By Doug Palmer | 10/12/2017 10:00 AM EDT
With help from Adam Behsudi and Sabrina Rodriguez
REVOLT OF THE BUSINESS GROUPS: Business groups like the U.S. Chamber of Commerce and the Business Roundtable that have long provided the bulk of the support to get trade agreements through Congress are increasingly alarmed about the Trump administration's plans for revamping NAFTA.
"The companies represented at the Business Roundtable are very concerned with reports that the Trump administration will weaken NAFTA with drastic changes that would disrupt supply chains that have greatly benefited U.S. businesses, workers, and consumers over the last two decades," Josh Bolten, president and CEO of the group, said on BRT's website, as the fourth round of renegotiations got underway Wednesday.
"Even worse, withdrawal from NAFTA would put at stake millions of American jobs in every sector of the U.S. economy, the competitiveness of U.S.-produced goods and services, and our country's standing as a global economic leader," Bolten continued, referring to the possibility that President Donald Trump will pull the U.S. out of the pact if Mexico and Canada balk at the administration's proposals and the talks break down.
In addition, an ad hoc coalition of business groups that includes National Association of Manufacturers, the National Foreign Trade Council, the Coalition of Services Industries, the American Farm Bureau Federation and the National Pork Producers Council hit Capitol Hill on Wednesday to enlist lawmakers in their campaign against the Trump administration's new approach to trade policy.
"This is really a massive negative reaction to where the administration is trying to take trade agreements and trade policy generally from what I would describe as the overwhelming majority of manufacturers, agricultural groups and services industries," one industry official involved in the effort said.
"We're asking members of Congress to contact the White House and Commerce and Ag and to voice their opposition to withdrawal from NAFTA; opposition to changes that go in the direction of restricting trade, rather than improving the agreement and improving trade; and to really suggest to the administration that they step back and do a better job of consulting with a wide, wide, wide range of groups that have these concerns," the official added, speaking on condition of anonymity.
IT'S THURSDAY, OCT. 12! Welcome to Morning Trade, where someday I'm going to make a mixtape for the NAFTA negotiations. Heck, I already know the first song, that Tom Petty classic, "I Won't Back Down." But I'm stuck on the rest. Got any ideas? Let me know: email@example.com or @tradereporter.
** A Message from ACTION for Trade: Innovative and creative industries have helped reduce the U.S. trade deficit. A new report found that the United States exported $90 billion more in IP-intensive goods than it imported in 2014. Learn more: http://actionfortrade.org/issues-and-resources/ **
ROSS: COMPANIES WILL GET USED TO NEW RULES: Commerce Secretary Wilbur Ross on Wednesday brushed off the increasingly loud grumbling over administration proposals that would, among other things, reportedly make dispute settlement non-binding and allow the pact to terminate after five years, unless parties decide to renew it.
Another possible proposal would require a car made in Canada or Mexico to have at least 50 percent U.S. content to qualify for duty reductions under NAFTA, which would be an unprecedented requirement in a U.S. trade agreement. The administration also reportedly wants to raise the regional content requirement to 85 percent, from 62.5 percent currently, and to make other changes to tighten the rules.
Despite opposition from the auto sector and Canada and Mexico to the idea, Ross expressed confidence the administration would get a fair share of what it wants in that aspect of the negotiations. "I think you will find we will get increased percentages in the rules of origin and I think you'll find the car companies will adapt themselves to it," he said at a NAFTA event hosted by the Dentons law firm.
An empty threat to ag? Ross also made the case that the potential danger of a NAFTA withdrawal to U.S. agricultural producers is an "empty threat."
"As far as I can tell there is not a world oversupply of agricultural products," he said. "Unless countries are going to be prepared to have their people go hungry or change their diets. I think it's more of a threat to try to frighten the agricultural community."
A lesson in reciprocity: Ross was pressed on whether he thought the U.S. proposal on government procurement access was fair, given that it might result in less market access for Canada and Mexico than is granted to other countries through the WTO.
The U.S. proposal would cap Mexican and Canadian access to U.S. government projects at the combined total access those two countries provide to U.S. firms.
"It's very good faith, our market is 10 times the size of either of those markets, so if you gave equal percentage market share we'd be giving them 10 for one, how is that good arithmetic?" Ross said. "It is actually to the benefit of the parties because it is the cumulative total of two economies rather than the individual one."
Ross said the proposal helps address "one of the fundamental flaws, the president feels and I agree, that exists in NAFTA to begin with."
"The fact is we think it was absurd in general to give away 10 times as much market access as you are getting back," he said.
TRUDEAU PREACHES THE GOSPEL OF NAFTA: Canadian Prime Minister Justin Trudeau heads to Mexico today to meet with President Enrique Peña Nieto after meetings on Wednesday with Trump and members of the House Ways and Means Committee. What the two amigos will have to say about their missing U.S. partner is anybody's guess, but Trudeau's back-to-back meetings once again highlighted the absence of a North American Leaders Summit this year.
Both on Capitol Hill and during a solo press conference at the Canadian Embassy on Wednesday, Trudeau stressed the benefits of keeping NAFTA in force while striving to modernize the pact - however hard that may be to do with the Trump administration. "I think it's been clear that circumstances are often challenging and we have to be ready for anything, and we are," Trudeau told reporters. "We're taking this very seriously. We're taking the importance of standing up for Canadian jobs and Canadian economic growth extremely seriously and that goes through every engagement we have."
