Trudeau, Trump face NAFTA pressure from their tender left flanks

by Invesbrain Saturday, July 22, 2017
Print This Article

The last people who would ever agree with Donald Trump may ultimately help the U.S. president destroy one of the trade treaties he so loathes.

This week Justin Trudeau and other Canadian politicians continued their NAFTA full-court press of American decision-makers with an appearance at the National Governors Association in Providence, Rhode Island. As the CBC points out, it’s not exactly friendly territory for the progressive prime minister -- 35 of the 55 governors that make up the NGA are Republican. But it’s not the forces of the right, Republican or otherwise, that are complicating the renegotiation of NAFTA for Trudeau and Trump but rather free trade’s traditional enemies on the left.

In a editorial in the Detroit News, Michigan AFL-CIO president Ron Bieber lambasted Trump for spending “more time on the golf course than at the NAFTA negotiating table.” But Bieber reserved his sternest criticism for establishment Republicans such as Michigan Governor Rick Snyder and Congressman Dave Trott saying they “support pro-corporate trade deals because that’s what their wealthy corporate donors want.” Trump instead earned praise for at least “ taking a good game on trade” in his promise to remake NAFTA and for his criticism of the now dead Trans-Pacific Partnership as “another disaster pushed by special interests.”

NAFTA, said Bieber, has been a “total trainwreck for Michigan” echoing Trump’s populist rhetoric as a candidate that the treaty was “the worst trade deal in the history of the world.”

Related: Modernizing NAFTA

Bieber said NAFTA needed to be rewritten “the right way” with: stronger labour rules with an “independent enforcer”; stiffer penalties for countries and companies that break the rules; a crack down on currency manipulation; tougher “rules of origin” to protect the U.S. auto industry; and “strong Buy American policies to support job creation here at home.”

Normally a state labour advocate appealing in a Detroit newspaper for a Republican president to take a hard protectionist stance would not merit much interest. But Trump’s populist anti-trade, anti-NAFTA rhetoric enabled the president to sway enough white blue-collar latter-day Reagan Democrats for him to be the first Republican presidential candidate to carry Michigan since 1988.

Trump captured the state after a halted recount and lowest margin of victory in Michigan’s history. He squeaked to victory by racking up votes in places like Macomb County, where, according to the Detroit Free Press, white, working class voters embraced his economic populist message allowing him to secure a country won by Obama in 2012 and 2008 by 12%, a nearly 50,000 vote margin.

And if anecdotal evidence is correct, those voters don’t care about Russia and believe media bias and Democratic “obstructionism” are to blame for the president’s lacklustre performance.

But as Jerry Dias, president of Unifor, Canada’s largest private-sector union points out, blue-collar voter may not stomach “a tweak and a little twist here and there.”

“There has to be a wholesale overhaul,” said Dias.

Related: Ford bypasses NAFTA, moves to China

Dias said over the past decade, NAFTA has cost thousands of jobs in the auto sector -- Canada has lost four vehicle assembly plants, the U.S. 10 while Mexico has gained eight. As a “perfect illustration” of the problem he pointed to General Motors decision to move production of the Terrain out of Ontario’s plant, along with 600 assembly jobs, and into Mexico.

According to a joint statement, issued by Canada’s Unifor and the U.S.-based United Auto Workers union, Mexican vehicle production has gone from two million units in 2008 to 3.6 million today; in 2018, it is expected to reach five million units.

Related: U.S. lobby groups take aim at Canadian copywright laws

The joint statement itself is a significant sign of forces mobilizing against NAFTA from the left and the Rust Belt. The Canadian Auto Workers union, which merged with the CEP to form Unifor in 2013, staged an acrimonious split from the UAW in 1984 (incidentally Ron Bieber’s father, Owen, was president of the UAW at the time.) But on July 12, Unifor and the UAW said they were joining forces for “major improvements” to NAFTA’s auto provisions.

The same day, Dias met with U.S. Commerce Secretary Wilbur Ross to talk NAFTA as well as the ongoing trade disputes regarding softwood and steel. Dias, who had met with Ross  just two months ago, said the commerce secretary “absolutely agrees with us.”

The two unions identified four priorities for NAFTA renegotiation, according to the Windsor Star: “raising wages and labour standards in Mexico; balancing trade; improving “Made in North America” rules; and ensuring workers in each country get a fair share of the benefits of the industry.

However, with negotiations between Canada, the U.S. and Canada set to start in mid-August, Robert Lighthizer, the U.S. Trade Representative recently told the Senate Finance Committee he hoped to see a deal completed in a “very short time frame.”

But the prospects of a speedy resolution to NAFTA talks -- and any concessions from Mexico -- look unlikely with that country’s presidential elections looming in July 2018.

