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tv   National Press Foundation Trade Workshop - Future of NAFTA  CSPAN  August 7, 2018 5:07am-5:59am EDT

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policy events in washington, d.c. and around the country. c-span is brought to you by your cable or satellite rovider. >> live tuesday on c-span, gavin williamson, the british secretary of state for defense, alks about the alliance. then we hear from reporters who worked on the harvey weinstein sexual misconduct story. on c-span2, the anniversary of the bombings of the u.s. embassies in nairobi, kenya, and tanzania, at 8:00 a.m. eastern. after that, a look at the health insurance costs. later, the american enterprise institute hosts a discussion on u.s. policy in southeast asia. that's live at 12:30 p.m. eastern. >> next, lori wallach talks about the ongoing negotiations
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between the u.s., canada, and mexico on updating the north american free trade agreement, or nafta, hosted by the national press foundation, this is about 45 minutes. >> the stuff that's in nafta and part of the reason the fights are so fraught and why so many groups who wouldn't think we have a stake in the trade fight, like consumer groups like mine, is because of what's actually in the agreements. number one, with nafta, the core provision is investment protections.
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this gets to the whole job outsourcing thing, and i'm going to explain what part of nafta ask that so you can know whether or not if they get the renotion done it actually fixes that, which is what president trump said he was out to do. and the second thing is a lot of the tax has nontrade issues in it. things like food safety standards, really behind the border policies thaw might be covering with a totally different agency when you're not writing a trade story is now being renegotiated in so-called trade agreements. so for just the basics, nafta was negotiated in -- it was signed in 1992, negotiated by george bush, the first one, and clinton inherited it, promised he'd change it, but didn't, and then made a huge push to get it through congress. he added nonbinding side agreements in a labor environment. it was passed in 1993, january 1, 1994 it went into effect. so this january it will be 25 years. and the frame of nafta really was a pretty radical change
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from all past trade agreements. past trade agreements dealt with tariffs and quotas, border taxes and limits on stuff coming in. technical fail hour. i'm really a charmer. maybe i shouldn't get on my plane this morning. i'm like a jinx. nafta was, as i said, much more expansive, and this gets for a very quick detour of how we got to this situation, which is, if you look at what we had for 50 years after world war ii, the so-called system, the gap that was the global trade rules, cutting tariffs, border taxes, limits on stuff. for the moment, we're not going to look at the other two. if you couldn't drop it on your foot, it wasn't on there. it only covered trade and goods. then you get the corporate globalization era, and nafta starts this. and you have all these new agreements. those are the w.t.o. vrgs of
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them, but in summation, it's service sector regulation, product standards for worker safety and the intellect, intellectual property, investment, and then also government procurement, stuff that had never been in a trade agreement. so you have the original trade agreements that were about quotas and tariffs, it was numbers. this is the text of nafta. it's 900 pages of behind the border policy and investment incentive. so when you start having a political fight about that, it becomes super controversial, because you're effectively writing policy that is normally done in state legislature or congress. you guys are covering it as an agency. but now it's building done with, number one, trade officials, not your experts in food safety. it's behind the border stuff that's subject to domestic policymaking rules normally, but it's being done behind closed doors in so-called trade negotiations, and the texts are
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secret, isn't obama administration, they've classified them, which is crazy. these are not the nuclear codes. and even congress was denied access to the tax for the first six years of the negotiations. so this is a "washington post" really cool info graphic bit of reporting that was done by howard schneider at the beginning -- in the middle of the t.p.p. negotiations. the blue dots are literally corporate -- are specific corporations, and their trade advisors. there are 600 total trade advisors, 500 of them represent corporate interests. the purple ones are the associations, chamber of commerce, national association of manufacturing. you can see it's mainly those guys. the yellow ones are academic, some of whom are on contract to the blues and the purples. and then sprinkled in the rest of that are 17 labor unions, two environmental groups, one partridge, one pear tree. no, there are a couple of state officials. there's a few other folks, but
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the vast majority is the corporate advisors and the press, the public, and to a large part, congress gets locked out. you can't see the tax. but they're rewriting side swaths of domestic law. i'm not going to go into this. the reason i put this in is you're going to get the slides. but instead of having your normal trade stuff, it basically has become these agreements, a delivery mechanism for a lot of other stuff. the bottom line is -- and this is a story-rich environment -- is packed into these agreements, you see all kinds of stuff that is probably even the opposite of free trade, like think of the patent rules. it's a classic protectionist, rent-seeking monopoly. the government gives a license to give a moan on which reply. that's the antithesis of what we expect in a free trade agreements, but there's expansions at monopolies. who's at the table matters. nafta and all the ones that have come since have the same basic model.
