lawmakers readily acknowledged the trade pact can be improved.
Sen. Richard Shelby (R-Ala.) said he would like to see a North American free trade agreement that addresses the trade imbalance with Mexico, which topped $63 billion last year.
"It's a double edged sword," Shelby said of NAFTA. He added that when it comes up, he would like to give the Trump administration authority to renegotiate, noting that ultimately Congress will have the final say in approving a new deal.
Earlier this week, Trump took aim at a sore spot in U.S.-Canada trade relations, namely Canada's high protective tariffs for lumber and dairy that make it hard for U.S. exporters to compete. The White House announcement of a 20 percent tariff on Canadian soft wood lumber raised concerns in Canada and among some U.S. producers, but members of the administration were quick to downplay the seriousness of the threat.
The Secretary of Agriculture, Sonny Perdue, told Sinclair Broadcast Group on Wednesday that he had full confidence in the president's ability to get a good deal for America's farmers, whether they're sending their goods across the northern border or around the world. "I think farmers across the nation elected a president who is a pretty good trader himself," Perdue said. "The guy who wrote the art of the deal – I think they’ll trust him to negotiate one on one with nations. I look forward to being involved in that."
When Commerce Secretary Wilbur Ross announced the 20 percent tariff on Canadian soft wood lumber, it fueled rumors that the Trump White House was going to spark a "trade war" with America's second largest trading partner. In numerous press appearances, Ross flatly rejected the notion.
According to Robert E. Scott, senior columnist for the Economic Policy Institute, the issue of a limited tariff on lumber exports is not likely to spark a trade war between the United States and Canada. But implementing "broad, across the board tariffs" on all imports coming into the country from Canada or Mexico, which Trump talked about on the campaign trail would be "very, very disruptive to businesses and to workers in all three countries."
In recent days, Trump has backed away from his threatened 20 percent tariff, a proposal that was picked up and supported by House Republicans as a border adjustment tax.
This change in position on the border adjustment tax and the quick turnabout on his threat to withdraw from NAFTA tells Scott that Trump "is perceived as being a not very credible negotiator."
"I just don't think anyone takes that seriously," Scott said of Trump's threat to pull the U.S. out of NAFTA. "The threat is ... almost immediately withdrawn as soon as the president get phone calls from the business community or the presidents of Mexico and Canada."
Ultimately, this week's theatrics around NAFTA were marketed for a domestic political audience. "I think it was designed to show that he is doing something so he can claim to his voters that he has threatened to get out of NAFTA."
As far as restarting negotiations with Canada and Mexico, Scott says there are numerous ways NAFTA can be updated to benefit workers, but based on the history of the agreement, reopening talks may just be a way for large corporations to "line up for a sweet deal" that they missed out on back in 1994 when NAFTA was first enacted.
"There are good things that they could do for workers in all three countries if they chose to do it," Scott emphasized. "That's why I think you see people from both sides of the aisle supporting the deal."