A bungled opportunity to fix NAFTA

Ford F-150 and F-350 pickups on the assembly line at the company's plant in Cuautitlan, Mexico, in Nov. 2003. NAFTA has led to flourishing trade and business competitiveness across North America, but hasn't done enough to ensure personal economic mobility or shared prosperity. Photo credit: BLOOMBERG FILE PHOTO

Donald Trump could have been a Canadian hero. He could have been a Mexican hero and an American hero, too.

Somewhere in his campaign bluster about NAFTA being a disaster (it isn't) and the worst trade deal ever (it isn't), there was a kernel of truth. NAFTA has a few missing pieces. It needs work. It has led to flourishing trade and business competitiveness across the continent, but hasn't done enough to ensure personal economic mobility or shared prosperity.

So the NAFTA renegotiation initiated by the Trump administration last year was a promising step. After nearly a quarter century, it gave all three parties to the deal a historic opening to tighten some loose screws, such as the poorly enforced labor and environmental standards that set an uneven playing field within the bloc, or the rules of origin for regional content, which leave too much room for components from China and elsewhere to sneak across North American borders duty-free.

Better wages and labor standards in Mexico would be good for Mexican auto workers, who are still unable to afford the products they build for the Detroit 3 and other automakers. They would serve as an important check on the one-way flow of manufacturing jobs from Canada and the U.S., and on companies that would seek to exploit looser safety and environmental rules.

Similarly, a deal on stricter North American content levels could have brought the alliance closer together, and formed a better defense against China's mix of virulent protectionism and opportunism.

These were the big win-win-win opportunities, from both commercial and political standpoints.

And yet, on all three sides, the parties come away with nothing. Less than nothing, actually, because while NAFTA remains in force for now, the spirit of cooperation among friendly neighbors that made it possible is in tatters, and now the auto industry is looking ahead to the kind of profound uncertainty that will kill investment and jobs.

European and Asian allies, meanwhile, have little reason to trust that the U.S. is interested in anything but destroying alliances and starting a war. Unless we're counting Russia and North Korea, the U.S. has few friends left. That's what happens when you set out to defeat instead of lead.

So this is not just a missed opportunity. It's a big step backward, and into the unknown. The outlandish and downright punitive demands of the Trump administration's NAFTA negotiating team have us diving into the mouth of a global trade crisis.

The president of the United States, like the red-haired character out of the South Park movie, wants us to blame Canada for this spiraling diplomatic disaster.

He must know well the movie's signature song, and its closing line:

"We must blame them and cause a fuss,

Before somebody thinks of blaming us!"

You can reach Krishnan M. Anantharaman at krishnan@crain.com

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