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it's not mainly about tariffs, and this is one of those things, just as a heads up, if at some point nafta renegotiations fail and president trump follows through and withdraws from nafta, which he has legal authority to do, because the nafta conflicting legislation has a living will clause that most people aren't aware of that lets a president basically take action, the implementing bill that approved nafta automatically terminates its first five provisions, so the authorization by congress goes away without another act of congress. were he to do that, just heads up, because you'll be tempted by the hysteria that will ensue to write something about tariffs will zoom back into place. since nafta was negotiated, the w.t.a. tariff cuts have gone into effect. so almost all of our manufacturing is duty free with very few exceptions. like trucks have a real tariff coming into the u.s., 25%. but mostly it's zero, it's really small. cars have 2.5%.
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agriculture is the nafta story if he withdraws. so just stick a pin in that if you have to cover it, for instance reporting for an ag state. agriculture, not all of it. corn will still be duty free. big myth. mexico's duty free for the world on corn. it happened at the w.t.o. a decade ago. but beef and pork, chicken, dairy, those are the things, if you are covering a nafta blowup, those are the things where it would make a difference. however, what is in nafta is all of these other rules. all of the agreements have a clause like this one at the bottom, which is countries shall confirm the con formity laws and administrative rules. that's a language from w.t.o., believe it or not, that's the most clear version of it that you get as compared to being in lawyerese. all of these rules, a country is required to con form its laws to.
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so the result is you have permanent enforceable rules. so like unlike any other treaty you might cover, it has its own enforcement system. if you break the rules of these agreements, you can have trade sanctions, or as i'm going to explain, you can be sued outside your courts, your government, by a spsk company or investor who claims nafta rights, and you have to pay the company from the treasury. they're permanent. it's not like the farm bill, which goes away every five years. there's no sunset. that is one of the big issues now on the neighborly nafta. should there be? hould it be not that somehow the nafta is permanent and legislation and presidents come and go, but the bottom line of how it works is because it's not subject to any amendment unless every country agrees and it never sunsets, you have this
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bizarre situation where this was negotiated in 1992. a lot of things have changed since it went into effect in 1994, yet it's been in place for 25 years, unchanged, because you would need consensus from all three countries to change a word, which is to say you can have governments change, you can have policies change, and this gets to serve this notion that it's sort of a cautionary tale, which is to be careful about using the term free trade to describe these agreements. because what's in them is not really even the classic theory of free trade. people envision the rolling in their graves if they ever got a look at the whole chapter that basically sets up intellectual property systems, sets up government-issued licenses, which, again, is sort of a classic rent-seeking tool. every now and then you get one of these officials to say
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something honest about what's going on in these agreements. i myself love the "financial times" quote about the w.t.o. being the place where governments go to collude in private against their interest groups. their interest groups would otherwise be the people trying to exercise democracy, like the unions, human rights groups, etc. so back to nafta renegotiations, now that we have a little bit of context, because otherwise it seems really confusing what the issues that they're fighting over. candidate trump said he'd redo it or get out. they gave notice to congress of intent to start negotiations, which is the first step under the fast track procedures. i put a couple of slides in we're not going to stop on that gives you the background of how fast tracks works, because that's going to determine the time line for the process. it's the procedure that was originally set by nixon that was reauthorized in 2015. under fast track, once there's intent notice, you have to wait 90 days, and then you can start, and the 90 days, they
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start on the 16th of august. that was in d.c. there have been many formal rounds where everyone goes to one of the countries. from the time of march through may, there was almost nonstop round of negotiations just hanging out in d.c. they were going to finish it by labor day. sorry, memorial day. now labor day. and they were very close. they had a lot of high-level meetings, and then canada just went missing in action in may. apparently during the longest final, we're getting it done, at some point somewhere in the canadian government, they decide they did notment this deal or a change from what they had. and they have a vision of, if we don't make a new deal, maybe we'll keep the status quo. i would say presue of coming attractions, that is not a good calculation, because i think the choice will be between new deal and no deal. but we'll see how it plays out, because canada now is rethinking that strategy.
