WASHINGTON – There’s been lots of talk this week from the U.S. administration about NAFTA’s shortcomings and the ways it can be fixed.
Make no mistake: this talk is about the next trade deal, not the last one.
The president and some of his allies have been pointing to perceived faults with the North American Free Trade Agreement, not in a bid to rip up the 20-year-old deal but in an effort to sell the idea that the Trans-Pacific Partnership might make things better.
The target of that sales job: the administration’s own allies in Congress.
President Barack Obama admitted as much during a news conference with his Canadian and Mexican counterparts Wednesday, when he made a glancing reference to his failure to get congressional fast-track authority to negotiate the 12-country TPP.
Unlike most cases of gridlock in Washington, in this instance, it’s mostly Democrats who are resisting the president and mostly Republicans who are supporting his trade efforts.
“I’ve said this to some of my own constituents who are opposed to trade,” Obama said.
“Those who are concerned about losing jobs or outsourcing need to understand some of the old agreements put us at a disadvantage; that’s exactly why we’ve got to have stronger agreements.”
He said future trade pacts would provide better protection for intellectual property; more open markets for U.S. agricultural products; and more opportunities for government procurement contracts.
Some of his aides have also said he would make good on a 2008 campaign promise to improve the labour and environmental standards in NAFTA.
Obama’s trade secretary raised some eyebrows earlier this week by suggesting that the process would reopen NAFTA — something Obama famously, and quite controversially, promised to do in his first presidential campaign.
Another Obama ally has since shed some light on what that meant.
Ben Rhodes suggested that the TPP, which would include Canada and cover 40 per cent of the world’s economy, would finally provide the redress that the president was talking about.
“We see this as an opportunity to introduce elevated standards on issues like labour and the environment that were not in NAFTA,” said Ben Rhodes, the deputy national security advisor, aboard Air Force One en route to this week’s Three Amigos summit.
Not all Democrats were convinced.
“Nonsense,” Rep. Louise Slaughter of New York told Politico this week.
“In all the time I’ve been in Congress, I have never seen a trade bill that benefited the American producer or the American worker. It’s all been giveaway, and we really can’t afford that anymore,” she said. “People are sick and tired of the one-way trade deal.”
Past polls have suggested that, unlike in Canada, NAFTA is unpopular in the U.S. The survey numbers, at the same time, have shown support for the idea of more trade with Canada and Mexico.
Fans and foes of free trade point to different aspects of the NAFTA legacy.
Under the pact, all three countries have had positive GDP growth nearly every single year, and have seen a boost in trade and in the manufacturing index.
At the same time income inequality has deepened — most significantly in the U.S., and to a lesser degree in Canada. The gains in the economy are being claimed by a smaller segment of society.
Facing headwinds in Congress, the Obama administration now seems poised to enter the upcoming round of TPP talks without fast-track authority.
That means that any pact could be tossed into disarray at the 11th hour, with Congress rejecting or amending parts of it. The Democratic-controlled Senate has all but extinguished any hope that it might relinquish its constitutional right to amend and revise trade agreements via a fast-track bill.
But some trade-watchers have downplayed the importance of that.
Robert Wolfe, a professor at Queen’s University and former Canadian foreign-service officer, said in a recent interview that the administration appears to be keeping Congress in the loop during negotiations in order to limit the chance of a late-stage rejection.
He also said fast-track bills can actually make things more difficult — by imposing on U.S. negotiators specific, tough demands that limit the chance of an agreement.
In this case, he said, negotiators can enter TPP talks without being shackled to the positions laid out by Congress in a fast-track bill.