NAFTA Renegotiation Perilously Stalled
White House blames trade-deal inaction on USTR vacancy as time runs thin before Mexican elections
A once-promising effort to renegotiate the North American Free Trade Agreement, a key pledge made by President Donald Trump on the campaign trail, appears hopelessly stalled — the White House blames Democratic obstructions of the nominee for U.S. trade representative.
But that is perhaps not the only reason.
“We still have an official 90-day notification that we have to give Congress, and so once we get Ambassador Lighthizer confirmed, we’ll be ready to probably announce a better work plan on that.”
Trump and the White House have a lot on their plate, and for now, NAFTA renegotiation has been shifted to the back burner.
For Canada, that’s likely not a big deal. Renegotiation of NAFTA is not seen as having a large impact on U.S.-Canada trade.
But for Mexico, too long a wait could scrap hope for a bargain entirely. Mexican elections heat up later this year, and Mexico’s incumbent leaders are nervous about losing face — or being seen as caving to Trump.
“It will be in the best advantage of the countries involved that we finish this negotiation within the context of this year,” said Ildefonso Guajardo Villarreal, Mexico’s economy secretary, speaking to CNN Money on Thursday evening at the World Economic Forum in Buenos Aires, Argentina.
A new president of Mexico will be elected in July 2018, as President Enrique Peña Nieto is term-limited. Mexican business leaders are worried that a new Mexican leader will have no incentive or motivation to renegotiate NAFTA.
At stake are big markets and possible new costs. Mexico doesn’t want new tariffs on exports to the United States. It also wants its investors assured.
And U.S. farmers want to know the Mexican market is still open for their fruits, grains and vegetables.
The main reason for the delay, according to the White House, is the holdup on the nomination of the U.S. trade representative. Trump has nominated Robert Lighthizer to be the trade rep, a Cabinet-level position that requires Senate approval.
But a source close to the NAFTA renegotiation said the president can move ahead without Lighthizer through a letter to the Senate Finance Committee. The letter would give the Congress a 90-day notice of the president’s intent to submit trade revisions.
And the source told LifeZette that Jared Kushner, a top aide to the president and his son-in-law, is simply too overloaded with other issues to concentrate on advancing the NAFTA renegotiation. The official, who requested anonymity because of the sensitive nature of his work, expressed some surprise that renegotiation was not a higher priority, as NAFTA is crucial to the North American economy.
White House press secretary Sean Spicer told reporters at a Monday briefing that President Trump preferred to have Lighthizer on board before that happens.
“And so our focus is getting [Lighthizer confirmed], and then we’ll be ready to go,” Spicer said, in response to a question from LifeZette. “We still have an official 90-day notification that we have to give Congress, and so once we get Ambassador Lighthizer confirmed, we’ll be ready to probably announce a better work plan on that. But as of right now, that’s not there.”
Alan Tonelson, an economic analyst and author of the RealityChek blog, said he understands why Trump wants to wait on NAFTA renegotiation until Lighthizer is in office, adding that Mexican politics should not be a factor.
“The biggest priority is what makes sense for the U.S. economy,” said Tonelson.
But Tonelson said renegotiation will benefit Mexico and Canada too, because it will call for manufactured goods to contain higher levels of parts made in North America to avoid tariffs.
Waiting for Lighthizer complicates a number of things beyond trade. Foreign leaders are not sure whom to deal with on trade. Wilbur Ross, secretary of the Commerce Department, can only do so much, and on top of that, his department is not fully staffed.
In early March, Mexico canceled some sugar-export permits to the United States in a dispute over the pace of shipments, according to Reuters. Reuters reported the supply disruption was blamed on unfilled positions at the Department of Commerce, leaving Mexican officials no one with whom to negotiate.
Still, one trade expert said China is far more of a threat than Mexico on trade.
Kevin L. Kearns, president of the U.S. Business and Industry Council, said he would rather see the Trump administration take 200-300 days to come up with a comprehensive strategy on growing industry and technology, and then go out and negotiate with other countries. And Trump, he said, should focus on unfair Chinese practices that damage trade.
“I don’t really think [the Trump administration] has done their trade homework the way they should have,” said Kearns.