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tv   Congress and NAFTA Negotiations  CSPAN  February 10, 2018 3:48am-5:24am EST

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>> good afternoon. welcome. thank you for joining us here today i'm a master of arts student here at johns hopkins university them north american freed trade agreement, or nafta, entered into on january, 11994. the agreement was signed by president george bush on december 17 of 1992 and approved by congress november 10 of 1994. excuse me -- 1993. nafta significant is because it was the most comp presentsive free trade agreement negotiated at the time and contained several ground breaking prognoses. the new generation of free trade agreement and also served as a template for certain provisions in multilateral trade negotiations as part -- this
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year congress will decide on what legislation to consider and to amend on the current nafta. there the will also consider the ramification offices negotiate organize withdrawing from na to how it will effect in the u.s. economy and foreign relations with mexico and canada. some contend that will draw from the tpp could damage u.s. economic leadership and other say it as a way to prevent potential job losses key provisions from the tpp may be addressed in moderrizing or renegotiating the nafta. which is at this point more than two decades old. some proponents contain that maintaining nafta or deepening economic relations with canada and mexico with he help promote common trade agenda with shared values and generate economic growth and opponents of the
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treaty argue the agreement has cost worker displacement. we are luck you have a such a distinguished panel here today. ... senior fellow at the director of the initiative and the americas
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program at csi s.. over 20 years of experience and an intelligence officer with the u.s. army for the u.s. embassy, barbados, germany and iraq and also the representative of the united states and the western hemisphere adviser to the under secretary for political affairs. senior research professor keister directed research at the automotive industry and a member of the advisory board of the mcdonald institute and law institute as well as commentator in regards to bilateral trade issues. to start off today's
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conversation, would you like to comment on how much congressional oversight there has been so far and whether the role so far in the negotiations? >> thank you for hosting this event it is a great pleasure to be here. the topic being held as congress deal with a lot of the coverage is about executive branch actions. they start to think about the endgame, the united states federal government has limited
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and enumerated powers and is in article one of the constitution that can be dealing with congress, so congress has the power to regulate the trade promotion authority but as a delegation of authority from the congress to the executive branch to do the work of negotiating the treaty. it requires a bill passed by both houses of congress so the endgame always deals with congress and because you are considering the congress the endgame is mostly some form of politics it can garner the
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support of the members so that is the endgame and it's important to think about. with the promise to renegotiate wasn't a compelling coalition in support of that and so you will recall when the president decided to launch and notify the congress most of the comments everyone was quoting the hippocratic oath please do no harm so there was a lot of resistance initially. the second element is the republican house, senate and the
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president there are things they want to do together and things where they disagree into their spin a tendency early on to focus on things that they want to work on together specifically tax reform. it's somewhat controversial. so now you are beginning to see heryou here february, 2018 you e beginning to see the hearings happening this week as the committee met with the ambassador and members of the republican side they had a meeting in the white house on
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trade. it's been slow coming for those of us wante who wanted to see it sooner. scott did a great job of the constitutional responsibilities of oversight. it started late and picked up speed in late summer and early fall.
