U.S. Chamber of Commerce President Tom Donohue publicly warned the White House Monday against pulling out of the North American Free Trade Agreement, a sign that big business is getting increasingly worried about how Trump’s effort to renegotiate the deal will play out.
In an op-ed for the Wall Street Journal, Donohue said President Trump’s periodic threats to pull out of the deal if the renegotiations do not provide enough benefit to the U.S. “must be taken seriously.” The chamber and other business groups have been keeping a close eye on the talks, the third round of which are currently underway in Ottawa.
“How might the calamity unfold?” Donohue asked. “Say the Trump administration pushes ideas that are opposed vociferously by the U.S. business and agriculture communities, as well as by the Canadian and Mexican governments. Such proposals might be to end the agreement’s investment protections, add strict rules on domestic content, or impose a five-year sunset clause.”
“Those proposals would all but guarantee that negotiations break down — in which case, American officials insist, they will start to pull the U.S. out of the existing deal,” Donohue warned. “Such a move would result in the restoration of trade tariffs, severely hurting domestic industries that rely on exporting to Canada and Mexico.”
He warned that there are 14 million U.S. jobs tied to those industries.
While many business groups would like to see some changes to NAFTA, which was signed back in 1993, most believe the deal has been a huge benefit to the economy. They have been calling on the White House to push for only modest changes, such as addressing the few products not fully covered by the deal, like dairy and timber.
U.S. Trade Representative Robert Lighthizer, however, has pushed for more fundamental changes, such as making participation by member countries in the deal’s investor-state dispute settlement system voluntary. However, that idea has gotten little traction, and the Canadian government would oppose that, an official told the Washington Examiner.
Recent comments by top U.S. trade officials suggest there has been little progress in other areas and appear to be laying the groundwork for a pullout. In a op-ed Thursday for the Washington Post, Commerce Secretary Wilbur Ross warned, “If we don’t fix the rules of origin, negotiations on the rest of the agreement will fail to meaningfully shift the trade imbalance. Our nation’s ballooning trade deficit has gutted American manufacturing, killed jobs and sapped our wealth. That is going to change under President Trump, and rules of origin are just the beginning.”
Rules of origin are used to determine the origin of a product, and how much a product has to be altered in another country for it to be considered a product of that country.
Donohue warned that pulling out of the deal would, ironically, hurt Trump’s supporters the most.
“Hundreds of thousands of American jobs would be lost, and that’s a conservative estimate,” he wrote. “Heartland states that voted for President Trump would be hurt most, and angry voters would know exactly whom to blame.”
