August 17, 2017


Why Trump's NAFTA Strategy Is a Surefire Failure (Patrick Smith, August 18, 2017, Fiscal Times)

This is Trump's moment of truth on trade, one of his premier issues. But even before Lighthizer sat down at the table, it was almost certain "America First" and "Made in America" will remain empty promises when the NAFTA talks end in January.

One obvious reason: Mexico and Canada have a lot at stake, too, both politically and economically. Mexican President Enrique Peña Nieto faces an election next summer. Justin Trudeau has to bring something back to Canada for restive industrial lobbies, greens, and other interest groups. Everyone goes home a winner is the name of this game. And nobody can win much of consequence unless there is a loser on the other end.

The 1994 pact could use an update. Chrystia Freeland, Trudeau's foreign minister, is looking for a "modernized NAFTA" come January, and all sides are in for this. This means topics such as rules of origin, local content, e-commerce technology, and emerging products such as batteries that drive electric cars will be on the table this fall. The new NAFTA will have new sections, but it won't in any way be a radically new path forward.

Trump promised too much, and nobody in his administration -- not Lighthizer, not Wilbur Ross at Commerce -- has yanked him into reality. They all seem to be going at the trade question with bad strategy and very misguided tactics.

Posted by at August 17, 2017 5:50 PM