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talking about billions of dollars and beat an feet and lof different products if they were to go away. you can connect the dots and have the committee process oversight and state governors calling the white house or calling congress saying if it goes away if we get into the trade for my state is going to be hurt badly and we will lose the seat in the state and sena
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senate. until last march when everyone thought the united states was about to end this with drawing and useful connectivity by the chamber of commerce and trade associations and individual states. they got in the act and realiz realized. they visited every state in the union. they've done a fantastic job. they've played a little bit of
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catch-up that they have done that as well. >> you were the one who inspired the panel and i think you ask the righaskedthe right question. i want to echo with scott miller and richard said as well for people that remember the trade policy history when they went to congress and asked for trade promotion authority, he was met by some bewilderment. what they wrote which became the bipartisan trade promotion and accountability act on the administration with so many
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conditions in strict deadlines that we have seen since 1974 that set up this fast-track process congress gave itself a bigger role because it wasn't sure where the negotiations were going to go in when they became president there was the question and the authority granted to the administration was still available to him and i think he felt he wouldn't get any more leeway than congress have given obama. you might think this is all inside based and it is to a degree. they've been faithful to their terms had announced things when they were supposed to announce
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them. i think what that reveals his seriousness about getting a deal and about congress's role. i think a surprise to many of us the issues congress cares about effect a number of states from georgia to washington and oreg oregon. we've seen concerns a little bit about the auto industry. they've been proactive in trying to engage talking to state statt
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someone but what's been interesting also is the politics there is always an accusation we have to fix it peace partners of ours are cheating at the beginning. it was going to carry on to the extent that it could. we've seen the case become quite contentious and go to the states some of you will remember the dispute the political dynamic started to shift into some started to ask why is he just beating us up all the time.
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they had to push back and they saw this weeks ago which is a challenge to the way the u.s. calculates penalties. specifically it deals with trade remedy practice that goes back to 74 before the united states. this is going to be a tricky aspect going forward but because it is a broader challenge. to try to step forward and defend the u.s. industry it's fascinating to me canada chose
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to challenge the u.s. trade law at the time that it's so important. it's a challenge to the way they pretend these walls so they are on both sides of this asking congress to do better. it's going to affect the negotiations that are ongoing themselves. anyone? will have to emerge. some group of industries and parties are going to have to take a look at the negotiations and to decide what they think
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about them in terms of the effect of their businesses and states and whatever the market may be. they begin to band together to form a set of coalitions that will be actively supportive of the congress. if you want to pass a bill in the house and the senate you have to do this work it off didn't it emerges after the negotiation starts, so the fact it hasn't shown up now is not a surprise. it supported the trade with
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korea so what has not emerged yet as a coalition in support of anything in particular in the united states. there is now a coalition to not screw up enough to. for 20 or so years, businesses and groups and firms across north america d-delta with it as a favor complete as they set up rules. nafta wasn't perfect when it started and it isn't today but we thought it was stable enough. usurp the customers based on that set of rules so a friend of mine works with the farm bureau into those international affairs, very important completion. so i asked what do they think
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about nafta. there wasn't a tab on the website of the farm bureau federation. now that problem has been solved so we have the coalition that hasn't materialized. they are making their voices known. there is no idea of what the final product might look like to garner the majority in the
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congress so that is the mystery why it's been difficult to predict the duration of the talks include the potential andl and the state might look like so we are behind the curve. not really because anybody ever asked for this. when it started last august will the trade representatives do their job and by the time you go to november or early december with three or four rounds by then, the mood in washington was dark and pessimistic because one of them had gone badly.
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the senior level peoplat the seh very good access were betting that we were going to walk which is sobering to hear that. i think the feedback has subsided in the past if there'se is now a general consensus that around while it didn't necessarily move the ball forward it also didn't collapse into the expectation they may show a little bit of flexibility on for things like the rule of origin but i'd heard that from a couple of people. the worst case scenario now is the negotiations after the round baby just go into dormancy until the end of 2018. so in that pessimistic period
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there is a lot of talk of how congress can block the administration. what was the governing trade a act, what lawsuits could be filed, it would've talked about the mechanisms to stop the administration but you don't hear that anymore and i think that reflects the united states isn't going to walk away from this unilaterally there will be some other solution that kicks in. there is almost no governing l law. something remarkable to me hearing from both of you.
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nobody wanted to be out front defending it. donald trump and his campaign helped to bring the voices of the critics we have been
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ignoring a lot of people didn't like that for a variety of reasons. but it's not the business community and beneficiaries of nafta back into the public square. so talking about how they affect their job. to have them come forward i think has been a nice side effect having taken this on board has decided they are open to changing it.