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and that is -- just on fast track quickly, so the way fast track works is powers that normal congress are delegated in a lump sum. the result is this procedure is going to determine where the news hooks are. so you've got the 990-day notice done. the next thing to look for is the 90-day notice of intent to sign an agreement. there's enormous urgency with mexico. the incoming new amlo president administration, the president that was just elected on the first of july, the new resident, and the outgoing pin the owe administration both want a deal done so the current president can sign it. the new guy does not want to inherit this hot potato as the first thing he has to deal with. and in order for the current president of mexico to sign it, and the 90 days of extra notice before it can be signed to be gin to congress, the drop dead
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deadline, if you are covering this, if there is not notice to congress by august 27, august 27, there's not going to be a nafta signing this year, and so your story will be, hmm wharkt hell happens to nafta as negotiations roll into 2019, versus if they give notice any time between now and the 27th of august, then there will be a signing. december 1 is when the new mexican president is inaugurated, and they will find the time to do the signing, and then text will be locked t. doesn't go into effect until the vote is on it, because there are some other stops, ssuming they go give notice, so that would be next. on the 30th day after the notice, the usta must publish the text on the website. that becomes the first moment for the press, the public, policy, congress, to see what the hell the deal is. and so that's a plan for
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reading glasses some time on the 30th, and make sure your contacts lined up to find out what the hell it says. the i.t.c., the international trade commission, is required to do an assessment. that's the next hook. they have up to 105 days after the notice. it doesn't typically always take that long. they will issue a report that projects what it's supposed to do. all of that is to say, if they meet the notice deadline and give notice to signing by august 27, there still won't be a vote until 2019. they don't have time for the rest of the fast track process to play out so. as you're sort of scheduling if you have to cover this or colleagues are going to have to cover, it the signing would be the big issue now. the text will come out. maybe the i.t.c. study, that's this year's news. ould be early in 2019, but the implement implementing bill gets written bit white house. it's the legislation under fast track, just to go back, one of those powers is the power to write legislation t. doesn't go through mark-up.
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once the agreement actually is signed and entered into, the process can go really fast. that's the fast track part of the fast track. so basically the legislation gets written by the executive branch. they have what are called un-markups. it's sort of a ritual which are ways and means and finance, house ways and means and finance get to look at it, but their votes don't count. they can say we're amending the implementing bill. it's not at all binding. as soon as the bill goes in under fast track, there's a guaranteed vote in 90 days. it's like a legislative luge run. so the major nafta issues now outstanding, it's 30 chapters in the redone deal, so it's going to be bigger than this. the text on all but two of them is done, which is to say, they're on the press piss of a deal. the u.s. and mexico are much closer to a deal. that's because mexico stayed at the table working at a very
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high level pretty con stan the. the u.s. and mexico may very well, as soon as next week, announce a deal in principle, at which point they will say to canada, come on in, the water's fine. canada sort of has been thinking u.s. and mexico have really hairy issues to work out, which they do. it's not atypical that countries will work in pairs to get the harry things between them. and now that the u.s. and mexico may have worked those things out, then canada needs to come back in. the nontrade issues have been the stickiest ones, investment and labor standards, energy policy, government procurement, all these issues about access to medicine and patent duration, the whole fight over copy right, an issue close to home for reporters, and exceptions to them. there's a whole chapter on e-scommers whether or not it can be regulated. there's a financial regulation chapter. there's a whole set of issues around transportation and trucks. that's going to be a big deal
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if you report for a border state or have national coverage, because right now trucks can come from mexico that do not 100% meet the u.s. standards that was a nafta guarantee of access. there are even visa issues. there's the sunset clause issue i mentioned. there are some big trade issues, really there are five of them. the rules of origin have to do with how much of the con tevent a good has to be made in north america to get the treatment. dairy is canada and u.s. are having a fight. chapter 19 is a fight with canada also. it's a special sort of anti-dumping review panel. the u.s. wants it up, canada it in. seasonality, if you are reporting for a state that does fruits and veggies, there's a huelingts battle between florida and california on that one. it has to do with whether or not there can be special safeguards, and limits of futures and vegetables.
