At Pro-Trade Think Tank, Wilbur Ross Soothes Business Fears Over NAFTA Talks

Parts of the scuttled Trans-Pacific Partnership will be a “starting point,” the commerce secretary said.

WASHINGTON ― Commerce Secretary Wilbur Ross said that a commitment to “do no harm” would guide efforts to renegotiate the North American Free Trade Agreement and that elements of the now-defunct Trans-Pacific Partnership would serve as a “starting point” in talks with Canada and Mexico.

The remarks on Wednesday at the Bipartisan Policy Center, which supports international trade agreements, struck a marked contrast with President Donald Trump’s nationalist bromides on trade. The comments will undoubtedly allay the fears of big-business interests that support NAFTA, some of which were well-represented in the room.

But Ross’ pronouncements are also liable to vindicate the fears of liberal trade skeptics already worried that the Trump administration’s version of revising NAFTA will amount to simply expanding NAFTA’s reach to new sectors of the economy. That runs counter to their wishes for measures more likely to save the jobs of less-educated workers, whether in manufacturing plants or call centers.

The Trump administration’s first objective will be to “do no harm, because there were some things that were achieved under NAFTA and under other trade agreements,” Ross told Jason Grumet, founder of the Bipartisan Policy Center, which receives foundation, corporate and individual funding.

Grumet subsequently told Ross that a “lot of people in this room and others are really comforted by” that assurance.

Indeed, two business leaders who support NAFTA ― Chip Bowling, chairman of the Corn Board of the National Corn Growers Association, and Jack Gerard, president of the American Petroleum Institute, an oil industry trade group ― were in the room.

Grumet had interviewed them just before Ross’ arrival, allowing them to deliver a swan song to the much-maligned trade deal. Bowling hammered home just how important NAFTA was in opening up export markets for U.S. farmers, while Gerard waxed lyrical about the efficient supply chains NAFTA has made available for U.S. oil and gas producers and refiners.

Both men suggested that the changes they’d most favor would involve streamlining NAFTA to further integrate the United States’ economy with those of Canada and Mexico.

“It works very well for us right now. You can always strengthen an agreement,” Bowling said.

Here, too, Ross seemed to suggest that the administration is open to a strategy that might please some in the business community who benefit from NAFTA.

Ross said that bringing NAFTA up to speed with TPP, which would have created intellectual property protections and removed barriers to digital trade, would be the first order of business. Mexico and Canada had signed on to TPP, a 12-nation Pacific Rim trade agreement, before Trump shelved it in his first days in office, after campaigning against both NAFTA and TPP. But many business leaders wanted those two TPP provisions, so now they could get their way with a “repaired” NAFTA.

According to Ross, “there were a number of concessions to NAFTA countries made in connection with the TPP. And so we would view those as a starting point for discussion.

“It’s an old agreement. It didn’t address digital economy. It didn’t address much in the way of services, especially didn’t address much in the way of financial services. So there are some big holes in it.”

As commerce secretary, Wilbur Ross is charged with overseeing President Donald Trump's overhaul of U.S. trade policy.
As commerce secretary, Wilbur Ross is charged with overseeing President Donald Trump's overhaul of U.S. trade policy.
Mike Blake / Reuters

The comments provide fuel for the fears of progressive trade critics, such as Lori Wallach, director of Public Citizen’s Global Trade Watch, who worry that the administration will revise NAFTA only to make it a more TPP-like accord, which they say would have expanded opportunities for business without protecting workers. Absent meaningful improvements in Mexican labor and environmental standards and a restoration of preferential treatment for U.S. goods in federal government procurement, Wallach and others argue, there is little chance that a re-negotiation will benefit the American workers hardest hit by the 1994 trade pact.

Ross did note some of the priorities of groups like Public Citizen. He rattled off a list of NAFTA provisions in need of revision, including “intellectual property rights, customs procedures, sanitary and phytosanitary regulations, labor issues, environmental issues.” He also emphasized the importance of improving overall enforcement of trade treaties.

But Ross said that adding new provisions to NAFTA would be the “easiest” place to begin negotiations.

Wallach saw signs that the Trump administration might be using TPP as a model for NAFTA reform in a leaked March draft of a letter to Congress providing 90-day notice of NAFTA negotiation.

“They’d take the pieces of TPP that Mexico, the U.S. and Canada had agreed to and enact them bit by bit through the NAFTA renegotiation,” Wallach said in April.

The actual letter that U.S. Trade Representative Robert Lighthizer finally sent to Congress earlier this month was a fraction of the length of the March draft and, as a result, lacked many of its detailed descriptions. But it included some language about modernizing trade that resembled wording in the letter the Obama administration sent to Congress in 2009 when it notified lawmakers it would begin negotiations over TPP.

At other points in the conversation with Grumet, Ross defied the views of his hosts.

After Ross mentioned that a major goal of trade talks would be to reduce the United States’ trade deficit with its NAFTA partners, Grumet asked him whether trade deficits are necessarily negative.

The Bipartisan Policy Center, like many centrist, business-friendly Washington think tanks, produces research arguing that trade deficits can often correspond to high economic growth and need not be viewed as inherently problematic. BPC senior director Steve Bell sent a letter on May 10 to the Department of Commerce’s Trade Promotion Coordinating Committee making exactly that point.

Ross flatly rejected the idea.

“There’s no question that trade surpluses are more beneficial to a country than trade deficits,” he said.

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