New NAFTA (NAFTAN) on Hold

U.S. Trade Representative Robert Lighthizer told the Senate Finance Committee he wants to shorten aspects of renegotiations with Mexico and Canada in the modernization of the 23-year-old North American Free Trade Agreement. Headline on the Hill after hearing this was “NAFTA Rewrite Unlikely to Happen this year.”

Lighthizer said “We’re going to have very short time frame, and we’re going to compact it as much as we possibly can.” He added, “There is no deadline. My hope is that we get it done by the end of the year [2017], but there are a lot of people who think that’s completely unrealistic.”

Negotiations of this order on completing a renegotiation of a trade deal could stretch for month, if not years. This is especially true for NAFTA as Mexico understands the politics in the U.S. and the advantage of holding back success for President Trump when he is politically eager for a new deal. I suspect some of this is behind Lighthizer’s testimony.

Lighthizer told Congress a drawn out process on NAFTA would not be tolerated. He doesn’t want a quick agreement if that means another bad agreement. “We’re certainly not going to have a bad agreement to save time; we don’t have any arbitrary deadline.”

Commerce Secretary Wilbur Ross told Congress he hopes an agreement could be ready by early next year [2018] and ahead of the elections.

Negotiations are set to start on August 16 and “we’re in the process right now of talking to negotiating partners about what the first day of the meeting will be.” I urge them not to begin by preaching U.S. economic losses since NAFTA began, because Mexico can certainly talk on the same topic.

The USTR is having public hearings this week to give groups an opportunity to present priorities for the re-negotiation. Interested readers should contact the USTR with economic concerns. The Trump administration’s re-negotiation objectives will be shared with Congress by July 17. Lighthizer said any final agreement on New NAFTA (NAFTAN) or Trump NAFTA (NAFTAT) will need Congressional support.

The US Chamber of Commerce and farm groups want a modernized deal, negotiated as quickly as possible to minimize any economic disruptions and uncertainty between the three nations. Labor wants a slower approach and greater modernization to provide “adequate” labor protections. This could cause re-negotiations to run into 2019. The Trump administration does not like this talk.

Some Democrats want a “complete overhaul” of NAFTA or NAFTACO. AFL-CIO President Richard Trumka said “it is time for the Trump administration to rewrite NAFTA the right way.” Message to Mr. Trumka: “It was time for President Obama to rewrite NAFTA “the right way” while he was president and did not.” NAFTA was a Democratic deal by a Democratic president.   

Jim Patterson note: GOP presidential candidate Ronald Reagan in 1980 called for a free trade agreement with Mexico and Canada. President Bill Clinton had to lobby Congress constantly to get the votes for an agreement on NAFTA. It took nearly 25years for Congress to approve the agreement.

Media is already reporting Lighthizer and staff are keeping renegotiations secret. This is not true. President Trump wants a better deal for the US than former President Clinton negotiated. I suspect Lighthizer and staff will make this clear when the real work on New NAFTA begins on August 16 in Washington DC with Mexico and Canada at the table. Negotiating parties from Mexico City and Ottawa agree with President Trump and Lighthizer NAFTA needs modernization. Washington could be a bit of a circus as groups hostile to any trade agreement take to the streets.   

Look for negotiations to revolve around big industries including autos, dairy, sugar, energy and e-commerce. The apparel industry was hurt by globalization more than NAFTA as textile manufacturing moved largely to Asian and Middle Eastern countries. US negotiators should not waste precious time on textiles, even if prodded by US Southern lawmakers. 

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In anticipation of Indian Prime Minister Modi's White House visit with President Trump, The Economist 24-30 June 2017 over imaged Modi riding an [economic] tiger with headline "Modi's India: The Illusion of Reform."

The Economist's editorial concluded "The prime minister is not as much of a reformer as he seems." It notes PM Modi "has also presided over an acceleration in economic growth, from 6.4% in 2013 to a high of 7.9% in 2015 - which made India the fastest-growing economy in the world."

While US, Western economies and China have an aging population, "India, by contrast, is still young. Over a quarter of the people joining the world's workforce between now and 2025 will be Indian."

The Economist concludes, "Mr. Modi's admirers paint him as the man who at last unleashed India's potential. In fact, he may go down in history for fulfilling India's best shot at rapid, sustained development. And the worries about a still darker outcome are growing."