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california doesn't want it, florida does. and the de-minimus, which has to do what amount of values customs rules even apply. canada has one of the lowest standards in the world, $15. if you send a birthday present to canada, you've probably still got a customs force, versus the u.s. is $800. they're having a fight about that. the battle lines, so sort of wrap up and get to questions of where the fight is, so this is the odd, odd upside-down world of the trump era. the administration has trump having pledged to do two things. to bring down the trade deaf sirblingt the approximate nafta trade deficit, and to bring back manufacturing jobs, and both of those things are measurable. the every month the bureau of labor started stinks puts on the the manufacturing job numbers, and of month, it happened this morning, comes
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out the annual monthly trade data, and then right now it was the six-month data. so breaking news, because you may not have been able to cover that this morning, the six-month data shows that this first half of 2018, trump's nafta deaf sid, china deficit, and global trade deficits are up compared to the first half of his previous year, which was up compared to the first half of obama's last year. so the trajectory is up. so with that in mind, what is the administration trying to do? they're trying to get rid of the incentives for outsourcing, and here's the ironic thing. democrats in congress have been fighting with their own presidents about trade and about getting rid of the incentives for outsourcing in trade agreements since the original nafta fight. so most of the democrats in congress opposed their president clinton. why wasn't the t.p.p. never had the votes to pass? almost every democrat in congress was against it, because the t.p.p. had the same model as nafta, the same
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outsourcing incentives. so here are the things where the administration has actually proposed doing things that ironically labor unions, groups like ours, public citizen, and democrats in congress have been demanding those changes for decades. number one thing is to get rid of the outsourcing incentives. that involves getting rid of the investment protections. there's a provision called investor state dispute settlements. i have a slide on that. i left it in there for folks to dig into later. it's that mechanism that was so controversial in t.p.p., where companies are empowered, foreign companies get special investor protections, which they're empowered to enforce against the government, not by suing the government in our courts, but by going to tribunals of three largely corporate attorneys who arbitrate a case based on the nafta rules, not u.s. law, and can demand and order the u.s.
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to pay compensation, unlimited sums, to the investor, to the foreign investor if they don't get special privileges. so far about a half a billion dollars of that money has been paid out. the reason why it works as outsourcing incentives, it's like free risk insurance. normally if you were worried you might be treated differently if you went to mexico, you'd buy risk insurance. not just against -- but against strife, etc. it's expensive. this investor state stuff is free risk insurance. it's why the cato institute, free markets, don't want subsidies, says this should come out. it's a subsidy for outsourcing. we're happy, don't get a subsidy. and why the unions and the democrats are against that provision. the guy who's the trade epresentative is named robert. he is a very well experienced expert on the rules. so he has sat down and said,
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what do i do to change the agreement, to change the outcome? so removing those investor rules. nafta also has a ban on buy america or buy local procurement prncheses. so before nafta, for instance, general electric and its billion dollars of government contracts every year had to have the stuff made in the u.s. after nafta, 10,000 g.e. jobs went off shore. and those procurement rules, again, having nothing to do with trade, have been one of the key demands of changing the rules so you can use buy america. you can have domestic preferences, so purchases at the government basically put tax dollars back into jobs here. closing a loophole in what's called the rule of origin, so that basically now under nafta, products values, a third from china gets the nafta treatment. that's because the rule now is a 62.5 at the highest percent
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rule. the u.s. has gotten mexico to agree to 75%, but then what's really interesting and kind of hard to believe, just given the politics right now, it appears that mexico has agreed to a second-tier rule where of the 75%, a portion of it has to be made by workers making at least $16 an hour. the point of that is to reshore some of the investment. so if more of it's made in north america, some of it's still going to be made here. that's a very big deal if that comes true. remains to be seen. and then adding labor standards are enforceable. because the biggest pull factor of outsourcing the investment to mexico is the fact that manufacturing wages, they are down since nafta. people go into shiny, brand-new high-tech plants and get $1.50 to $2 an hour. it's now mexican manufacturing wages are now 40% lower than coastal china. the outsourcing draw is enormous. that's the pull factor. the first two are the push
