The two news items came one after the other.
First, U.S. Trade Representative (USTR) Robert Lighthizer advanced last Thursday the filing of the letter of intent with the U.S. Senate to commence in 90 days the renegotiations of the North American Free Trade Agreement (NAFTA), a move that came as a bit of a surprise — not much — as we were expecting the letter to be filed this coming week.
Second in Hanoi, Vietnam, on Saturday, the 11 nations that now form part of the once U.S.-led Trans-Pacific Partnership (TPP) vowed to negotiate an “alternative plan” not just to get to the free commerce objective sponsored by the Asian Pacific Economic Community (APEC) that is left open to include new nations willing to abide by the negotiated TPP.
As a side comment, USTR Lighthizer also made it a point to say that the United States has no plans to return to TPP.
That was no news, as President Donald Trump made it a point even to go as far as signing an executive order to rebuke anything that might stink of Barak Obama’s doings. However, the TPP members are keeping a clause “to welcome other economies who want to join at the adequate moment,” as put by reunion host Vietnam Commerce Minister Tran Tuan Anh.
In short, the stages are set for NAFTA partners Canada and Mexico to be the North American participants in both trade deals, which might mean a shock to the protectionist attempts made by the government of the United States. At least in the case of NAFTA, regardless of what President Trump and his USA exit voting minority “build that wall” base is considering, NAFTA has been good for the three nations in terms of commerce and helping Mexico join the North American bandwagon.
Keep in mind that Trump had to concede in the NAFTA renegotiation after at least 16 state governments (Texas and California, to start with) let him know that nixing NAFTA would have dire regional economic effects. In short, as the old American adage says, “money talks, nobody walks” away.
Both the NAFTA renegotiations and Canada and Mexico continuing to be members of TPP may look like two different negotiations, but they may be in fact part of the global trade advances being made nowadays and paving the road for the future.
An important question that arises right upfront this weekend is that once NAFTA is successfully renegotiated, upgraded and revamped — it is an old treaty and political times, industries and technology have leapfrogged in the past 23 years — will it serve as a platform to enter the U.S. market? Maybe!
One very good news item for the United States is that it enters NAFTA renegotiations with a very solid economy thanks to the eight years in power of Barack Obama who, contrary to what President Trump says, made the economy good and strong. Those who have a bit of memory will recall that George Bush, with two wars, left the economy in shambles with the financial and industrial establishments nearly bankrupt. Don’t forget the predatory housing crisis of 2008 and the panic seeing large financial institutions go under. Obama left Trump with a very healthy financial system and instead of moaning about how “disastrous” Obama was, Trump should be grateful for having a sound financial, industrial and economic system, as well as a 4.4 percent unemployment rate, which in economic terms is known as full employment.
The bad news is going to be for the Rust Belt voters who voted for Trump after taking the bait that he’s going to bring good old American jobs back to them. Trump’s “basket of deplorable” voters will witness how their expectations of reviving the old American Dream is no longer there and with or without NAFTA, renegotiations will not likely bring the results they expect.
In any case, it is too early to say what’s going to happen, but in Mexico expectations are great that both NAFTA and TPP sail with forward winds because it’s just plain good business.