Mounce: “Half-a-NAFTA”: Breaking Promises with Mexico

There used to be riffs with terms like “Afta-NAFTA.” Now, via “breaking news” as the media loves to intone ad nauseam, the new term is “half-a-NAFTA” (Kevin Hassett, Chair, Council of Economic Advisers, on MSNBC News, 28 Aug 18). 

In Mexico the reference was to “Tender Loving Care,” for the TLC (Tratado de Libre Comercio), a better joke than ours.

Not sure Mexicans are joking now. Only a few were prepared for Trump’s unctuous greeting to President Peña Nieto: “Enrique?” (I could almost hear a Boss-like “Kika? Baby. . . .”) At least it wasn’t as bad as his call earlier to Prime Minister of Japan, Shinzó Abe—startling him with “I remember Pearl Harbor.” But then, those things call for respect and diplomacy. What Trump wanted from Mexico was compliance.

Apparently, both the current Mexican president (until November 30, 2018) and president-elect AMLO, have signaled a begrudging willingness to “go along” with a bilateral “deal.” If realized, it cuts out Canada from the current, 25-year-old trilateral agreement, NAFTA. Trump is sure the title of his rearrangement is “more elegant.” It is also probably illegal without congressional approval (Republican Senator Patrick Toomey, Pennsylvania). Senator Lamar Alexander, Republican of Tennessee, adds: “no one sees a new agreement without Canada” (Ana Swanson, “Trump’s Trade Deal Leaves Out Canada,” New York Times, 27 Aug18). 

Currently, the core of NAFTA allows U.S. companies to operate within Mexico, with no tariffs. Trump would add a “sunset” clause, so that either party could end the agreement precipitously. He prefers “one-on-one” deals, scoffing at multi-nation pacts, such as the European Union. Previously, both Mexico and Canada have supported the other to ensure any new deal is trilateral (Larisa Epatko, “What’s In the Trade Deal with Mexico?” PBS, 27 Aug 18).  

NAFTA should be reviewed and restructured, with balance—to include labor and the environment. As it is, according to critics, it remains just a deal mainly favoring big business. It is harder on Mexico, although they had not many options at the time it was inaugurated,1994. The net effect was to destroy millions more jobs in Mexico than it created. Millions of small farmers lost their land. Small business owners lost business. Mining operations, especially by Canada, resulted in Mexicans losing communal lands. Entire communities were forced to move as cartels profited (Dawn Paley, Drug War Capitalism, AK Press, 2014). Out-migration to the U.S. was often the only option. 

NAFTA provided some work in the north, but the south still lags. Those facts, the concerns of Mexican campesinos, are not the ones that trouble Trump. He has insisted, at behest of auto workers, no auto parts may be manufactured in either country at wages below $16 (US) dollars per hour! Those who know Mexico and its current wage scale (about $4.70 daily, minimum) realize the impossibility of such a drastic change in Mexico. It is puzzling both out-going and in-coming Mexican presidents are able to ignore this fiction. The pain causing Mexico’s reaction was predictable: “‘Muro’ a autos mexicanos”–a wall for Mexican cars (El Mañana, 29 aug 18, p. 1). Many Mexicans feel betrayed.

And Texas? (and the border?) Mexico is our largest trading partner, “the major way we compete in global markets” (Rufus Yerya, Head of the National Foreign Trade Council). Only eight percent of Texas trade is with Canada, (six percent with China) but 37 percent is with Mexico (Tom Benning, Dallas Morning News, 19 Jul 18). Trump’s tampering does not seem to have been thoroughly thought out. And more than slightly sinister is his removal of “Chapter 19,” an independent review process designed to resolve accusations of subsidies or “dumping.”

Did Trump alone figure all this out? No. He depends on his son-in-law, Jared Kushner (whose security clearance has been down-graded). Without higher education (or knowledge of Spanish?) in these matters, without experience in government, his many assignments, from Trump, include: 1) Negotiating Middle East peace; 2) Solving the Opiod epidemic; 3) Diplomacy with China; 4) Reforming Veterans’ affairs; 5) Reforming the criminal justice system; 6) Reforming government itself, making it “run like big business”. Whew! But wait, there’s more.

On his down-time, Kushner is charged with 7) “Diplomacy with Mexico.” Perhaps you think I am teasing you? Perhaps (if you are inclined to think this way) you imagine these are “fake facts?” No. Check it out. Then reflect on the fabulous deal with Mexico pushed (bullied?) by Trump. Ready to take the plunge? Trump claims his new deal is “the largest trade deal in history.” No; it’s not. NAFTA was/is larger. The largest (covering 600 million people) is the European Union/Japan trade deal (MSNBC, 28 Aug 18). More to the point, there is no “U.S. car” anymore, and hasn’t been for a long time. Neither is there a “Mexican car” nor Canadian car. All that business, as with many others, is inevitably, inextricably intertwined, if not trilateral, then multilateral. So, the requirement that “40 to 45 percent” of autos must now be made in the U.S., is a pipe dream—a Trump/Kushner fantasy.  

Mexico is trying to push back, but, again, with few options. Prime Minister Justin Trudeau is under pressure; however, Canada is pushing back, in last-minute negotiations in D.C. Seventy-five percent of its exports are to the U.S. and Trump threatens new tariffs (Paul Viera, Jacob Schlesinger, Santiago Pérez, Wall Street Journal, 28 Aug 18).

However, Trump is also under pressure. Canada is the U.S.’s 2^nd largest trade partner, after China (Mexico is third). But perhaps Trump has not heard “if it ain’t broke, don’t fix it? NAFTA is out of tune, but not broken, at least the trilateral relationship remains a splendid idea. Why break that natural relationship?  

Cars are made multilaterally; so must diplomacy and the values involved be multilateral. A nation committed to democracy must wake up from selfish and/or xenophobic dreams, internally and externally. Trade is only one part of our interconnections with our neighbors. In reaching trade agreements, the U.S. must also reach out to our neighbors in North America—to Mexico and Canada—respecting and protecting their interests, in order to further our own.