The Wall Street Journal reports Trump Aims to Model New Trade Deals on Revised Nafta.
> U.S. Trade Representative Robert Lighthizer called the new North American trade deal a “paradigm-shifting model” of American policy that sends a tough message to the rest of the world.
> The underlying principle, as Mr. Trump himself said in unveiling the North American accord this week, is that trade partners should consider it “a privilege for them to do business with us.”
> Whether the Trump team can replicate the new pact’s terms elsewhere is unclear. The White House had unusual leverage over Canada and Mexico with its threats to blow up a quarter-century-old pact that their economies had come to depend on.
}The EU and Japan have no such existing trade pacts with the U.S., so have less to lose. Indeed, they see their own burgeoning free-trade-zones—an EU-Japan pact that doesn’t include the U.S. and the 11-nation Trans-Pacific Partnership from which Mr. Trump withdrew the U.S., both taking effect next year —as giving them leverage by putting U.S. exporters at a disadvantage.
> But the Trump administration seeks to add clauses in future deals that allow the U.S. to withdraw if a trade partner forges a separate deal with a “nonmarket economy”—a clear reference to China. That could force Britain to choose between Washington and Beijing.
Three Delusional Ideas
- Trade is a “privilege”
- Countries will accept terms with the US that demand other countries to not trade with China
- USMCA is a “paradigm-shifting model”
On October 1, I mocked the notion of point number three in Trump Hails “Single Greatest Agreement Ever Signed”
What did it do?
There are two ways to look at things.
- It prevented an absolute tariff disaster
- Hardly anything at all
Both viewpoints are valid. Canada is the US’ largest export partner and Trump came remarkably close to blowing up trade with Canada.
However, the revised deal is nearly identical to NAFTA. It hardly did anything at all.
That was not only my conclusion but that of WSJ writer Greg Ip as well.
Limits of America First
On October 3, Greg Ip penned New Nafta Shows Limits of ‘America First’.
His opening gambit was nearly identical to mine.
> To free traders, the new Nafta is a bitter pill to swallow. It introduces managed trade to autos, waters down the foreign rights of corporations and normalizes national security as a pretext for tariffs. Many of its improvements, such as on intellectual property and labor rights, were already in the 12-nation Trans-Pacific Partnership, from which President Donald Trump has withdrawn.
> But the verdict is different when judged by a different standard—how the world’s trading system survives the most protectionist U.S. administration in memory. ….
> n the end, the new U.S.-Mexico-Canada Agreement looks a lot like the old Nafta. Mexico’s only significant concession was on autos and parts: rules requiring more production in North America, higher wages for workers, and potential tariffs if its exports to the U.S. exceed 2.6 million vehicles.
> Yet these auto rules may have little practical significance.
Greatest Single Agreement
So here we are: Trump Hails “Single Greatest Agreement Ever Signed” a deal that does nothing, but at least it didn’t destroy anything and everything.
That is the new standard for “greatness”.
One of my readers cleverly phrased it this way: “The art of the deal is more important than the deal itself.”
Mike “Mish” Shedlock
“Hardly anything at all” is better than nothing at all. The improvement for dairy farmers alone is worthwhile, and the labor provisions will make our products more competitive, especially with Mexico. Reviewing the agreement every six years is also an improvement, as is the country of origin improvement. Without Trump we would still be in reverse. Before we can climb out of the massive hole of corruption, you first must stop digging.
The so called “deal” with the Diary industry comprises a very minuscule portion of the total trade between our two countries, so cannot be considered in any assessment of the overall “improvement” the new treaty represents over NAFTA. Furthermore, in regards to the changes made to that inconsequential portion of which Diary comprises, it might interest you to know that the duties Canada levies on diary products remains unchanged. Yes, those 300% duties remain the same – ’cause a government subsidy is a government subsidy – and the U.S. government agricultural subsidies are the biggest by far in the world… every bit as bloated as its’ massive war budget.
I will hand you one thing Mish. You are like a dog on a bone. You have been wrong for so long on so much, what is your plan? Keep predicting the same ol same ol and eventually, you’ll be right? Great strategy. I can see it now in 2030 gold goes to $3500 and here you come quoting your predictions from 2015 and claim you got it right! One problem: Me calling for a volcanic eruption at Yellowstone, and 200 years later we get a blow doesn’t make me a geologist. I don’t know why I keep coming here other than the laughs.
List evidence please. No evidence equals no credibility. Thanks
Yet here you are.
Since Mish has no achives, (I wonder why) I’ll just go by memory. His call to buy gold 3/4 years ago. How about the housing market being overpriced…forever. How about the economy on the verge of perpetual collapse. Stock market? Same getting ready to collapse for years now. There, those are just the things off the top of my in 30 seconds. Now, how about you name the things Mish has nailed. Being a perma-bear will eventually make you right, just like the proverbial broken clock.