The third round of scheduled talks to revise the historic North American Free Trade Agreement (NAFTA) – a pact that made the United States, Mexico, and Canada the largest trade region in the world – ends Wednesday in Ottawa, Canada.
With numerous issues left unresolved after the second round of talks earlier this month, including Washington’s desire for expanded use of U.S.-made materials in automobiles and other products, and disagreements about how to resolve trade disputes, many will look for word that this session reached a positive turning point. On Tuesday, U.S. Trade Representative Robert Lighthizer, Canadian Foreign Minister Chrystia Freeland, and Mexican Economy Minister Ildefonso Guajardo joined the talks.
“It’s great to see progress and advances in the negotiations,” Gerry Schwebel told the Rivard Report Tuesday. Schwebel is a senior vice president at International Bank of Commerce and a leading expert on international trade and finance.
“We, the participants from the private sector, remain focused and committed to the successful conclusion of all the negotiation rounds. With over 40 different companies from the U.S. Chamber present here in Canada, many more cleared advisors and all the members of the negotiating teams and congressional staff delivering the strong message of ‘do no harm’ to NAFTA, there should be no reason not to achieve a positive outcome.”
Fresh from this week’s talks in the Canadian capital, Schwebel will give a more detailed progress report at a forum in San Antonio on Friday.
Sponsored by the Rivard Report with the Texas-Mexico Trade Coalition and the City of San Antonio, the forum at St. Mary’s University will bring together local and national leaders from all three countries to discuss the ongoing NAFTA negotiations. It will be held at St. Mary’s University Center’s Conference Room A. For tickets, click here. The event also will be livestreamed here.
“St. Mary’s has strong, historic ties to Mexico and to our alumni who are there, and our students from different parts of Mexico who study here,” said university President Thomas Mengler. “But there’s a lot of uncertainty right now around NAFTA, the border wall, and DACA [Deferred Action for Childhood Arrivals], and they are all traumatic for members of our greater St. Mary’s community, not only in Texas, but all over the country.”
Making the case for a fair and equitable NAFTA at Friday’s forum will be former Canadian diplomat Colin Robertson, who served as a negotiator during the original NAFTA talks. Robertson spoke with the Rivard Report on Monday.
“By Thursday or Friday, I will have a sense, I hope, of what’s gone on,” said Robertson, who now serves on an advisory committee for Canada’s deputy minister for trade. “Are they making dramatic progress? I’d be surprised. But I think they are making progress at each of the negotiating tables.”
The professional negotiators who gathered in Ottawa this week know one another well, Robertson said, and are on the same terrain as they were when the Trans-Pacific Partnership (TPP) was being negotiated – before President Donald Trump kept a campaign promise and withdrew from TPP talks in January.
“Of the 28 tables, there are probably four or five that have reached a consensus now, keeping in mind they won’t be settled until everything is settled,” Robertson said. He believes they will have made headway on some of the major issues as well, but not yet reached a consensus.
“The unpredictable factor in this is Mr. Trump, but otherwise, I wouldn’t be fussed,” Robertson said. “They are making progress, but there are still some decisions that have to be made and those will go to the leaders. But when they go there, we will already have had some give and some get. After three rounds of talks, we’re where we should be.”
Rivard Report Publisher Robert Rivard will moderate a panel of speakers at Friday’s forum that will include former U.S. Ambassador to Mexico Antonio Garza, now counsel with the law firm of White & Case in Mexico City.
“While far from perfect, the trade agreement guides the cross-border exchange of billions of dollars in agricultural products, motor vehicles, and appliances,” Garza wrote on his blog in August. “It underpins millions of jobs from California to Kansas to Maine, and is the framework for entire industries’ business models.
“If NAFTA suddenly disappears, it would be impossible for the three region’s economies to exit unscathed. The disruptions that come from businesses’ reshuffling their operations and absorbing higher costs would cause some to shut down and others to pass along the costs to consumers through higher prices.”
Higher costs are the central concern for people like San Antonio small-business executive Ricardo Aguinaga.
As vice president of Hallco Industries, a manufacturer of bulk materials handling solutions for trucks, trailers, and stationary conveyor and bin systems, Aguinaga’s job is to expand Hallco’s business in Mexico and Latin American countries, a task he began in 2014. For help in opening those doors, Aguinaga joined the Free Trade Alliance in San Antonio, traveled with the Alliance on trade missions, and learned how to approach taxation and import duties.
Today, Hallco has a distribution center in Brazil and one in Poteet that services Mexico, and Hallco’s export business to Latin America has grown 60%. Hallco employs 100 people in countries around the world.
“The biggest precaution we have when it comes to NAFTA is how we will be affected by export-import duties for the countries we are exporting to,” Aguinaga said. “It’s a favorable rate today. It’s affordable. But if it increases, that would make our product less affordable and affects how much we can sell in that particular country.”
He also hopes NAFTA 2.0 won’t undermine stability in trade relations. “We try to keep eyes on rules and play with the hand dealt us. Once we know the rules, we can play with the rules that are there, as long as it’s stable. As long as I know the duties for my products will remain stable for a while, I can structure the business to take care of that.”
The loss of manufacturing jobs, decreased wages, and a multibillion trade surplus are common pain points for many Americans when it comes to NAFTA. Only about half of Americans say NAFTA has been beneficial for the U.S., according to a Pew Research Center survey reported in May, compared to 74% of Canadians and 60% of Mexicans who say it’s been good for their countries.
Close to 710,000 jobs were lost between 1994 and 2014 as a result of increased imports from Mexico and Canada or due to shifts in production, according to U.S. Department of Labor statistics. Texas, North Carolina, and California were the states most affected.
Yet trade with Mexico supported about 1.2 million U.S. jobs in 2015, according to the U.S. Department of Commerce. Trade with Canada supported about 1.6 million jobs.
Last year, both Canada and Mexico ran a collective $74 billion merchandise trade surplus with the U.S. But NAFTA has more than quadrupled trade in 20 years and boosted economic growth in all three countries. It has led to lower prices on groceries and oil across the U.S.
For Texas, trade between this state and Mexico alone supports 387,000 jobs and, in 2015, Texas’ trade with Mexico added up to $176.5 billion.
“’America First’ rhetoric will lead to ‘America Last’ in job creation,” Bexar County Judge Nelson Wolff said. “A strengthened and modernized NAFTA that leaves the current framework in place will facilitate more direct investment in Bexar County.”
More than 63,000 jobs have been created in San Antonio as a direct result of NAFTA, San Antonio Mayor Ron Nirenberg said.
“We want to protect those jobs and keep the agreement in place to provide additional trade opportunities,” he said Tuesday. “‘Do no harm’ is our starting goal for the negotiations.”
Wolff and Nirenberg will participate in the “Future of North American Trade” forum, and Nirenberg will serve on a panel about the role of cities on both sides of the border.
“I continue to emphasize the importance of NAFTA to Texas and even more so now that our economic model has been impacted by recent catastrophes,” Schwebel said from Canada. “More than ever we must protect NAFTA-related jobs in Texas, especially those related to the trade services, energy, and agriculture sectors.
“However, let’s not take any of this for granted,” he said. “We all must be fully engaged.”