Monday, October 16, 2017

Trump May Be Setting Up to Crush Free Trade

Jonathan Swan reports for Axios:
It's hard to overstate how concerned free-traders on Capitol Hill are about the current state of the Trump administration's negotiations on two consequential trade deals: the North American Free Trade Agreement (NAFTA) and the U.S.-Korean trade deal (KORUS.)

"We're all on collapse-watch," one knowledgable source told
me. Capitol Hill aides who work on trade are asking "when" not "if" Trump sends a withdrawal notice for NAFTA.

Trump's top trade negotiator, Robert Lighthizer, is playing such extreme hardball with the Canadians and Mexicans in his NAFTA negotiations, that sources close to the process say there's no chance of a compromise solution unless he changes tactics.
How big a deal is this? Swan again:
 Between NAFTA and KORUS you're talking more than $1 trillion in annual trade in goods and services. Withdrawal would do far more than simply roil the U.S. markets; it would profoundly alter U.S. alliances, test a crucial national security partnership in Asia, and could result in the election of a hard core leftist (and no friend to the USA) in Mexico.
Now, it needs to be made clear that  NAFTA and KORUS are crony trade deals that provide advantages to those close to central power. However, President Trump does not desire to end NAFTA and KORUS to eliminate the obstacles placed on trade by these deals but, instead, to put more obstacles in the way of free trade.

Trump is unpredictable so no one really knows what moves he will make but it doesn't look pretty,

Swan writes:
The next couple months will be crucial because Trump's patience — and Lighthizer's uncompromising asks — have struck immovable objects in Mexico, Canada, and South Korea. Something's gotta give.

For the problems with Trump's protectionist views on trade, see: Why Donald Trump Never Washed the Windows at Trump Tower.


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