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factors. the question is, will they get those done? they would get support from democrats and unions if they did. the sunset review is a mandatory review every five years, where the agreement has to be reauthorized to continue. the notion is, if we got it right this time and it's working, it will just get reauthorized. if it doesn't, it will force renegotiations quicker than 25 years, because you have to fix it to get it reauthorized. here are all the issues that are the u.s. position where the chamber of commerce, the business sector, the farm bureau, the republicans in congress support it, but the democrats and unions have opposed these things for decades. so this is the intellectual property chapter. there's a big push led by senator hatch to extend new protections, particularly with respect to what are called biologic drugs. this is going to be a big issue, so heads up. the question is what should the duration of the special protections be. it's going to be one of the last issues to settle this fight. it's one of the issues that
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delayed t.p.p. for five years. linkage is a technical issue has to do with who's in charge of enforcing patents. is it the drug safety agency? the other countries don't want that. and then patent extensions, it's longer time for generic competition and prices comes down. e-commerce, there are a whole set of fights that have to do with a fight between consumer privacy protections versus free flow of data. they want to lock in the no-tax policy, which, of course, brick and mortar shops, main street shops are worried about, because being e-commerce and not having to pay tax gives a real advantage. the chapter, if it's like t.p.p., could have a lot of limits on regulating in this sector, where those of who you cover this issue in congress know they're just starting to grapple with. how do you balance free speech, but not getting scammed? all of these issues are up in the air. the copy right issue has to do
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with the extent of extensions and the penalties. there's been endless industries that have tried to get rules where you criminalize small-scale noncommercial copying. you make every nafta country make it a criminal penalty, so you sort of revive this through the back door of nafta. not a lot of people know where that text is, so just heads up, that's one to watch. on food safety, there are a bunch of issues having to do both with what standard of safety is required and labeling, an issue to watch is equivalence. this is one of those stories where you can tell a story very vividly about how trade is more than tariffs. we suspect that there will be equivalent, which is that imports from mexico and canada don't meet our investors, but that get determined to be equivalently protected, to come in. that currently is the rule for meet under nafta. it could be for everything, and
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then regulatory coherence is a whole chapter the industry guys are desperate to get. it was in the europe agreement that obama was doing, and it basically lays out what procedures you have to use. you can go back to this. it explains what this is. but again, it's a really big hot issue, because the groups from the democrats in congress, they look at a half a billion dollars paid out to corporations in a tax on water and timber policies, toxic spans, energy rules, and think, oh, my lord, they alone can atact our treasury. from the conservative side, they say crazy subsidy to promote outsourcing. you want outsource that makes sense, the market will price that. that's part of your decision. just as a -- it's a rare list where you have basically
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senator elizabeth warren both thinking anything legal is a bad idea. in here are some of the cases, and in the packet of materials it explains where you can get more information. so very quickly, why has this become such a hot fight? it's because of the outcomes under the original nafta. so we saw the volume of trade increase, but the volume of trade increasing has not been even. we've seen a big deficit where there had not been one, and i'm going to jump to the slide so you can see it. before nafta, we had a small deficit with canada, and we had a little surplus with mexico. this is goods and services and goods. we have had an enormous increase, 191 billions in goods deficit, even when you balance in the services where we have a surplus, you have $158 billion deficit. more important is the growth in the deficit with our nafta partners is 43% faster on an
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annual basis than with the countries we don't have these kind of agreements with. that should not be the truth. you can even argue they don't matter. but the fact that you have the agreement and then the growth of the imbalance is much faster with the countries you have the preferential agreement with, lets you know something is not quite right with the agreement. the result is the department of bor has certified almost million jobs from the middle of 2017, which is the most current cat, jobs lost to nafta, specific jobs. up here, there's a flyer that explains how to use it from an order from 1997. we have access to all the raw data on the as the result feud job loss. at d.o.l., it's not searchable. you can see a list. we actually paid someone to program it so the raw data, you
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can search by the state you cover, by the city you cover, by the industry you cover, by what country it went to, by what year, by how many workers. you can sort it in any number of ways. there have been a bunch of really interesting data stories where people have mapped that data. we can provide you with all the data on a flash drive, so it's actual easier and faster to play with. but there's a lot of rich stories in that. unfortunately, it's a million people who lost their jobs to nafta as compared to the million we were supposed to gain in the first five years of nafta. that gives you a little bit of context to why people and half of the states in the u.s. are ripped about nafta and found trump and his attack on it, or for that matter, sanders, in winning over clinton in a bunch of those states, michigan, wisconsin, on a trade appeal, very appealing. so the biggest issue with the job loss, of course, is wages.
