Business leaders express growing concerns about renegotiating NAFTA treaty, a key issue for trade-dependent Washington

Almost from the beginning, national and state leaders have expressed concern over the NAFTA treaty renegotiations. In recent days, they have been vocal about the potential harm to the economy. 

The Associated Press reports doubts that the agreement will make it through next year

Round 4 of NAFTA talks began Wednesday in Arlington, Virginia. In a sign of how contentious things could get, the countries extended the negotiations for two extra days, through Tuesday.

“What is the administration going to do? Are they going to be patient and work through these things?” asks Phil Levy, senior fellow at the Chicago Council on Global Affairs. “Or are they going to take this as a pretext and say, ‘We tried negotiations; they failed. Now we need to blow this up?’”

The economic repercussions could be widespread and deep.

Levy pegs the chance of NAFTA’s survival at less than 50 percent.

The end of NAFTA would send economic tremors across the continent. American farmers depend on Mexico’s market. Manufacturers have built complicated supply chains that cross NAFTA borders. Consumers have benefited from lower costs.

The AP story provides good context and is worth your time if, like many Washingtonians, your concerned about global trade.

The U.S. Chamber of Commerce has been particularly outspoken. On its website, the group has a “NAFTA works for America” page. The page outlines the benefits to American businesses and endorses a “modernization” of the agreement.

Trade with Canada and Mexico is a significant driver of U.S. economic growth, and with a two-decade record to examine, it’s plain to see that the North American Free Trade Agreement (NAFTA) has generated substantial new opportunities for U.S. workers, farmers, consumers, and businesses.

More than 125,000 small and medium-size businesses export to our two North American neighbors, and they are our largest export markets by far. Most important, trade with Canada and Mexico supports 14 million American jobs.

The business community welcomes the opportunity to update the agreement, and as NAFTA negotiations are underway, the U.S. Chamber understands that now is the time to modernize NAFTA.

Recent statements by U.S. Chamber president Tom Donahue, though, state clear concerns that the negotiations are headed in the wrong direction. Reuters reports,

Speaking in Mexico City, Thomas Donohue, the U.S. Chamber of Commerce’s president and chief executive, listed several U.S. proposals that he said would undermine $1 trillion in annual trilateral trade, including a “sunset clause” to force regular negotiations.

His comments marked the second broadside the chamber has launched against the Trump administration’s stance on NAFTA in less than a week. It has argued repeatedly that the trade pact is critical to U.S. industries such as agriculture and manufacturing.

The Wall Street Journal reported last Friday,

A war of words broke out Friday between the White House and U.S. Chamber of Commerce over the Trump administration’s proposals for rewriting the North American Free Trade Agreement, after the business group called the president’s agenda “highly dangerous” and vowed a corporate lobbying blitz to try to force him to drop proposals to significantly change the 23-year-old pact.

Last June, the Washington Council on International Trade wrote the U.S. Trade Representative outlining its “objectives for [NAFTA] modernization.” The letter began by describing Washington’s role in global trade,

Washington state is the most trade dependent state in the United States, with 40% of our jobs tied to international trade. From apples and aircraft to software, our state thrives on international trade. Last year, Washington state exported $14.4 billion in agricultural exports around the world. Around 50% of our potatoes and nearly 30% of our apples are exported. We export around $26 billion in services a year1, and over $70 billion in manufactured goods.

And described NAFTA benefits, including,

Since NAFTA was implemented, Washington’s goods exports to Mexico have grown 700 percent, while our exports to Canada have grown 200 percent, and the two countries are the top export destinations for many of our businesses. An estimated 330,000 jobs in Washington state rely on trade with our NAFTA partners.

Last month, WCIT president Lori Otto Punke wrote a Puget Sound Business Journal op-ed outlining the importance of both maintaining and modernizing NAFTA.

Because Washington state’s economy is so dependent on international trade, it’s critical that we preserve NAFTA’s benefits that support industries from manufacturing and technology to agriculture, retail and maritime. At the same time, we must update the trade deal to meet today’s challenges and those we will face in the coming years…

While we have seen benefits from NAFTA, trade has changed dramatically since the U.S., Canada, and Mexico first negotiated it. Ecommerce is a crucial element of international trade, yet there are few rules on digital trade in NAFTA, an area of major importance to Washington state’s large and small businesses, innovators and retailers. NAFTA rules must be updated to govern and support the growth of digital trade.

NAFTA modernization also provides an opportunity to streamline customs procedures, especially in Mexico, where there is a lack of transparency and where exporters often face delays and inconsistent regulations.

The year began with the scuttling of the Trans-Pacific Partnership. At the time, business leaders here called it a setback, but expressed optimism about the future of other trade agreements, including the then-upcoming NAFTA negotiations. Now, that optimism appears to be waning. That’s a concern for our trade dependent state.