Monday, October 16, 2017

Hardline American demands put NAFTA and Korea trade negotiations on the ropes

Negotiations on the North American Free Trade Agreement are on the ropes because President Trump's top negotiator, Robert Lighthizer, "is playing such extreme hardball with the Canadians and Mexicans . . . that sources close to the process say there's no chance of a compromise solution unless he changes tactics," Jonathan Swan reports for Axios. Withdrawing from NAFTA could cause big problems for farmers, many of whom voted for Trump. A host of lawmakers are begging Trump to stick with it for the sake of the farmers who depend on it.

Trump also wants a sunset clause that would cause NAFTA to dissolve five years from now unless all parties agree to extend it at that time, and has threatened to withdraw from it summarily unless he gets his way in the negotiations.

The automotive industry could lose out too, which could hurt Republicans since most of the top 10 states for auto manufacturing voted for Trump. A new study says up to 50,000 auto-parts jobs could be lost if the U.S. ditches NAFTA completely, and up to 24,000 jobs could be lost if the U.S. keeps NAFTA but pushes through stringent "Made in America" auto manufacturing requirements.

Trump wants tariff-free cars crossing the U.S. border for manufacturing to be made of at least 50 percent American parts. "That's viewed as a non-starter by virtually every party involved in automobile manufacture," according to The Canadian Press.

Renegotiation of the U.S. trade deal with South Korea, which also helps U.S. agriculture, aren't going so well either, and for much the same reason: hardball negotiation. But a poison pill to torpedo the deal may be the point: "Trump believes to his core that the deal is a scam," Swan writes. The negotiations matter, he says, because "Between NAFTA and KORUS you're talking more than $1 trillion in annual trade in goods and services. Withdrawal would do far more than simply roil the U.S. markets; it would profoundly alter U.S. alliances, test a crucial national security partnership in Asia, and could result in the election of a hard core leftist (and no friend to the USA) in Mexico."

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