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donald trump captured the sense of nafta wasn't good but there isn't an agenda and there's a tremendous amount of flexibility. if he can come up with an agreement to satisfy the community and say it's a good deal or it's a better deal, fantastic deal, then i think he will be able to celebrate and if we are able to move forward with a broad base of support in the idea i think there will be a net benefit even if it comes with donald trump driving the car it's good we are engaged on th that. he saw this on tax reform.
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i am really working and going back. say we like this deal we are going to invest more it's going to make congress feel much more comfortable in the 2018 which it still could do. >> the issue has been used as an electoral issue and it's very complex and difficult to understand and summarize. how do you think that the privatization of.
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trade politics were amazingly stable as an outstanding book. it's called classical for commerce and the history of the policy and one of the points that doug erwin makes is that they are unstable for about a hundred years up until about 1980. if you go back and want to know
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where the industrial midwest was, in northwest ohio today to make automobiles in marysville big automobiles in marysville up the way from marysville and 18 a.d. it was the producer of steam locomotives much like in the wheat belt people grew crops in the financial services they were very important to trade in the beginning so there was a political geography so every trade agreement was essentially bipartisan and geographically specific so you are a senator from new york it doesn't matter whether democrats, patrick moynihan or democrat, trade was good for new york likewise south carolina you have strom thurmond and senators from south carolina
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because of the concentration of the payroll in the state of south carolina. now that all changed in three important ways. what happened is because of the information revolution all of a sudden the communication costs long-distance phone call new york to los angeles a dollar a minute. anybody with a third of the 1990 those that calls wha the calls y for long-distance today at the cost of electricity so this changed the way that you communicate and coordinate attacks and allow international spread so they need to plan transfers so that is a fundamental change. what that does is cost trade to the benefits and cost to be a oa much more micro level.
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it is no longer tied to geography is no longer a textile state. at the same time you throw company with headquarters in the south carolina and likewise you also have bmw and volvo in south carolina and now tim scott has a different view of how the politics of trade work in his state and his predecessor strom thurmond because of this change. it's more confusing it harder to figure out so it is a matter of political competitiveness and they never hold the majority between 1954 and 1994. there was political stability. we don't have that anymore.
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likewise we have a bunch of leaders didn't like the senate and decided to turn it into the house so we now have these tribal bodies of the legislature which is web-based politics of everything including trade. and this is the one almost nobody mentions where the party bases are in different places for democrats if the labor movement and the environmental movement, democratic voters more urban and they support trade, likewise elicited the chamber of commerce the more rural an and d are youolder your voters are the skeptical you are of trade so both parties are disconnected and combined first the weaponize
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politics into second, technology costs globalization to affect firms at a finer level and the party base. i can't really add to what's nafta has done politically. nafta is a greater political symbosymbolpoliticalsymbols in r has been in the united states as a reason for that it was the same year they entered the treaty so this might all of a sudden mexico joined the global economy and it really started skyrocketing after 1994 and you can see that it's obvious for anyone to new mexico before and
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after so what that means is it is their ticket into the industrialized world it's not just a trade agreement with political weight and significance of being in the ranks and that's why it's interesting they are in a campaign season and they are very strict so they are not campaigning but it's not a controversial subject used as a weapon and a full.
