Trump's 'America First' agenda undermines U.S. economic leadership

Updated 2017-08-23 11:33:57 Xinhua

Though it is unclear whether Mexico, the United States and Canada could strike a deal by the end of this year on rewriting their trilateral trade pact, it is tenable to say the "America First" agenda promoted by President Donald Trump will undermine the U.S. regional and global economic leadership, experts warned.

The three North American neighbors Sunday wrapped up their five-day Round One renegotiations on the North American Free Trade Agreement (NAFTA)that removed tariff barriers and led to tripling of trade among them over the last 23 years.

Sunday's joint statement offered no details on the initial talks, but negotiations are likely to become increasingly tense and difficult over the next months as the Trump administration pushes its "America First" agenda and pledged "Buy American and Hire American" during the talks.

FUTURE TALKS COULD BE TOUGHER

NAFTA can "probably be revised and improved" in a "relatively short timeframe" if the three countries are dealing with "additional areas that are up for renegotiation," like labor standards, e-commerce and intellectual property, Robert Salomon, associate professor at the Stern School of Business, New York University, told Xinhua on Monday.

However, there are certain areas where the United States, especially with the Trump administration pursuing the "America First" agenda, will find "much more difficult" to renegotiate with Mexico and Canada.

"The toughest issue I think will be dispute settlement under the agreement," said Edward Alden, a senior fellow at the Council on Foreign Relations, in an earlier interview with Xinhua.

A dispute-resolution mechanism under Chapter 19 of NAFTA, which allows Canada and Mexico to appeal countervailing and anti-dumping duties imposed by the United States through independent tribunals that have often ruled against Washington rather than through judicial reviews in U.S. courts.

"The Trump administration wants to eliminate that mechanism. Both Canada and Mexico see it as tremendously important because they believe that otherwise they could face arbitrary restrictions on their access to the U.S. market so that will be a very hard issue," Alden said.

Another difficulty would be government procurement, he said, as the Trump administration wants to expand "Buy American" rules for it.

NAFTA prohibits preferential treatment for American companies when they bid on U.S. government contracts, with a similar restriction on Mexico and Canada when dealing with their own government procurement.

"Canada and Mexico want more opportunities for their companies to sell to governments in the United States. That will be a very difficult issue too," Alden said.

"After all, it is a free-trade agreement. It is not a trade agreement with trade barriers, and so if the trump administration tries to push that protectionist agenda, I would expect Canada and Mexico to push back rather strongly," Salomon said.

Talking about the "Buy American" policy, Canada's Foreign Minister Chrystia Freeland said recently that these buy-local rules were poor public policy, driving up prices, resulting in worse infrastructure, and harming the economy

"(It's) political junk food -- superficially appetizing, but unhealthy in the long run," she said.

TEST FOR TRUMP'S DEAL-MAKING SKILLS

Alden noted that the three countries probably will have a new NAFTA, but the question will be "whether the outcome is politically acceptable" to President Trump.

"If you look at the negotiating objectives for the United States, most of them are quite modest and reasonable. There are some difficult issues but President Trump has already moved a long way to soften the positions he took in the campaign," he said.

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