Trump war of words with big business over NAFTA escalates

Trump war of words with big business over NAFTA escalates
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President Trump renewed his threat to terminate the North American Free Trade Agreement (NAFTA) as the biggest business lobby aggressively pushed back in an escalating war of words between the two sides.

Trump bashed NAFTA during his populist campaign for the presidency, calling it a disaster for American workers, and has repeatedly called for severing trade ties with economic partners Mexico and Canada as part of a strategy to get a better deal for the United States.


"I happen to think that NAFTA will have to be terminated if we're going to make it good,” Trump said in a wide-ranging interview with Forbes released on Tuesday. "Otherwise, I believe you can't negotiate a good deal."

U.S. Chamber of Commerce President and CEO Tom Donohue is also ramping up his rhetoric as negotiators meet this week in the latest round of talks on the pact.

"Let me be forceful and direct," Donohue said during remarks on Tuesday in Mexico City. “There are several poison pill proposals still on the table that could doom the entire deal."

Donohue warned that Trump's threats to leave the deal are not considered bargaining chips in the complex negotiations between the three countries. 

"If the administration issued a withdrawal order, which requires a six-month waiting period, it would not be viewed by our partners in Canada and Mexico as a negotiating tactic," Donohue said. "Instead, it would abruptly slam the door on future negotiations because those governments have made it very clear they won’t negotiate with a gun to their head." 

Leaving NAFTA would probably leave Mexico and Canada with no other options but to slap higher tariffs on the United States and possibly pull back from cooperating on other major issues such as terrorism, Donohue said. 

Last week, the Chamber said several of the White House's proposed changes to the 23-year-old NAFTA deal were "highly dangerous" and have the potential to kill the agreement. 

"All of these proposals are unnecessary and unacceptable," Donohue said Tuesday. "They have been met with strong opposition from the business and agricultural community, congressional trade leaders, the Canadian and Mexican governments and even other U.S. agencies." 

The Chamber has been engaged in outreach with Mexico and Canada in an effort to build alliances on how the 23-year-old NAFTA agreement should be reshaped.

He said the U.S.-Mexico partnership is being "tested against the misguided forces of protectionism."

"Ladies and gentlemen, we’ve reached a critical moment," Donohue said. "And the Chamber has had no choice but ring the alarm bells."

To further get the point across, the Chamber sent a letter to Trump on Tuesday signed by 314 state and local chambers of commerce from across the nation, reiterating the benefits of NAFTA and insisting that U.S. negotiators “do no harm.”

On Wednesday, the powerful business lobby is sending NAFTA supporters to canvass Capitol Hill in support of an updated pact.

Donohue's remarks come a day before the ninth U.S.-Mexico CEO Dialogue, which aims to improve cooperation between the countries and strengthen economic ties. 

"Our free trade partners, in particular Canada and Mexico, are vital geopolitical allies in the fight against terrorism, transnational crime, and illegal immigration," Donohue said. "In these trying and complicated times, we must double down on these relationships, not drive them apart."

Trump told Forbes that he feels no obligation to honor the agreements from previous administrations, including free-trade deals such as the Trans-Pacific Partnership (TPP) trade agreement pushed by former President Obama. 

Shortly after taking office, Trump pulled the United States out of the TPP, a deal with 11 other Asia-Pacific nations touted by advocates as a means to anchor the nation in the rapidly growing region and provide a buffer to bad trade behavior by China.

“It [TPP] would have been a disaster. It's a great honor to have — I consider that a great accomplishment, stopping that. And there are many people that agree with me. I like bilateral deals."

The TPP was completed two years ago but failed to reach Capitol Hill for Congressional approval before President Obama left office. 

The Obama administration completed pacts with Colombia, Panama and South Korea, all deals that were started under President George W. Bush. 

The Trump administration has fired up talks with South Korea to revamp the latter deal, which went into effect in 2012.

As far as NAFTA goes, Trump has repeatedly threatened to leave the agreement but has so far been talked out of the move by the business community and top leaders in Mexico and Canada. 

Those conversations are likely to begin again this week with Canadian Prime Minister Justin Trudeau stopping in Washington on Tuesday and Wednesday. Trudeau is expected to meet with Trump at the White House before departing for Mexico.

The fourth round of negotiations starts Wednesday in Washington.