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he's done a favor in terms of its perception in mexico. they would see a gratifying of thit ratified thecountry is qui. if it hadn't been split between the democratic party and the federal liberals you might well have seen the election go the
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other way and rejected with so much fear that this agreement was going to transform the economy in a way that was americanized it. the fact that that didn't happen and then everyone was afraid the border was going to be erased and yet they grew more prosperous if the standards of living rose to sew this up for the openness and free trade, he had been a free-trade skeptic and seemed to be coming around before he retired the only of trade itself and openness also has been talking abou about a
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progressive agenda to advance inclusion for the indigenous peoples and others so it's changed the politics of trade for canada. i want to pick up something raised which is one of the more interesting stories we haven't begun to debate. that is something that they have shown in the generational gap over trade and many people who were bab baby boomers in their s and 50s when nafta came in they vote thei felt their econoc prospects didn't improve and many of them ended up feeling this way i and they voted for donald trump. they are much more cosmopolitan
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lowering the communication was much more fluid so because of that they tend to see openness has a value not only in the classroom but their lives as being a normal thing so the trick is you have a critique that is coming from an older generation but the people that you are building this for is the millennial generation. you need to build an agreement because the personnel losing their 60s and 70s retired they want a better life for their kids so can we come up with a nafta to plato that goes back to the old debate certainly when you hear the rhetoric that is what you hear is a net
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positive that sets the table for economic growth to provide opportunities i think if we can get to the latter you will see congress get on board because it not only makes the young voters happy that the older voters. mexico and canada have been trying to ask about the negotiations negotiating security and environmental issues into the social issues that haven't been negotiated at least not in north america again how do you see this affecting
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how the u.s. might want to ratify these coming from their trading partners? >> there's three basic areas of work. one that you mentioned is the modernization and certainly if you start the negotiations today you would have chapters on labor and the environment. that's what we do now. with 1994 there was zero commercial use of the internet and today the way that the young entrepreneurs and small businesses go in to it is electronically. the digital trade services are
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so powerful for the businesses that it can't be ignored so there are some modernization elements. so you still have that policy that's changed. we have three separate standards so these are modernization elements of intellectual
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property in canada and stalinists. and likewise they didn't get done in the original it is a group where things have changed substantially as the art that are the hardest to solve since almost the founding. have you seen the most improvement negotiated for the first time? >> what amazed me is the degree to which you need restrictions
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to be creative in the paper a great spur to innovation. the auto sector is very large and politically sensitive that goes back so it's north america the politics have always been big but what amazed me is in the original recall the big three were very much involved in the negotiations of the rules for the automobiles and they were specifically trying to harm their japanese competitors trying to solve the market and build a set of rules to match the supply chain that interfered in their supply chain what happened in the meantime they looked at the rules and said it's not that we can do that. so more vehicles will be
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produced by the automakers for the first time in history. everybody thought they were going to disadvantage the auto companies but what's really happened is the rules were stable and predictable enough to build their businesses around it and that has been an immense creativity and nobody really tested and you can't pu can puta piece of paper but that dynamism is the product we have today. he go got credits but i will say also one of the things that is interesting is to some extent we are being treated to an american way of doing business people preferred not to think about the
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sausage factory congress is if it happens all the time is when there's something that's popular in the movinand moving through,e wants to hitch a ride whether it is a war funding bill or a big-budget so you take issues that have nothing to do with the main project that you attach them as amendments and it isn't enough to get them through. it's certainly not the common practice and what we have seen in trade is trade support there is a lot of money on the table into the community gets behind it than people with other concerns have tried to define ways to tie their concerns to the trade agenda. so thanks to the clinton administration there was a feelinfeeling on the part of ord
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labor and the environmental movement the issues were completely ignored if it went forward without their concerns they would try to block it and find it and that made sense because they were concerned about the labor of growth if it helped nonunion fo firms. they felt like it was a stretch. it was built through to the core of the agreement, but what happened is more and more those sort of issues you wouldn't think are primarily related to trade at a seat at the table not
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necessarily because they are intricately involved in the north american trade but they realize this is it important ist enough maybe they can hitch a ride so for example the first nation communities which is what we would call aboriginal communities elsewhere, mostly remote and often not in the mainstream. they try to reconcile with the communities with years of dispute and so on so they added to whaadd upto what they would k about here. it is a practical matter when you talk about the politicization and how it's affected things and people realize it. a lot of forward.
