As nafta goes, so goes the nation – the blade la gasolina lyrics


When President Trump was campaigning, he promised to pull the country out of the three-way consortium with Canada and Mexico. After he was elected, he thought better of that, and decided to try to renegotiate it instead. Late last year, a long series of talks began, with trade negotiators shuttling back and forth between Washington, Ottawa, and Mexico City.

The goal was to get an “agreement in principle” by April 30, but that deadline came and went. Douglas George, a highly experienced trade negotiator who is now Canada’s consul general in Detroit, is still hopeful. “Intensive negotiations continue,” he told me last week.

The eighth and latest round began in Washington Monday, with U.S. Trade Representative Robert Lighthizer joining his counterparts from Mexico and Ottawa. Although the principal figures meet only sporadically, lower-level negotiations on various aspects of the enormously complex agreement go on pretty much all the time.

NAFTA is not popular in the industrial heartland, perhaps especially in Toledo and Detroit, where it is blamed for lost manufacturing jobs. Dan Ujczo, a lawyer from Columbus, who specializes in international trade, quipped recently that “I seldom hear NAFTA mentioned without another word starting with F in front of it.”

Apparently realizing that, Mr. Trump chose to renegotiate it, but insisted on radically revised “rules of origin” that would require that at least half of the components in every car in all three countries be manufactured in the United States. That demand seemed especially popular in Michigan, Ohio, Pennsylvania, and Wisconsin, the heavy manufacturing states that gave Mr. Trump his upset victory.

Nobody claims that NAFTA, which was signed in 1994, was ever a perfect agreement, or one that was going to please everybody. Ironically, while it almost certainly would not have been renegotiated had Hillary Clinton had won the election, in some ways it needed to be.

But neutral economists think the vast majority of those would have been gone anyway; too often, people blame NAFTA for job losses caused by globalization. Robert Lawrence, a professor of government at Harvard, calculated last year that the total number of jobs lost because of NAFTA was something less than 150,000.

However, other jobs have been created by the trade agreement. Overall, NAFTA has had a “modest but positive effect,” on the entire U.S. economy, according to a recent analysis by the Council on Foreign Relations. The bottom line, is that NAFTA helped the domestic auto industry survive by creating a relatively seamless three-nation manufacturing and production network.

Tearing it apart now would result in an epic disaster, the CAR study found. Not only is the U.S. auto industry heavily dependent on trade, it couldn’t possibly keep up with even domestic demand. Last year, Americans bought 17.3 million cars and light trucks; our factories made 11 million. “The U.S. cannot self-supply,” it concluded.

One final sticking point may be Washington’s initial demand that the treaty have to be renewed every five years. Mexico and Canada argue that businessmen need stability, and agreeing to review the treaty at regular intervals instead makes more sense.