White House

Hundreds of business leaders call on Trump to stick with NAFTA

The flags of the United States, Canada, and Mexico flying in New Orleans where leaders of the North American Free Trade Agreement met. Mexico, the United States and Canada began a second round of talks in early September on re-negotiating the pact.
The flags of the United States, Canada, and Mexico flying in New Orleans where leaders of the North American Free Trade Agreement met. Mexico, the United States and Canada began a second round of talks in early September on re-negotiating the pact. AP

Hundreds of business leaders from all 50 states have joined forces to increase pressure on President Donald Trump to remain in NAFTA.

In a letter signed by more than 310 state and local chambers of commerce, the business leaders urged Trump to update and improve, but not end, the 23-year-old trilateral agreement with Mexico and Canada that, the leaders say, has contributed to $1.2 trillion annually in trade.

“We recognize that this agreement is a quarter century old. It makes sense to modernize it,” said Glenn Hamer, president and CEO of the Arizona Chamber of Commerce. “But for the love of God don’t do any harm to something that has been so economically beneficial to states all across America.”

As negotiators from the United States, Canada and Mexico prepare to kick off a fourth round of talks on Wednesday in Washington, D.C., a feud broke out last week between Trump and the U.S. Chamber of Commerce as the size of the stakes came into sharp focus.

It’s a crucial round in the negotiations as each country’s trade representatives are expected to introduce specific proposals on controversial items, including rules of origin thresholds that would require products treated favorably under the pact to include higher levels of U.S.-produced content and a sunset clause that would automatically terminate the agreement after five years unless all three member countries agreed to extend it.

U.S. Chamber President Tom Donohue traveled to Mexico Tuesday to “ring the alarm bells” about the administration’s “unnecessary and unacceptable” proposals.

According to prepared remarks he will deliver to a group of business leaders in Mexico City, Donohue will explain that he was “cautiously optimistic" when negotiations began, but now sees White House demands as "poison pills" that could scuttle the deal.

"We’ve reached a critical moment," Donohue said, according to the text of the remarks. "And the Chamber has had no choice but to ring the alarm bells."

Last week, the Trump administration responded to similar complaints by accusing the chamber of being part of the entrenched Washington elite fighting his work to “drain the swamp.”

“The president has been clear that NAFTA has been a disaster for many Americans, and achieving his objectives requires substantial change,” Emily Davis, spokeswoman for the Office of the U.S. Trade Representative, said in response. “These changes of course will be opposed by entrenched Washington lobbyists and trade associations.”

 

Eric Farnsworth, vice president of the Washington-based Council of the Americas, said it’s about time that the business community has gotten more involved. Business leaders need to make their voices heard at this critical stage, he said, but it’s unclear whether the Trump administration will listen.

“The business community finally recognizes that NAFTA is at risk,” Farnsworth said. “This is not a drill.”

Canada and Mexico are two of the top three trading partners with the United States and they are America’s two largest export markets. Indeed, the United States exported more than twice as much to Canada and Mexico individually as it did to China in 2016, according to U.S. government data.

US Rep. Mark Sanford says ending NAFTA, as Trump has threatened, would be catastrophic. Sanford and other members of SC's legislative delegation spoke to the SC Chamber of Commerce Wednesday, August 23.

The Chamber reports that about 14 million U.S. jobs depend on trade with Canada and Mexico. More than $1 billion in commerce is conducted daily across the southern and northern borders. Similarly, nine million American jobs depend on trade and investment with Canada.

Trump has called NAFTA one of the worst deals struck in history. He said he wants a “fair deal,” often citing the U.S. trade deficit with Mexico — a measure of how much America’s imports from Mexico exceed its exports to that nation. In 2016, that trade deficit stood at $63 billion.

Trump also cites American job losses to Mexico after NAFTA was signed. On this point, there are more economists who agree, especially on the left among trade unions and blue-collar voters. Studies funded by groups aligned with unions say NAFTA has led to the loss of more than 800,000 U.S. jobs. Nonpartisan groups, including the Congressional Research Service and the Organization for Economic Cooperation and Development, say NAFTA might have hurt specific U.S. sectors, such as auto manufacturing, but overall had a more modest effect on U.S. jobs.

Economists widely agree that carrying a trade deficit is not inherently a bad thing, especially for a developed economy like the United States. The trade imbalance partly reflects America’s propensity to consume more than other countries, and the money U.S. trading partners make from selling to Americans is often then used to both purchase U.S. exports or to invest on Wall Street or in U.S. bonds.

In their letter, the local and state chambers said half of all Canadian and Mexican imports are “made-in-the-USA.” They said the agreement has been especially beneficial for U.S. farmers and ranchers. Agricultural exports to Canada and Mexico have quadrupled to $38 billion since the agreement was signed. Canada and Mexico are the top two markets in the world for U.S.-made manufactured goods with purchases of nearly half-a-trillion dollars last year — a sum that tops the next 10 largest markets combined, the chambers said.

Hamer said there are years where trade with Mexico has made a difference between growth versus recession in Arizona. And though he was critical of the administration’s take on trade, he praised its efforts to cut regulations and confront tax reform.

“The administration is spot on in its tackling those two areas, but I’d argue as right it is in those areas, it is that wrong when it comes to its general approach on trade,” Hamer said.

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