During the campaign, Donald Trump reserved particular fury for the North American Free Trade Agreement. He blasted NAFTA as “a disaster” and blamed it for lost jobs, closed factories, and economic despair.
It’s deeply ironic that renegotiating NAFTA—on a relatively reasonable basis—may be one of his best opportunities for a meaningful political and policy win.
The fiasco over healthcare reform was a textbook example of how not to advance policy. The administration’s failure to build support for reform legislation led to widespread opposition from members and stakeholders. Trump also showed disdain for substance, using an epithet to dismiss policy objections from House conservatives.
But while success on trade—especially with respect to reforming NAFTA—will be far from easy, it may actually be more achievable than either healthcare or tax reform. That’s in large part because Trade Promotion Authority (TPA) legislation enacted by Congress in 2015 can potentially provide “adult supervision” to both the president and Congress.
TPA provides an optional process under which Congress and the president exercise their shared constitutional authority over trade agreements. Under TPA, Congress agrees to up-or-down votes, without amendments, on trade agreements negotiated by the administration—but only if the administration complies with extensive consultation and transparency obligations and only if the agreement advances the law’s detailed negotiating objectives.
The TPA’s focus on process and substance doesn’t guarantee success, but it can promote more thoughtful and inclusive deliberations and, potentially, better outcomes. At the same time, TPA assures U.S. trade negotiators that trade deals negotiated with extensive congressional input won’t later be picked apart piecemeal by Congress.
During the healthcare debacle, members and stakeholders were in the dark about the specifics and impact of the legislation. They were told that they’d learn more—after the vote. By contrast, any NAFTA rewrite under TPA would be subject to a more transparent process.
Among other things, TPA requires the administration to provide summaries of its objectives and proposals in the NAFTA negotiations and to publish the full text of any new agreement 60 days before the president signs it. Additionally, the administration would be required to consult frequently with bipartisan congressional advisory groups, give any member of Congress access to negotiating texts, and meet and consult with any interested member. Along with other reforms to engage the public, these steps would help assure significant stakeholder input into NAFTA talks.
In the effort to rewrite healthcare, substance played second fiddle to a frantic effort to capture votes. By contrast, any rewrite of NAFTA under the TPA would be judged on how it advances nearly 150 specific negotiating objectives established by Congress. These include ambitious objectives to expand trade in manufactured and farm goods and services; updated provisions on protecting intellectual property, eliminating regulatory barriers, and enforcing strong labor and environment rules; and new objectives to promote human rights, address currency manipulation, and require state-owned enterprises to compete fairly. Of particular importance to the integrated North American market, TPA objectives also encourage American participation in global value chains.
The Trump administration could ignore TPA and take a more difficult path to a NAFTA rewrite. So far, however, administration officials appear to be following the TPA process—beginning congressional consultations and sharing a draft NAFTA notification that appears to check some of TPA’s substantive boxes.
To succeed in renegotiating NAFTA, they’ll also need to adopt a similarly considered approach to trade talks with Canada and Mexico.
The administration could begin by shelving Trump’s bellicose anti-trade threats and zero-sum approach to negotiating. They must recognize that many NAFTA reforms—such as rules for digital trade, customs clearance, regulatory coherence, and small business—could be “win-win-win” for business, workers, and consumers in all three countries. As Trump himself recognized during his 2016 visit to Mexico, a stronger and more competitive North America benefits each NAFTA nation.
Administration negotiators must also be more realistic about the concessions they can wrest from Canada and Mexico.
Commerce Secretary Wilbur Ross noted recently that key provisions of the Trans-Pacific Partnership would be the “starting point” for renegotiating NAFTA. His NAFTA counterparts partners don’t necessarily agree. As former Deputy U. S. Trade Representative Wendy Cutler notes, “TPP rules were agreed to in a negotiation in which Canada and Mexico would get new benefits from nine other Asia-Pacific countries. It shouldn’t be assumed they’d automatically agree to them in a NAFTA renegotiation.” Similarly, other administration goals, such as rolling back NAFTA’s procurement and disputes provisions, would likely require significant corresponding U.S. concessions—trade-offs that could seriously harm American stakeholders and the U.S. economy.
Finally, the administration needs to adopt broader tests—beyond its fixation on trade deficits—to evaluate NAFTA. A stable and prosperous Mexico, for example, is a huge help on key administration priorities, including immigration and national security. Eroding U.S. economic links to Mexico, on the other hand, would be a boon to America’s competitors, especially China.
The fact that there’s a pathway to a reasonable renegotiation of NAFTA doesn’t mean it will happen. With President Trump, a radically different course can be a tweet away. Insisting that Mexico pay for a wall, imposing import taxes, or rolling back NAFTA reforms could easily scuttle the renegotiation and weaken vital relationships that benefit American manufacturers, farmers, and service providers, and support millions of American jobs.
But Trump is also flexible. If he wants to get back to winning—for himself and the American people—there’s a smart and serious way to succeed on NAFTA.