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the shift people are expecting that the more people will say wait a minute and i think that is going to make what we think under the trade issue a piece of legislation to become more complicated. if i could add one thing from mexico's prospective and one thing that's nafta did it made them feel a lot safer. it was probably in the north where you had certain assembly factories and felt 20 years later they opened up the energy sector and the development in the last five or six years has been significant. most of it is natural gas through pipelines and liquid
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natural gas. they had a signing bonus. i don't think they would be thinking of that if they had achieved a level of investor security competence so that is one of the biggest side effects is increasing the confidence. they have some oriented leaders said they had no way to deliver the reform and they were not engaged in the world and nafta
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brought about not just free trade but there was no such thing as a notice and comment rulemaking. but in the administrative procedures act all of a sudden keep in mind that is not only valuable to the forerunner forey have to respond to the comment but what's important for the domestic purpose we had no idea whether they would be prior to this transparency so we are exactly right about investment into the security and what that has done for raising the living standards of mexico but it's a
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habit of forgetting how things might have been at this point. >> one of th >> one of the things the u.s. does we are willing to be the bad guy to put enough political pressure to encourage our partners to make different political positions to use good reform and i think one of the most contentious issues is canadian dairy. the idea to the limited supplies isn't particularly efficient that it is posted. it adds up to the canadians but with mexico leaves office we
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were willing to be a source of pressure to help reformers do something that might not be possible. it would be a place about how much support there is today because all sides of the political spectrum recognize that mexico is a different and probably a better place as a result of those forms. the pastor came out and said he would paper and i quote no nafta over a bad nafta. what do you think that he meant by that? >> his remarks go to a couple of things.
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if you like we will leave it alone going back to the do no harm. but if nafta disappeared we could go back to the trade agreement it would have to revise. they have a way to survive even this. it's to signal he isn't going to cave on the canadian interest, this whole dynamic they've been trying to engage with trump administration and put a lot of political pressure.
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they have a series about the deal and i think all of the pressure he needs to stand up to that criticism. candidate should have an election this year. they will be harbingers of what happened. he has to play politics and i think that he's recognized he may have been too friendly for too long and he needs to also suggest he has the ability to walk away is the u.s. congress
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concerned in the next year and should they be concerned next year? mexico is a transit point. to their credit they have been cooperative in trying to shoot that down in the u.s. security agencies and also very cooperative trying to stem the flow of central america in migrants.
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last year or the year before there were more detained. there is a feeling by some in mexico that they are doing the dirty work. potentially it would be at risk. he might say why are we doing this? so there's going to be a level of concern given some of his past statements and positions. but at the same time, i think there is a surprising amount of acceptance that that wouldn't necessarily be a disaster for the united states. they may try to overturn them.
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they could slow the process down so there is some concern. on the security cooperation that could be an issue problem if there's a different philosophy about going after the cartels that everything else they don't see this as an in-depth world scenario cyberpolicy community would deal with it. >> if you think of it in its simplest terms, we had elections in november and at least a third of the senate and every house member are concerned about and i also think it's one of the reasons the talks are more constructive than they were six months ago. so when they lost the most i think that there were serious
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consideration but lots of people involved he loses the ability to confirm judges and all sorts of officials. if you look at some of the states where they are facing the voters in november and trump when the state, north dakota would be the prime example. 78% of agricultural exports go to canada and mexico so nafta is pretty important and that may have a constructive effect on things as they go forward. the way the government is
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perceived in canada and mexico is this group in congress. they bring up the disputes that the voters care about. they say they are great friends and allies and we saw that under obama and george w. bush and so on and now it's unusual now that he is a combat and in the arena so there is no one in the politics profile to say the kind of things that and/or because they are missing something they usually get.
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if they are communicating with their colleagues. one of the interesting things they are doing a lot to talk to congress. i think in its own little way.
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they are a little bit domestic and foreign and i think that brings us something different than in the relations with almost any other part of the world. >> i would agree the canadian embassy in washington probably has more facts into things at their disposal than the relationship with canada than anybody in the u.s.. they can sit down in terms of the relations to the members of congress. it is impressive when you look at considering the concept. what they've done in the past ten or 15 years as a standard for how to do this job.
