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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The "Presidentials" from the 1976 GOP National Convention Jim Patterson

My President Ford Convention Staff Identification Badge

It was one of my several jobs at the 1976 GOP National Convention in Kansas City.

This was the political shootout between President Ford and California Governor Ronald Reagan at Kansas City's Kemper Arena. I was a member of The Presidentias, a national group of young Republicans who did much more than serve as cheerleaders for President Ford.  

At Gerald R. Ford Presidential Foundation event in Grand Rapids, MI.

Reading "Time and Chance," a biography of Gerald R. Ford, Washington DC

At the Gerald R. Ford Presidential Museum, Grand rapids, MI

With the Gerald R. Ford Memorial Stamp, Ford Presidential Museum, Grand Rapids, MI. 

In Jack Anderson's August 4, 1976 column, The Washington Merry-Go-Round, he announced the group as "Convention Cheerleaders."

"President Ford's son Jack recently sent out 10,000 letters to young, freshly-scrubbed Americans. He's trying to recruit 500 of them to cheer for his father at the Kansas City convention.

"Young Ford's letter offers them the chance to be "Presidentials." For this opportunity, they have to pay a $130 fee. They also have to pay for their transportation costs. (I flew Delta from Atlanta.) But once in Kansas City, their expenses will be picked up by the President's campaign committees.

"The "Presidentials" will be admitted inside the convention hall, Jack Ford promises. They won't actually be allowed on the convention floor, but they'll participate in rallies and demonstrations. Or, to use Jack Ford's words they'll 'provide the enthusiasm my father will need to win.'

The "Presidentials" should be easy to spot on your television screen. They'll be young, probably somewhat hoarse, dressed in red-and-white tee shirts emblazoned, 'President Ford '76."

Less than 50 words. Jack Ford wanted 500 participants. He got more than 1,000! The final count is based on my recollection and news articles from 1976 I located from other participants.

I am doing additional research.

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Jim Patterson Diplomat, Writer, Speaker,

Comments on a WSJ interview with Secretary Wilbur Ross on Trade 2017

Iowa's senior U.S. Senator Charles "Chuck" Grassley, chair of the Senate Judiciary Committee, and longtime family friend. Senator Grassley is also on the Senate Agriculture Committee and a close fried of former Iowa Governor Terry Branstad, the new U.S. Ambassador to China. Ambassador Branstad and Iowa's junior Senator Joni "Make 'em Squeal" Ernst were also at this Capitol Hill meeting of Iowa political and business leaders. 

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The recent Wall Street Journal interview with Commerce Secretary Wilbur Ross focuses on trade, China, NAFTA and more.  The June 18 article’s lead paragraph: “One of the most notable political trends over the past 18 months—and one with the potential to affect companies across many industries—has been voter pushback against globalization and free trade.” This “trend” against globalization and free trade goes back further than 18 months. President Clinton barely succeeded with NAFTA. President Obama gave up on the Trans-Pacific Partnership. The Office of the U.S. Trade Ambassador is the loneliest place in Washington at the time of this article.  

Selected quotes:

Secretary Ross: “Just about every other country in the world has more protectionist rules than we do. Take China. China has the most beautiful free-trade rhetoric. And those of you who do business either within the country or try to export to it know they are the most highly protectionist of the big countries. So this is nothing new. We’ve been in a trade war for decades. The only difference is now the American troops are coming to the ramparts for maybe the first time.”

Secretary Ross: “If I were an importer, I would beware of what happened already in the rare-earths [metals industry]. China is a very big supplier of rare earths, which are quite essential to many electronic products. They drove everybody in this country out of business by dumping, dumping, dumping, dumping. And guess what happened once they did? Prices suddenly went way up. And when they get angry with a country, they cut off the supplies. So long term, it seems to me, the interests of American businesses and of the president’s policy are totally consistent because there are no free lunches.”

On trade progress with China, Secretary Ross said: “The Mar-a-Lago summit, which I was privileged to be part of, accomplished a lot, and mostly all to the good. I’ll give you some examples.

