Transition official: Trump will not rip up NAFTA
Members of the Trump transition team are trying to tamp down concerns among corporate leaders that the incoming administration may spark trade wars with Mexico, Canada and other major trading partners over the next four years.
Anthony Scaramucci, a senior advisor on the Trump transition team, told a group of business leaders convened at a bipartisan meeting by the group No Labels that President-elect Donald Trump is a free-trader who is looking to make trade deals more fair, not scrap them.
“I don’t think we’re looking to rip up NAFTA as much as we are looking to right-size it and make it fairer,” Scaramucci said Monday. “He’s got a great relationship, by the way, with the Mexican president. They talk regularly,” referring to Trump and Mexican President Enrique Peña Nieto.
Scaramucci said part of his role with Trump’s economic team has been to study the impact of the North American Free Trade Agreement (NAFTA), which Trump has called “the worst trade deal maybe ever signed anywhere.”
“I don’t think anybody in the administration from the top to the bottom is looking for protectionism. We understand the economic harm and the impact that would take,” he said. “I don’t think anybody in the administration is looking for quote-unquote tariffs, but I think they are a cudgel, if you will, to lay out there if we can’t get the trade deals to be right-sided to now benefit the American people.”
Trump bashed Hillary Clinton during the presidential campaign for her husband’s role in crafting the landmark 1994 trade accord, which he said he would “entirely renegotiate” or “terminate.”
Scaramucci said trade officials have failed to use the “regulatory process or the review process” created under NAFTA to ensure fair compliance. He said the United States has lost about 70,000 factories since NAFTA was enacted.
Critics of NAFTA such as Vermont Sen. Bernie Sanders (I) charge the pact has cost more than 800,000 jobs, including tens of thousands in the Midwest, a region of the country that Trump carried in last month’s election.
The Congressional Research Service and other experts, however, have said the trade deal’s impact on jobs is difficult to quantify.
Trump has also promised to pull out of the Trans-Pacific Partnership, a centerpiece of President Obama’s trade agenda, on his first day in office. That agreement with 11 other counties, the largest in history, covers 40 percent of global GDP but has yet to be approved by Congress.
Scaramucci said the United States has in the past sought trade deals that made it easier for foreign partners to export goods to the U.S., rather than making it easier for U.S. manufacturers to penetrate foreign markets.
He added that the deals signed since World War II were designed to promote global peace and stability, but sometimes came at the expense of American workers.
“This economic interdependence has actually reduced conflict around the world. However, one of the deleterious side effects of this is that it’s hollowed out the manufacturing base of the United States,” Scaramucci said.
He said the Trump transition team is battling what he called a media mischaracterization of Trump’s stance on trade as protectionist or isolationist.
“Things get snippeted a certain way in the media and they get framed a certain way that he’s a protectionist and he’s against trade. I can state categorically that if he were standing here right now, he’d tell you that he’s a free trader,” he said.
Scaramucci said people “just need to understand the dynamic of these deals and where they put the American worker today.”
Trump warned on Sunday that companies that move manufacturing operations to other countries could face a 35-percent tariff on goods shipped backed to the United States.
“Any business that leaves our country for another country, fires its employees, builds a new factory or plant in another country and then thinks it will sell its product back into the U.S. without retribution or consequence is WRONG!” he tweeted.
At the same time, the Trump transition team has tried to reassure business leaders worried about major disruptions in the country’s trade relationships.
John Engler, president of the Business Roundtable, an association of CEOs from the nation’s biggest companies, said Scaramucci’s comments Monday on NAFTA were “very consistent with what they’ve been saying.”
“There’s been a lot of conversation, but I think they have actually been quite consistent about trade,” said Engler, who is a member of the No Labels advisory board. “They’re very committed to trade. They want different deals, they think they can get better deals.”
The president-elect scored a public relations coup last week when he convinced Carrier, the maker of heating and cooling systems, and its parent company, United Technologies, to keep 1,000 jobs in Indiana instead of moving them to Mexico.
Vice President-elect Mike Pence, Indiana’s governor, said Trump convinced Carrier to keep jobs in the state without leveling threats.
“He just asked them very respectfully to reconsider their decision to leave,” Pence said, recounting the telephone conversation he overheard between Trump and company officials.
Pence said Trump told the leadership of Carrier that his administration would create a better business environment in the country by cutting taxes, rolling back regulation and renegotiating trade deals.
Renegotiating NAFTA and other major trade deals has received scant discussion among Republicans on Capitol Hill in recent weeks as they have focused on other parts of Trump’s agenda, namely repeal of ObamaCare and tax and regulatory reform, which has more support from GOP lawmakers.
Senate Majority Leader Mitch McConnell (R-Ky.) noted to reporters after the election that Trump will have wide latitude to rework trade deals because the fast-track negotiating authority that Congress approved for Obama last year will still be in place.
Fast-track authority bars Congress from amending trade deals and puts in place an expedited process for ratification that requires only a simple majority in the Senate instead of 60 votes.
Another major trade deal hanging in the balance is the Transatlantic Trade and Investment Partnership being negotiated between the United States and the European Union.
EU Trade Commissioner Cecilia Malmstrom said the day after the election that it was hard to say what effect Trump’s election would have on those negotiations.
Updated at 2 p.m.