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>> i think that definitely plays a role if we have a fair number of congress staffers for the communications between the two bodies and even that the executive branch level is supposedly very good. the one statement if you think about it a couple of days ago were a week ago when the secretary of state was in mexico city at the end of their press conference the mexican foreign minister got a question about relations in the united states and he said, paraphrasing, but relationships are better now than in the previous administrations which is stunning if you think about they didn't have to say that so that comports with things i've heard behind the scenes for the
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mexican foreign ministry and national security council's. .. >> below that to the council of state and swiss regular interactions governors and premieres so the political class or the active politicians regardless of party had opportunity to interact with one another on a personal level there is
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something about politicians talking to politicians like doctors lawyers and professors they understand each other they know what the other person is about that has built a thickening of trust some of you will remember the book trust as the foundation of economic integration. and to credit those interactions but at the end of the day we like each other enough to do the right thing again. >> and would like to open the floor for any questions.
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>> it is called the poison pills because those industries in the united states are toxic and some of those have a review clause is there any coalition that you see supporting those poison pills? >> so far, no. that is is been one of the more disruptive elements they are usually pretty solicitous to seek the views of the congress. that is an astonishing professional. with a private audience of one. there was some tension in nearly days and with the u.s.
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administration tabled as they are headline demands is that sunset clause and then to withdraw with only six month notice if the numbers hadn't changed in five years than it would terminate. and with that balance sheet to worry about the idea to eliminate that dispute settlement made no sense why would you negotiate an agreement? that created a spectacle i have never seen that they could not explain the benefits to the united states when asked by the trading partners
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and without auto parts supplier executives flying into washington to tell their elected leaders they hate these rules and they will hurt their companies. it was poison for everybody there was one more but with that procurement proposal was we will by america so will canada and mexico that will be the headline. and why canada would accept a proposition for procurement escapes me but nobody really knows those or supports those but initially i interpreted them in that respondent way to create a narrative for withdrawal so the string of tweets announcing withdrawal would say but apparently
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things have changed we talk less when the poison pill was used in the last round in regard to the canadian proposal. so for me with that trade agreement at the end of the day i don't know how that goes into the coalition. >> we often talk about when nafta was negotiated with the e-commerce economy but also social media and one of the things that makes this negotiations fascinating is that trade negotiators always have outrageous proposals, going back and forth if i call that a poison pill but when
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the canadians characterize that shock and awe proposal as a poison pill with sends a signal people are concerned what the canadians intended that these are designed to force canada and mexico to come to the table. that leaves people concerned the administration was bound for destruction but i suspect they thought of themselves they were making an outrageous offer hoping for middle ground but the way that played out is not what that expected. now they use the rhetoric a poison pill is probably an unconstructive way on those issues like sunset to have regular meetings or the free trade commission we have done
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a number of updates without reopening the agreement over the years security prosperity and both beyond the border and regulatory cooperation council with mexico as well 21st century border commission but yet we take this negativity. we could beef up those ongoing negotiations but similarly they agree that proposal didn't make anybody happy at all but it laid out some integral parts will be have seen his auto companies
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suppliers because nobody understands the math, if the goal is to raise the rule of origin the only part that is higher than any trade agreement in the world then how do you do it? that is what you would hope for that will come out of the industry with government procurement maybe they will come up with something it is set-aside but with that dispute settlement i don't know where we will go it seems to thank you can resolve those of the domestic trade courts but canada and mexico the courts tend to favor the government so the way they
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applied the law usually expect them to side with the federal government. so it is skeptical of the government case. >> so maybe they thought this would sell. but in any event the poison pill and those bold and outrageous demands could be helpful that they started a conversation coming to a point hopefully have a deal that contains that element but the idea those are the outlines of the agreement will never happen. >> to your point of the
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security concerns looking more broadly at congress, do you think that the debate about immigration could be used how we talk about trade agreements are becoming more progressive if they could try to sneak something and if they spoke for eight hours and something like that happened within the trade promotion authority or is that not realistic? >> anything is possible you can't rule out what a member of congress would do but it is very unlikely to try to deal with something as politically contentious as immigration within the context of the trade agreement that just will not happen.