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The Economist on a Shake-up in Riyadh advises "the new crown price should curb his impetuousness abroad and pursue reform at home."

Crown Prince Muhammad bin Salman (MBS) has wielded the real power behind King Salman, 81.. "No one would be surprised if Salman, 81, were to abdicate in favour of his 31-year-old heir [MBS]."

"Saudi Arabia must prepare its youthful population 970% of Saudis are under 30) for a fast-changing world in which they will have to work for a living. Oil is likely to remain cheap for a long time, the politics of religion are tearing at the region, and many Arab states have collapsed into civil war. Yet rule by a callow, hot-headed prince could be just as dangerous as stagnation under a gerontocracy."

"Intelligent, ambitious and willing to entertain new ideas, MBS show promise, but a worrying tendency to act rashly." MBS is "thought to be behind the diplomatic assault on Qatar" for what Economist says are "vague accusations it supports terrorism." Some Americans believe Saudi Arabia had a role in plotting the September 11,2001, attacks on the World Trade Center and Pentagon.

Ruling the Kingdom of Saudi Arabia in a changing global economy requires new thinking, innovation, ambition and the energy to lead.

In October 2016 the New York Times said MBS' rise "shatters decades of Royal Tradition." A law graduate of King Saud university, MBS is an accomplished pianist. He was critical of the Obama administration over its foreign policy approach to Iran. This may have led The Economist to call MBS impetuous, rash, etc. His elevation, during uncertain economic times, conflicts in the region and a growing sentiment among young Saudis that elder rulers are "out of touch" with a new global economy, is important and breaks Saudi Royal Tradition. Political traditions are being broken around the globe due to a global "out of touch" sentiment. 

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Dow Jones June 26, 2017 

Google Slapped With $2.7 Billion EU Fine Over Search Results The European Union's antitrust regulator fined Alphabet Inc.'s Google a record 2.42 billion euro ($2.71 billion) for favoring its own comparison-shopping service in search results. The decision could force broader changes to the way Google designs its search results in Europe because it sets a possible precedent for other search services, such as travel and maps, which the EU is also scrutinizing.

Jim Patterson note: If Google is in violation of EU antitrust laws, it most certainly must also be in violation of US antitrst laws. If Google is not in violation of US antitrust laws, then US lawmakers need to rewrite the damn antitrust laws. Google has unfairly blocked consumers from access to other search engines which do not sell their personal information to sophisticated web marketers. 

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WASHINGTON, June 26 (Reuters) - The White House warned Syrian President Bashar al-Assad on Monday he and his military would "pay a heavy price" if it conducted a chemical weapons attack and said the United States had reason to believe such preparations were underway.

The White House said in a statement released late on Monday the preparations by Syria were similar to those undertaken before an April 4 chemical attack that killed dozens of civilians and prompted U.S. President Donald Trump to order a cruise missile strike on a Syrian air base.

"The United States has identified potential preparations for another chemical weapons attack by the Assad regime that would likely result in the mass murder of civilians, including innocent children," White House spokesman Sean Spicer said.

"If ... Mr. Assad conducts another mass murder attack using chemical weapons, he and his military will pay a heavy price," he said.

Jim Patterson note: Intelligence is better now than when Barack Obama refused to see internationally prohibited chemical weapons used in Syria for fear of a broader conflict with Russia.  

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June 27, 2017

Following the overwhelming Senate passage of legislation on June 15 targeting Iran's aggressive behavior, the House is gathering cosponsors for similar legislation that would strengthen sanctions against Iran's ballistic missile activity and illicit arms transfers.

Iran—the world’s leading state sponsor of terrorism—remains the greatest long-term threat to Israel’s security and U.S. interests in the Middle East. Since the 2015 announcement of the Iran nuclear deal—also known as the Joint Comprehensive Plan of Action (JCPOA)—Tehran has increased its dangerous behavior.

The Iran Ballistic Missiles and International Sanctions Enforcement Act (H.R. 1698), authored by House Foreign Affairs Chairman Ed Royce (R-CA) and Ranking Member Eliot Engel (D-NY), aims to strengthen sanctions targeting Iran’s ballistic missile activity and illicit arms transfers. 

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• State Department: The department is continuing its hiring freeze while it finalizes its workforce restructuring plan, but a report from Bloomberg in late April said a preliminary version of the plan would involve cutting 2,300 jobs, about 600 of them through buyouts.

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