Tags: Donald Trump | Financial Markets | Mexico | tariffs | trade | usmca

Congress Can't Cave In to Trump on NAFTA

Congress Can't Cave In to Trump on NAFTA

On Nov. 29, 2018, President Donald Trump listened to a question before traveling to the G20 Summit in Buenos Aires, on the South Lawn of the White House in Washington, D.C. The president had criticized leaders of Canada and Mexico over NAFTA, before it was rewritten. (Evan Vucci/AP)

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Wednesday, 12 December 2018 11:05 AM Current | Bio | Archive

The best argument for Congress to pass President Donald Trump’s tweaked version of the North American Free Trade Agreement is also the worst argument for it.

It’s the argument from stability. It concedes that the new agreement, labeled the U.S.-Mexico-Canada Agreement (USMCA), may not be a vast improvement over Nafta, or an improvement at all.

But it urges passage on the ground that otherwise we might end up with no trade agreement at all, because Trump has been threatening to withdraw from Nafta.

This is the argument that the editors of The Washington Post are making.

They have no illusions about the USMCA. They know that Nafta was not "the worst trade deal ever," as Trump calls it. Studies have found that the agreement, which first went into effect in 1994, modestly increased American GDP without raising unemployment or significantly reducing manufacturing wages.

The Post editors are aware, as well, that the changes in the new agreement are a mixed bag. (If Nafta were a disaster, as Trump says, USMCA would be, too.)

On the plus side, American exporters get more access to the Canadian dairy market, and the agreement includes new rules on digital trade and storage.

On the other hand, the agreement also has stricter rules on what counts as a car made within the trade bloc and new wage rules for the Mexican auto industry. Both of these policies were priorities of the Trump administration and are, as the editors note with understatement, "possibly counterproductive."

The Post’s argument for congressional passage of the U.S.-Mexico-Canada Agreement is not that on balance it’s better than Nafta. It’s that passage "would stabilize a hemispheric trade area that Mr. Trump had threatened to destabilize."

Trump is threatening to withdraw from Nafta so as to leave lawmakers a choice between his version of the deal and no deal at all. With no deal, the more restrictive trade rules that applied before Nafta would go back into effect. The Post is right to prefer either Nafta or USMCA to that result.

But think about what its editors are saying: Congress should give the president what he wants, whether or not what he wants is in the national interest, to keep him from doing something destructive. Because the editors are not confident they can persuade Trump to be reasonable, they want Congress to accede to his unreasonableness.

Sen. Patrick Toomey, R-Pa., has a different perspective. He says that "the old Nafta is preferable to the new Nafta" on the whole, although that might change if the Trump administration works with him and like-minded colleagues on amendments.

But Toomey is also mindful of the need for Congress to assert its own constitutional powers. Trump has already imposed tariffs that many in Congress denounced.

In negotiating this deal his administration has not consulted with key members of Congress — as required in legislation giving the administration the authority to engage in those negotiations in the first place. It largely ignored the objectives Congress set for negotiations, such as further liberalization of trade and the protection of American investors abroad.

Trump has refused to lift steel and aluminum tariffs, even for Canada and Mexico, even though he and his aides said that they were in place to secure a better deal and would be lifted afterward. Now Trump is trying to force Congress to back him by withdrawing (or threatening to withdraw) from Nafta — which it is not at all clear he has the legal power to do.

Sen. Toomey puts it this way:

It’s bad enough that we have ceded so much authority to the executive branch — maybe nowhere more so than on trade — but now to let the president take an action against Congress, let’s be honest, that is not legally permissible? I’d be extremely disappointed if my colleagues in Congress just roll over.

Whether to keep the North American Free Trade Agreement or adopt the U.S.-Mexico-Canada Agreement is not an earth-shattering choice. They are very similar and our economy would not do much better under one or the other.

But Trump’s strategy for getting his agreement past Congress ought to change the congressional calculation. What Trump is trying to do is to extort Congress into giving him a political victory on trade. He wants congressmen to worry about the effects of his irresponsibility. At some point, they have to stand up to it.

Ramesh Ponnuru is a Bloomberg View columnist. He is a senior editor of National Review and the author of "The Party of Death: The Democrats, the Media, the Courts, and the Disregard for Human Life." To read more of his reports — Click Here Now.

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RameshPonnuru
What the president is trying to do is extort Congress into giving him a political victory on trade. Legislators need to stand up to Trump, even if his substitute trade deal is not a lot different from the original.
tariffs, trade, usmca
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2018-05-12
Wednesday, 12 December 2018 11:05 AM
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