For 14 years, American beef producers have been trying to get their product into China on an unfettered basis. In less than 100 days, we got it in. And that first beef will literally be leaving in about 10 days. The same is true for some other things.

Those were the easier deliverables. We’re now working on another list. We generally have two conference calls a day, one early in the morning our time and one late at night with the Chinese. That’s five, six, seven days a week.

The whole fabric of these discussions is different from prior ones. We aren’t interested in great long-winded debates and big ceremonial meetings and big proclamations that have no teeth. We’re interested in very specific, very tangible achievements. And we’re finding a very, very sensible give-and-take with the Chinese right now.”

Will the U.S. leave the World Trade Organization? Secretary Ross said this would be a radical step. He indicates, at present, he would advise President Trump against such a move. He does see the need of WTO reform.

Secretary Ross said NAFTA was “an obsolete agreement.”  He explained, “It didn’t envision the digital economy at all. Barely talked about natural resources. Barely talked about service, particularly financial services. It didn’t really address our economy or theirs the way they are today.”

The WSJ reporter asked how does the administration change NAFTA “without pissing everyone off”? Secretary Ross said, “We solved the sugar thing without pissing everyone off. We’re trying to solve some of the little disputes with Canada. Disputes are resolvable if people are of reasonable will and are willing to make reasonable compromises. We made some big changes with China. I don’t see them suddenly screaming and yelling.” This is a great response and the question is if Mexico and, especially, Canada are willing to make trade compromises.

Secretary Ross feels trade deficits do matter and he proposed ways to reduce them. “To the countries with whom we have the big deficits, like China, we are going to say: ‘Look, there are a bunch of products that you buy, some from us and some from other people. We’re your largest customer. You really ought to give us a little better market share. It isn’t going to hurt you to buy cattle from us instead of from X country or soybeans from us or industrial goods from us.’ So substitution of, or changing market share, would be one easy way to redistribute a bit of the deficit,” he said.

Secretary Ross then made an important and hugely realistic statement: “Because it isn’t inherent in free trade, in my view, that one country, namely the U.S., has to absorb the entire cumulative trade surplus of the rest of the world, and therefore eat $500 billion a year of deficit.” This is important because the size of the trade deficit, like the size of the U.S. federal budget deficit, have disrupted the U.S. economy and business decisions and have contributed to the vast income inequality, un- and underemployment, gig jobs, high rents, low savings rates, and other economic ills in the U.S. economy  that have disillusioned workers.

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On June 19, 1867, Maximilian I, emperor of Mexico since 1864, was executed by firing squad a month after being taken prisoner by the forces of President Benito Juarez. 

In 1917, during World War I, King George V ordered the British royal family to dispense with German titles and surnames; the family took the name "Windsor."

In 1944, during World War II, the two-day Battle of the Philippine Sea began, resulting in a decisive victory for the Americans over the Japanese.

In 1953, Julius Rosenberg, 35, and his wife, Ethel, 37, convicted of conspiring to pass U.S. atomic secrets to the Soviet Union, were executed at Sing Sing Prison in Ossining, New York.

In 1964, the Civil Rights Act of 1964 was approved by the U.S. Senate, 73-27, after surviving a lengthy filibuster.

2007 A truck bomb struck a Shiite mosque in central Baghdad, killing at least 87 people. President George W. Bush and visiting Israeli Prime Minister Ehud Olmert sided emphatically with Palestinian President Mahmoud Abbas in his standoff with militant group Hamas. 

2012 WikiLeaks chief Julian Assange took refuge at Ecuador's Embassy in London, seeking to avoid extradition to Sweden, where he faced questioning about alleged sex crimes. (Sweden dropped its inquiry in May 2017, but Assange remains holed up in the Ecuadorian Embassy to avoid arrest by British authorities for jumping bail.) 

Birthdays of Note: 

Nobel peace laureate Aung San Suu Kyi is 72. 

Author Salman Rushdie, author of "The Satanic Verses," is 70.