WASHINGTON
— Dozens of business and industry leaders descended on Capitol Hill on
Tuesday in a coordinated push to preserve the North American Free Trade
Agreement, a pact that has appeared increasingly at risk as the Trump
administration presses Canada and Mexico for significant concessions.
More
than 125 participants from the automotive, retail, agriculture and
other industries plan to meet with all 100 Senate offices on Tuesday to
ratchet up pressure on lawmakers — many of whose constituents work for
companies dependent on Nafta — to keep the deal intact, the U.S. Chamber
of Commerce said.
The demise of the 1994 trade pact has become a growing threat
in the wake of dramatic changes that the United States says it wants
and that American businesses and foreign negotiators say are
nonstarters.
As recently as two weeks ago, the president threatened to pull out of Nafta
unless negotiators succeed in significantly rewriting the agreement,
which governs commerce across the three countries. It’s an outcome the
administration says might be necessary, but one that business leaders
contend could devastate their profits and harm America’s ability to
compete in a global market.
The
meetings are part of an increasingly frantic effort by business groups
to persuade lawmakers to preserve the deal and push back against some of
the provisions that the United States is currently advocating. The U.S.
Chamber of Commerce organized a visit to the House of Representatives
on Oct. 11 to deliver a similar message.
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The
president has long threatened to ditch Nafta, but businesses largely
discounted that as more bluster than reality. That has changed in recent
weeks as negotiations with Canada and Mexico have become rockier,
prompting industry leaders to organize and speak out. The next round of
trade talks were postponed until mid-November to give the parties more time to resolve their differences.
Bill
Lane of the Trade Leadership Coalition, which advocates preserving
Nafta, said that until recently businesses had been largely silent on
Nafta because they did not want to undercut other policy priorities,
such as rewriting the tax code to secure a lower corporate tax rate.
“But
they also realize it doesn’t matter what the tax rate is if you’re not
competitive, and Nafta makes North American manufacturing competitive,”
Mr. Lane said.
Businesses
argue that the administration’s proposed changes to Nafta would reduce
the certainty the agreement gives them over their future operating
environment — a key consideration when investing long term. They say
other proposals the United States seeks would increase their regulatory
burden and costs. In an age where capital is mobile and businesses move
around the world to increase their profits by a few percentage points,
they argue that tighter restrictions could push manufacturing out of
North America altogether.
The
administration’s proposals for reforming Nafta include adding a clause
that would terminate the agreement after five years unless the three
countries voted to continue it. The White House also wants to set a
higher threshold for the proportion of automobiles and other goods that
must be made in North America and the United States to benefit from
favorable tariffs. Other provisions would make it easier for American
businesses to levy punitive tariffs on Canadian and Mexican products,
helping to wall off the United States’ market from what the
administration describes as unfair competition.
In
remarks to the press after the fourth round of Nafta talks, Robert
Lighthizer, the United States trade representative in charge of the
talks, acknowledged that the administration’s current strategy involves
rolling back some of the advantages enjoyed by businesses under the
pact, with the aim of redistributing those benefits elsewhere.
Mr.
Lighthizer described his objective as getting “back to the days where
there was a substantial majority of people in both parties that voted
for these trade agreements.” But in order to get to that point, he said,
“everybody has to give up a little bit of candy.”
“I
think it’s possible to take a little bit of the sugar away, and have
them say yeah, we’re still doing pretty well,” Mr. Lighthizer said of
American businesses. “I understand that everybody that’s making money
likes the rules where they are, that’s how it works. They can make a
little less money or make more money in a different way, and we can get
the trade deficit down.”
In the final analysis, Mr. Lighthizer said, he believed businesses would support the revised agreement.
So
far, however, many businesses have expressed firm opposition to the
proposals. Speaking in Mexico City earlier this month, Thomas J.
Donohue, the president of the U.S. Chamber of Commerce, said that
several proposals on the table could “doom the entire deal” and that the
chamber would send an “army” of lobbyists to Capitol Hill to try to
stop them.
Among
the biggest opponents of the administration’s changes is the automobile
industry. Under the administration’s proposed changes, 85 percent of
the value of an automobile would need to be manufactured in North
America to benefit from Nafta’s zero tariffs, up from 62.5 percent
currently. The proposals would also require half of the value of cars
manufactured in Canada or Mexico to be sourced from the United States.
According
to Matt Blunt, the president of the American Automotive Policy Council,
which represents Ford, General Motors and Fiat-Chrysler, these
restrictions would probably encourage companies to ignore Nafta
altogether, prompting them to make automobiles outside of the United
States and pay a tariff to import them. That would essentially create a
tax on the auto industry and harm its competitiveness, Mr. Blunt argued.
On
Wednesday, the American auto manufacturers, parts suppliers and dealers
announced they would form a coalition called Driving American Jobs to
fight to preserve Nafta.
Hun
Quach, a lobbyist for the retail industry who planned to visit the
Senate on Tuesday, said retailers saw opportunities to update and
improve Nafta in a number of areas. But her group, the Retail Industry
Leaders Association, was concerned about tighter regulations for apparel
and textiles, the introduction of more uncertainty into the deal
through a sunset clause, and more protectionist trade cases by the
United States that would block imports from Canada and Mexico, she said.
“Anyone
doing business within the Nafta region would like to have certainty to
know that their supply chains they build over decades will remain in
place,” Ms. Quach said.
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