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again the hard-core faction of the republican party isn't just illegal immigration but legal immigration that is huge change of thinking and still the problem of immigrants who are here in the documented. to pull that into nafta negotiation i cannot see anybody seriously taking that sandal somebody make that speech? i don't think they would go anywhere. >> the original one was available to mexicans and canadian nationals for work on the u.s. it's there. not in its -- substantial numbers i learned this week they discovered this provision.
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look. we can talk about this for business reasons but if there is this official issuance it is immigration so for some reason through the lack of social media nafta actually did contain that provision of the only trade agreement and i know how it survives but the obama administration made a change to the rule making it used to be a one-year visa and it took a while see you have to apply six months into your first visa. and then the obama administration extended the term at three years and also did something quite surprising
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to extend the benefits so if you have a visa your spouse domestic partner has the right to look for work that is not true for h1b visa and your working age children have a right that also makes a big difference. one of the most generous categories intended for professionals or people going back and forth. i can give you a counterargument if i was running nafta why are not running for office i would like to see a debate of labor mobility. i can do vigil's changing -- crossing the border with that collaborative innovation but yet unlike europe or other places we don't have a particularly good favorability system in north america.
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but if we have achieved nothing else those ideals of nafta two-point oh or three-point oh and four-point oh but it was an agreement to last through the ages but written in a way that we did the best we could on the margins great ideas are out there but we cannot reopen nafta but if we get through 2.0 there is a potential we potential we can come back to the table in the future to talk about how we meet the needs of the economy. >> good point. >> in afternoon gentlemen. i am a student here. yorty answered this question so i will throw this out there. you explained nafta instituted many regulations personal
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businesses with positive circumvention with consideration within their respective states. if nafta were to read dissolve is there a danger that state so long as they didn't violate other terms of trade? or how does industry respond? is that powerful enough to self regulate in absence of the government? >> an interesting question. i will unpack a little bit. the way the u.s. does trade agreement you think it must be a treaty but it isn't it is in
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agreement with the legislature to translate into a statute they grant authority to agencies to go about rulemaking. so for example customs has a rule if your product meets the rule of origin you are eligible not to have a tariff. but regulation as an area of government is fascinating and very complicated. many regulations on the books are written because then industry really wanted to write the rules that favor the way they do business and giveaway competition from someplace else. that is the way we get very complicated counterproductive inefficient set of regulations in society.
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now nafta inspired a lot of people to see the benefit to harmonize their approach. it made sense for them to get rid of those barriers so this is particularly important in canada one of the things that is funny is that they don't have the same internal market structure with the trade barriers. it is a story going back to canada that we really don't that manitoba know something that is good for business in it that makes his lineup with
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québec to do something economically more efficient and some improvement i don't think industry would self regulate but at the same time businesses feel that regulation is their job they are always worried about the business down the street to cheat to get the advantage of you think that rhetoric donald trump has used but what animates his vision of other countries is the cheat and they don't follow the rules so he uses that language so in terms of regulation if nafta were to fall apart there is a concern with enforcement to make sure without nafta protections we don't have cheating but i hope it doesn't
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come to that. >> you would have a game going on if it were to go away even if they change no law or regulation doing their analysis they may curtail or forgo a new investment. now thinking the gloves are off who knows what will happen. they wouldn't have to do a thing that those expectations could change. >> at a practical level, yes after eliminating nafta what about trade restrictions? terrorists alone would go up so it isn't just a good idea it is the law. the heavier the object the more expensive.