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it's a story a lot of people covered as inequality, but there's a lot of rich, interesting data that the bureau of labor statistics does that has how much at this point the loss in wages from our current trade regime outweighs the gain in cheaper stuff. that's the theory of trade. free trade is good, because cheaper enefits from stuff and only some people lose their jobs. the problem is if the downward pressure on wages across the economy overrules the benefit in cheaper stuff, then you got to change the rules. cheaper stuff and the last thing i will say, the damage has happened in mexico, the damage has happened in canada, and so president trump's notion, i would say, of e lost, they won, is not right. the question is, what are the rules? and the key set of questions shows you the trade deficit. the key set of questions, and this is where i'll stop for questions is, so far the
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administration has not delivered a lot on trade, which was key to trump getting elected. and so the nafta takes on a whole different political level f importance, and with the t.p.p., the thing was dead in congress, the outsourcing continues, it's happening under nafta, but broader. and the government contracts are still going to firms that outsource, we're just about to release an updated data story on that, so heads up. we can track that. who knows what's going to happen with china, but with nafta, you can withdraw, he may, but that's not going bring the jobs back. so that's where we are on nafta. it's a story that basically is blowing up right now. and a lot more data and information in the packets. >> it's time for 15, 18 minutes worth of questions. when we're asking the questions, cnn will be coming around -- i'm sorry, c-span
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will be hovering a mic over you, so just wait for that to come. any questions out there, let me know, and we'll go around the room there, ok. k. >> i have a couple of questions. one is, if the jobs won't come back, what will happen? does that just mean that manufacturing won't be importing their stuff, or as others, you mentioned the w.t.o., the regulating things, fine nafta disappears in terms , but what if the president withdraws the u.s. from the w.t.o. he's also indicated he's not very happy with that organization. >> so on the first question, if hey do that set of things that
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have been the demands, you would say from the left, from the day nafta passed, they will bring back jobs actually. particularly with the rule of origin as a matter practical. if you have a rule of origin that now requires 75% of the content of the good to be made in north america, an x percent of it to be made by $16 an hour wages, the biggest part of the nafta trade deficit is autos, and we've had a huge flux of auto zpwrobts u.s. to mexico from great u.a.w. wages, middle class wages, to $2 an hour in the same fancy, robotics, laser precision plans. and so what will happen, and what we've started to hear from the companies who are protesting this is that they will be forced to bring production, parts of production lines back. there will be delays.
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there will probably be a transition to answer that part of the industry's concerns. it won't be one day it's this, and one day it's that. they'll have a number of years, because they're going to have to bring production back to meet that new nafta rule. and the basic rule about this, if you're a rorg trade attorney, the way do you this has to do with how heavy and bulky a product is. so if you change the rule of origin on something really small, and it's easy to ship and it's light, then the actual transportation cost is not a big enough factor that you wouldn't just send it to china, for instance, and say, all right, i'll pay the tariff, but it's cheaper. in this instance with cars, which is the largest part of the nafta trade, you will actually bring investment and jobs back. so that is the answer to that. and on the w.t.o. question, so here are two pieces of that. the part of the w.t.o. that actually is the part that we definitely need is that little
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gap in 1947. that became one of now 19 agreements the w.t.o. enforces. there's a legal question about what happens were a country to withdraw from the w.t.o. who already was in the gap before, because as a practical matter, no country wants to be in a situation where any other country can charge them whatever the hell tariff they want. i mean, we're in the best position to weather that, because we're the largest import market. everyone wants to sell here. if you were a small country, you would not even think about that. so we wouldn't be totally sunk, because too many countries couldn't nail us for the long term, because they need our market. however, would the gap remain, were that to happen, number one. and number two, would it be possible given the legislation for the w.t.o., which doesn't have the living will clause for a president to do that unilaterally. the nafta implementing bill is unique that way. if anyone wants to dig into that, article 107 has a living
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will provision that is not in the w.t.o. so. there would be a legal fight were the president to do that about whether or not he has the authority unilaterally without an act of congress to do that. but also, there is the question about whether the part of it we want, the little gap, would still in some way be in effect vis-a-vis trade partners in the u.s. it would get rid of all the other stuff though, like the intellectual property rules would go away, but maybe the ariff cuts would be there. >> what's your view about why the white house is taking that on so strongly? obviously as a campaign promise, but there are other campaign promises that once they're in the nitty-gritty of policymaking go away. why that turnaround? >> so i think that there are probably three reasons. one is practically those investor rules in nafta are an incredible incentive for
