US should keep leading the global economy, not close off borders

With Robert Lighthizer’s confirmation as the United States Trade Representative (USTR) earlier this month the Trump Administration’s “America First” trade agenda is set to accelerate with the North American Free Trade Agreement (NAFTA) renegotiation at the top of the list.

It took Ambassador Lighthizer just four days on the job to give official notification to Congress of the Trump Administration’s intent to renegotiate NAFTA. Once begun, negotiations will face a host of challenges, including overly-politicized negotiating positions amongst all three parties, and the possible need to re-certify the agreement by votes in the legislatures of each country – an uncertain prospect given the vitriolic rhetoric used to characterize NAFTA over the last 18 months.

{mosads}Trade policy is one area where the President can act to appease his political base with almost total autonomy from Congress and the courts. This rightly has pro-trader advocates worried, including Republican Sens. John McCain (R-Ariz.) and Ben Sasse (R-Neb.), who voted against confirming Lighthizer based on concerns that NAFTA renegotiations could harm agriculture exporters in their states.

Candidate Trump repeatedly called NAFTA the “single worst trade deal,” and President Trump has already indicated that he will walk away from the agreement if he does not get what he wants from the renegotiation. According to media reports and White House aides, Trump was prepared to terminate U.S. participation in NAFTA at a rally marking his first 100 days in office. Reportedly due to last minute calls from Mexican President Peña Nieto and Canadian Prime Minister Justin Trudeau, he was convinced to try renegotiation instead.

Some political analysts say the Trump was merely posturing on NAFTA, and that he will never truly attempt to dis-integrate the North American economy. While Trump has demonstrated a great capacity to adapt his positions, one policy on which he has remained steadfast for decades is his antipathy towards international trade.

In an in-depth interview with Playboy in 1990, Trump lamented the U.S. – Japan trade relationship saying, “They have totally outsmarted the American politician; they have no respect for us, because they’re getting a free ride. Of course, it’s not just the Japanese or the Europeans–the Saudis, the Kuwaitis walk all over us.” In the same interview he went on to say that if he ever became President, he’d “throw a tax on every Mercedes-Benz rolling into this country and on all Japanese products, and we’d have wonderful allies again.”

It’s clear that Trump’s views on trade have not changed much since the 1990’s. Since his inauguration, the President has withdrawn from the Trans-Pacific Partnership, imposed 24 percent tariffs on Canadian softwood lumber and ordered the review of all major U.S. trade relationships.

Secretary of Commerce Wilber Ross, the architect of Trump’s anti-NAFTA platform, is producing a report that identifies foreign trade partners with which the U.S. has “a significant trade deficit in goods.”  The report will assess causes of the trade deficit in goods, including “tariffs, non-tariff barriers, injurious dumping, injurious government subsidization, intellectual property theft, forced technology transfer…and any other form of discrimination against the commerce of the United States.” Specifically excluded from that report is the professional services sector, in which the U.S. has a large trade surplus that has quadrupled since 2005.

Like many politicians Trump’s policies are guided by public opinion and recent polling shows that trade is deeply misunderstood by the American electorate. A survey by The Economist and YouGov (fielded April 29 – May 2, 2017) found that American opinion about NAFTA is evenly divided in thirds with 31 percent favoring withdrawal, 39 percent opposing withdrawal and 29 percent not sure. However, amongst Trump supporters, 59 percent favor withdrawal. Not surprisingly, it’s this group that the President listens to and cares about most.

The benefits of global trade and NAFTA specifically are substantial, even if they are not well understood. Texas, Louisiana and North Dakota export oil, natural gas and refined products to Mexico. Agricultural states like Iowa, Nebraska and Minnesota sell wheat and corn to feed a growing Mexican population.  In Michigan and Ohio the automotive industry relies on a dynamic cross-border supply chain that supports jobs all three countries. In all, economists estimate that 14 million jobs are supported by U.S. trade with Canada and Mexico.

Withdrawing from NAFTA would harm the U.S. economy and signal the abdication of U.S. global economic leadership.  A true America First strategy to trade should build on the success of past agreements, make updates and improvements where needed, and ensure the U.S. continues to lead the global economy.

Jamie McInerney and Casey Clark are co-leaders of the global trade policy initiative at FTI Consulting, private sector advisers.

The views of the contributors are their own and not the views of The Hill.