Trump was tight-lipped about the progress of the trade talks, but he raised the possibility of pursuing a trade deal with Canada if the three-way NAFTA pact were to fall apart. "It's possible we won't be able to reach a deal with one or the other. But in the meantime, we'll make a deal with one," Trump told reporters in the Oval Office on Wednesday. However, Trump added that "we have the chance to do something very creative that's good for Canada, Mexico and the United States."
LEADERS MULL OVER BOMBARDIER SPAT: Trudeau said he and Trump addressed the ongoing U.S. trade remedy case brought by Boeing against Montreal-based aerospace company Bombardier, which has already been hit with combined preliminary anti-dumping and countervailing duties of nearly 300 percent.
"I highlighted to the president how we disagree vehemently with Commerce's decision to bring countervailing and anti-dumping duties against Bombardier, that we feel that this is not something that is warranted and quite frankly something we look at very negatively upon," he said at the press conference.
Trudeau reiterated that the case would prevent the Canadian government from looking to Boeing as a source for any military procurements.
DEMOCRATS CALL FOR HEARING ON NAFTA WITHDRAWAL IMPACT: In another sign of NAFTA withdrawal anxiety, two frequent critics of trade agreements, Reps. Lloyd Doggett (D-Texas) and Rep. Bill Pascrell (D-N.J.), called on Republicans to schedule a hearing to examine the economic costs of Trump deciding to terminate the pact.
"I think it's very important that the administration be summoned here to explain ... what it's doing with reference to NAFTA and what the consequences of terminating NAFTA will be on one sector after another and how many job losses will result from it," Doggett said Wednesday at a House Ways and Means Trade Subcommittee hearing on trade opportunities in the Asia-Pacific.
"I very much favor reform of NAFTA," Doggett added. "There are many things that need to be changed in it after two decades. But the idea of terminating or repealing it will have far-reaching consequences in Texas and it will have far-reaching consequences across our country."
Pascrell, who accused Trump of running an "incoherent and unpredictable trade policy," said Congress should play a more active oversight role in the NAFTA negotiations. "Considering the president has threatened more than once to withdraw the United States from NAFTA, I think it's critical that we have a public hearing on the trade agreement - [what] the renegotiation process or the threat of withdrawal means to our economy, our workers and communities," he said.
REICHERT: PICK UP THE PACE ON BILATERAL DEALS: After the W&M subcommittee hearing, Chairman Dave Reichert told reporters he had no idea whether Trump would follow through on his frequent threat to withdraw from NAFTA. But without getting into specifics, the Washington Republican said he did share the business community's concerns about some of the Trump administration's proposal for revising the pact.
"Some of the concerns I think are legitimate concerns and need to be evaluated," Reichert said, adding that he and his staff are in regular conversations with U.S. Trade Representative Robert Lighthizer about the direction of the talks.
Reichert used the hearing to highlight the need for Trump to start making good on his promise to negotiate bilateral trade deals, especially in the Asia-Pacific, where the United States risks falling behind to trading partners such as the EU, Canada and Mexico, which are actively pursuing deals in the region.
"We cannot allow much more time to lapse in creating opportunities to have other agreements, and especially when you look at Japan," Reichert said. "Also, looking at Vietnam, we've got to move forward quickly on these bilateral agreements so that our industries ... have the opportunity to compete fairly across this world."
COPYRIGHT GROUPS WANT STRONGER PROTECTIONS IN NAFTA: A coalition of more than 500 companies and groups representing film, television, music, book publishing and other creative industries have collected more than 50,000 signatures in support of incorporating strong copyright protections into the revised NAFTA agreement.
That puts them at odds with tech groups representing a broad swath of companies - from startups to titans like Google, Amazon and Netflix - that want the Trump administration to incorporate safe harbors and other copyright limitations and exceptions present in U.S. law into the text of the new NAFTA deal.
The tech groups says the looser restrictions on the use of copyrighted material are necessary for the internet economy to continue to thrive. But Michel Kains, director of the USAlliance for Music, said they were urging "U.S. officials not to bow to the agenda of behemoth Silicon Valley companies like Google seeking to undermine American exports and crucial copyright protections for their own gain."
- Brady says NAFTA 2.0 must boost North American competitiveness, POLITICO Pro reports.
- Lawmakers defend KORUS in face of Trump attacks, POLITICO Pro reports.
- India opposes inclusion of new issues under WTO negotiations, Livemint reports.
- Macron says France is in no hurry to sign EU-Mercosur trade deal, Reuters reports.
- Uruguay says the ball is in EU's court on Mercosur trade deal, Reuters reports.
- U.K., EU send proposal to rest of WTO to split trade terms, POLITICO Europe reports.
- A U.S.-Brazil free trade agreement remains a tantalizing prospect, Agri-Pulse reports.
- London Mayor Sadiq Khan will visit India and Pakistan to promote trade, Bloomberg reports.
THAT'S ALL FOR MORNING TRADE! See you again soon! In the meantime, drop the team a line: firstname.lastname@example.org and @abehsudi; email@example.com and @mmcassella; firstname.lastname@example.org and @tradereporter; email@example.com and @jmlauinger; and firstname.lastname@example.org and @pjoshiny. Also follow us @POLITICOPro and @Morning_Trade.
** A message from ACTION for Trade: America's dominant position in innovative and creative industries provides an opportunity for U.S. negotiators to ensure that the global economy rewards innovation and protects creative assets. The new American Creative, Technology, and Innovative Organizations Network for Trade is dedicated to shaping U.S. trade policy and trade agreements, making sure they foster innovation and creativity and protect the intellectual property that drives U.S. trade competitiveness. Learn more: http://actionfortrade.org/ **
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