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and hearing barriers to trade but for me, there is a worse option in terms of the commercial environment that is a zombie nafta neither dead nor alive because we are not committed to the existing nafta not all the way to 2.0 so that deters decision-making if you eliminated nafta companies could still make decisions you would know your commercial environment in zombie nafta you don't know. so our friends at toyota tell me the tacoma pickup is successful basically 100% capacity it is a great product they have to expand the facility. they sell everyone that they
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make. what do you do? zombie nafta makes that hard to solve. >> another example is one of the things what the environmental groups were concerned about to place after nafta. there were some mexican plants getting into the business of automotive paint you can imagine is very metallic with a lot of toxins you want that in the water or atmosphere. the use of magnetic process to get it into the car with a sophisticated set of rules and regulations meaning you have to close the facilities to have nothing harm the environment but mexico is not a place where it could be done. so some suppliers moved in and
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the mexican government said we are starting to see this activity but we have never seen this before. those conversations between regulators these are the minimums injuring those standards in so going to your question if we ended up with bad will between canada and mexico you don't have that opportunity to learn from each other to set those good standards. one of the things we never acknowledges to talk to each other to cooperate at a governmental level that is one of the benefits would lose.
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>> i have a two-part question talking about congress getting into the big administration you mentioned the audience of one do the americans know what they want? it sounds like a better nafta and things keep changing so what the hell? where are we today the other was to yank the conversation back to the title maybe that is a good way to end it where are we?
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>> good question. >> i talked to a lot of people with the government on all sides nobody has a clear idea what the endgame is yet. and nafta is complex. it is as if we have a very complex advanced military helicopter with technicians working if a politician says make it five faster. do you know what we are doing? [laughter] and in some ways the politics are disconnected from the actual operation because it operates as a set of rules that has this incredibly rich texture and ecosystem it is too complex to understand if
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you can't work on the helicopter you cannot explain to the politician so we do have that disconnect but we got into this because the president promised to do it. he wasn't the first candidate to promise to renegotiate have t to -- nafta even senator clinton and barack obama promised to renegotiate so the promise has been roundabout to do that with a coalition that understood general agreement of what needed to be fixed and a potential solution has never happened. because of that we have a mess we are in now. one of the easiest things to happen is congress to ignore
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this is the story of tpp the reason the trump administration could kill the transpacific partnership because the obama administration could not get that to congress and that is a fact. there is a lot of reasons for that but it is hard to get the coalition built you have to state clearly what it does and why that's good to make the political case and we are nowhere near that. i really fear the zombie outcom outcome. >> we had a couple of models. you are right very complex in front of the public that most of the american public will sit back and watch nervously and pass judgment once they see the results we had two examples going to different
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ways one was congress attempt to get rid of the affordable cac -- care act repeal and replace it is complex but affects daily lives directly or through their family and all the politicians went back and forth, none of those proved passable leave the public scorn on the attempt they were not talking about replacing it with something they said that is a good substitute if we go down the road of repeal and replace and it isn't very good it could keep scorn on those who push the idea how do you follow the rug and not give us something better in return? the other is like a tax reform bill getting into the weeds as
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the president propose that congress had to make changes just to get that coalition together. but when it passed, opponents were very critical the public seems very dubious about this and it seems people have come around we can live with that and some become more dizzy yesterday so does nafta to .0 like repeal and replace but survivable okay peace legislation? for most congressmen they would prefer the latter want
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to look like they did something good they're all looking for reelection whether this process can produce that i don't know but i'm hopeful. >> when candidate trump gave an idea time and time again to stand in front of factories that were about to shatter losing jobs to mexico in particular partly responsible for those jobs coming back that may actually address trump kept coming back to again and again so if the tax reform has that effect of manufacturing jobs back to the united states it could be that is good enough for trump. >> thank you. that is all the time we have.
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thank you for coming today if you have any questions please stay afterwards but thank you for coming. [applause] . . . .
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