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outsourcing, and the administration's goal is to try to reverse thosen? tizz. it's one thing if a company decides to make it here. there's another thing if there's a push factor that's telling to you leave when that's not the goal of pushing jobs out. so that's number one. practically, it's one of the few things that will make a big difference. that, getting rid of the buy america ban, raising the rule of origin, and raising labor standards. you have to do all four things, and you can change the dynamics where investor happens and where the jobs are. you miss one piece of those, you're not going to solve -- you're not going to reverse the incentives and trends that nafta created. that's number one. number two is, the part of isds, the notion of foreign companies, multinationals being able to go around u.s. courts and go to a tribunal of three private sector attorneys and having the u.s. treasury have to pay out cash, not ordered by a u.s. court, but by three
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random people who, by the way, the rules allow them to rotate between in one case suing the government and in another case acting as the judge and they can be doing both at the same time in the same time period. ixnay for conflict rules in courts. so that is from a progressive perspective, a huge threat to environmental labor and other -- from a conservative perspective, that is a sovereignty outrage. if you look at chief justice roberts about why it's bad, he just says how would we delegate away our right to decide when the u.s. government gets sued, what rules the u.s. government gets sued by, and who decides where treasury money gets paid out to other companies. that's something that should number our courts. that's something we should have an adomestically to review from. senator elizabeth warren's perspective, it's a democracy
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issue. and when you put those together, it becomes an issue that pretty much across the -- i mean, there's a letter that was -- it's in your packet, actually, that has 300 law professors and economics professors who are all nafta t.p.p. supporters but for a handful of them, saying this is just an abomination, intellectually and systematically. and then third issue is i think a pragmatic defensive one, which is when it was first created, this scope of the rules was narrower, and the kind of things that were being ordered for payouts were smaller, and the tiply can thing that would happen is a government, where there wasn't a good system, would nationalize an oil well, and this became a place to get the money back, and no one has a problem that. there's a system like that in a new nafta, compensation for expropriation, no one would complain. the problem is, in nafta and beyond, all these other crazy
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rules get added so that there was almost a right to be compensated for regulation changed. i mean, right now under nafta case, it was decided last year canada is going to be on the hook for tens of millions of collars for doing environmental impact statement on a mine, and their system is almost exactly like the u.s. one. so i think there has been a growing fear the state department defends these cases that at some point we're going to get hit with a really big one. and when the keystone x.l. case was filed for $15 billion, i think that made everyone's blood run cold in the u.s. government, and across the board, they thought, one of these huge ones could hit us. germany has had to pay billions to an energy company. developed countries are now starting to pay out. i think there's a general defensive oh, my god, political grenade as well. >> is that strong enough? the forces that don't like it,
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which is a lot of the speakers that are going to be here later in the day, that's lot to line up against for political administration, so that's an ideological grounding and why it's bad, is it strong enough to overcome the political pressure from all these big industry groups, all these big -- >> i think it's a combination of the ideological sense, but the political point i just made. i mean, president trump is so far out on a limb that he can't see the trunk of the tree on the trade issue, because he made very explicit promises. he was going to bring down the trade deficit quickly. and he was going bring back manufacturing jobs. each one of those points is measured every month empirically. so if you want to do that, and you look at nafta, there is a way to do that. there are four things that must be done. you fail to do any one of those four, you will not do that. you probably also need to do
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the sunset to really do the job, but the four big things, one of them is getting rid of investment incentives, and if you do not get that out, he is going to fail in that thing that won him those key states that put him in the presidency. and i am sure that political otivation is powerful. >> we only have five minutes of questions. and if you could just tell us your outlet before you ask a question. > "houston chronicle." where are canada and mexico on isds on some of these issues? are they in agreement with trump? it seems like they have some of the same tires lose, canada especially. >> so on isds, it does appear that there has been, there was already an agreement some
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months back that -- let me step back. the u.s. original proposal on isds was called an opt-out proposal. that's the last one you'll see covered in the press, unless you read something like inside u.s. trade, a subscription publication. the proceed wolf originally was any country that wants in can be in. the u.s. is opting out. by the way, we're changing the rules and getting rid of all these rights. the only right you're going to have is for compensation for expropriation. which, again, not a problem. compensation expropriation of real property, ok, so be it. mexico came back to the u.s. and said you're getting out, we can't be in if you're how the. how can we say we should be in? we're the ones who paid $200 million because of your damn companies suing us. so mexico said i guess we're opting out too. ironically, canada, the one progressive government, the other conservative governments, canada was miserable. we have no one to isds with.