And perhaps the only thing the frontrunner Andres Manuel Lopez Obrador would agree with Trump on is NAFTA needs a substantial reworking.

Obrador, a left-wing populist who is the former mayor of Mexico City, is leading the race to replace President Enrique Pena Nieto, surging on Trump’s attacks on Mexico, from the president calling Mexicans “rapists and criminals” to his plans to build a border wall to his crackdown on illegal immigration. He’s also benefiting from Mexico’s stalled economy, which is struggling, in part, from the uncertainty surround Trump’s rhetoric over NAFTA.

It means Obrador could become the first left-wing Mexican president since the 1930s.

Back in April, Obrador’s website listed as its top item the face he filed a human rights complaint against Trump.

"We do not want a relationship of subordination. We will not accept it. Mexico is a free, independent country — not a colony, nor a protectorate," he told a Washington news conference.
"Never will we subordinate ourselves to any foreign government."

Related: Make your own opportunities through NAFTA’s renegotiation consultations

If negotiations drag into early 2018, the Mexican presidential election will almost certainly forestall a deal until 2019 -- there is a five-month lame duck period in Mexico until the government is sworn in in December.

And the man known as AMLO and the anti-Trump told Bloomberg he can’t wait to handle NAFTA negotiations personally.

He plans to revive farms hit by NAFTA through subsidies -- because that’s what the U.S. does with its agriculture. Overall, he’s indifferent to the treaty -- Bloomberg wrote he “didn’t   appear too concerned about the possibility that the trade pact could break down completely.” He pointed out Mexico’s industrial output and exports have surged since the pact was put in place in 1994, but the country’s poverty rate has remained largely unchanged.

Nafta “didn’t hurt, but it wasn’t the panacea,” he said. “It’s not our salvation."

Related: NAFTA’s looming December shake-up

Things to Watch in the Week Ahead

"The sky is falling. The sky is falling," they cried, as equities plunged in December.  It is signaling a recession, we were told.  Instead, global equities have begun the year with a strong advance.  The S&P 500 gapped higher ahead of the weekend, extending this year's ra...

Markets Finishing Week on Positive Note

Overview:  Sentiment has improved since the volatility last month spooked investors and, perhaps, some policymakers.  Global equities are rallying.  The Shanghai Composite and the Nikkei are at their best levels in almost a month, while the Dow Jones Stoxx 600 is at its ...

The British Constitution goes down in flames with Brexit vote - Loonie Politics

  Theresa May just made history.  Not, as some think, by suffering a record 432-202 Parliamentary drubbing over Brexit.  By remaining Prime Minister regardless. With left-wing lunatic Labour leader Jeremy Corbyn putting forward a non-confidence motion, Tory MPs shuffled ne...

The Death of a Business Cycle

How do business cycles end?  In the US, conventional wisdom is that they are murdered by the Federal Reserve.  It is too slow to raise rates and then goes too quickly.  This view is espoused by numerous well-respected economists and policymakers.  President Trump's critic...

The magic numbers for your findependence nest egg revealed

The latest RBC retirement poll came out today and the one thing I like about it is that they put the emphasis on my preferred term of Financial Independence, as opposed to plain old full-stop Retirement. After all, just because you’ve accumulated enough wealth to stop working ...

Cornered in an Oval Office

Donald Trump has painted himself into a corner. Not an easy thing to do in an Oval Office. But Trump, with thin-skinned hubris and yet another hissy fit, has fabricated a ‘crisis’ to further his political agenda. Trump has threatened to declare a national emergency, insistin...

The big surprise

Since Christmas Eve – just a couple of weeks ago – the stock market has gained 10%. Preferreds are up. So are REITs. Investors who ignored the noise are seeing their portfolios being reflated after the Trump-induced hissy-fit of late 2018. The portfolio managers I take hot ...

In the age of Trump, Trudeau doubles down on liberalism

Say what you will about Justin Trudeau. I’ll start. It takes a special kind of chutzpah to sell yourself as an environmentalist who wants to tackle climate change while championing the construction of pipelines, the very machinery that perpetuates it. And it takes chutzpah (no...

Pharmacare ‘cost-savings’ should not trump appropriate drug use

Author: Dr. Nigel Rawson Cancer drug's use in retinal therapy has been linked with increased risks of stroke and death. Read more about Pharmacare ‘cost-savings’ should not trump appropriate drug use Tags:  pharmacare fair pharmacare drugs new medicines patient...

Trade Optimism and the Recovery in Oil Boosts Risk Appetites

Overview:  Optimism on trade talks between the US and China coupled with the biggest rally in WTI in two years (11%+) have helped keep the equity market recovery intact. The MSCI Asia Pacific Index rose today, the eighth time in the past ten sessions, while the Dow Jones St...