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you can't do it by yourself. you have to have another country in. despite the fact they're the progressives and should have been the first ones to bail probably, they basically had no isds partner so. then the next sort of state of affairs was, well, if none of us are in it, should we just take it out altogether? and that is where the debate sits now. either in practice there's going to be no isds, because no one is in it, and the old rules will be narrowed, or they'll just whack that altogether, because the u.s. and mexico basically drew the line. and understandably, for the u.s. and mexico, what's peculiar is canada is the number one isds paying out losing developed country in the world. germany is second. they are by far in the worst situation. so why they wouldn't want to be out is highly mystifying, because there are lots of other ways you can do investment protection. like if a company, for instance, wants to go to mexico and get oil or gas, that's a risky business. if you think about it, mexico
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has a path of nationalizing that sector. there's a new progressive president, so you get scared and wonder what's going to happen. i get it from the business side. then you do an investment contract with the government, and in the contract, it says if we have a dispute, we agree to arbitration in this place, and you put that in the contract. you don't need open season on all laws to open ended isds on the shelf. and that thinking is not permanent ated in canada, but they have no one to isds, so that's where it is. >> does it matter what they do? >> i mean, i feel there's some certainty that one can say isds is a practical matter is out of nafta. and the question then becomes, you know, there is a difference. i mean, you're from houston. i would imagine the oil industry would like to know if they're actually expropriated, which has happened in mexico in the past, that they would have a way to get compensation. that is what the pro-isds
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forces say. we just need this for compensation. but that's not what it's about. it's been -- there's been a huge attack on domestic progressive policies using isds. so if the language is in there, it's basically calling the bluff of the folks who have said that's what they want, and now they have that. they have to change the procedures as well. t can't just be the same three corporate tribunalists. but if they put that in, that might be something folks in houston would want to know. and that seems to be what they're talking about now. > one more question over here. >> do currency issues ever come up in negotiations? i've heard a number of industry groups say it's effectively a tariff against exporting from the u.s. to mexico, because peso is so cheap. it doesn't seem like it's part of nafta, but maybe sort of is involved in the negotiations. >> the answer to that is, there
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may be currency language in nafta. originally the plan was, and the u.s. trade representative said this, to use the nafta talks for cuns a intense a tense issue, to try to get a plan as a model, so that then down the road, if there were negotiations with a country for whom it is a big deal, instance, if the korea deal got further negotiated, or if there was an agreement with japan, on or there's a deal in currency with china, that they would have the model down. but i have not heard much about where that's gone, and that hasn't been one of the issues that has been considered sort of a hot-button issue. this is sort of that slide is the set of issues that have been the hot button issues. there's a ton of other stuff they're negotiating, and one of those issues is currency. but it has not not come up as a big deal. these are the ones that have been the ones that you will hear eventually, oh, they couldn't get a deal this week
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because of -- it's going to be sunset. it's going to be one of those. >> i want to thank you very much. >> thank you. [captioning made possible by espn, inc.] >> want to understand the sort of transformation of trade agreements from tariff and nontramb agreements, grab the book. if anyone wants, i actually have to say this, i was going say, give enthuse hard copy. but i can't. >> grab the handouts up here. our next speaker from georgetown law center is already here, and she'll be starting at 10:40, grab some of the materials right there, take a quick break. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2018] >> c-span's "washington journal," live every day with
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news and policy issues that impact you. coming up this morning, george mason university's richard discusses vulnerabilities to america's electric grid and pipelines by actors. issue one's meredith talks about her group's new report all expensed paid, which looks at loopholes federal lawmakers are using to pay for personal expenditures. be sure to watch c-span's "washington journal" live at 7:00 eastern this morning. join the discussion. >> the former executive director for the state department's advisory commission on public diplomacy recently reflected on the challenges of getting information to foreign and domestic audiences. posted by the university of -- hosted by the university of southern california annenberg center on communication, leadership and policy, this runs one hour.


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