#1 – LIGHTHIZER FAVORS ‘GUN TO THE HEAD’ NAFTA VOTE STRATEGY
• With NAFTA negotiations moving toward a deal, trade watchers are starting to dig in to the whip counting efforts. One big unanswered question most are asking is why – in an election year – would members of Congress would ever choose to take a tough vote on NAFTA 2.0 when they always have NAFTA 1.0 to fall back on.
• Here’s a reason: According to POLITICO, U.S. Trade Representative Robert Lighthizer is advocating internally to withdraw from NAFTA in order to force Congress to vote to approve a renegotiated NAFTA, the idea being the threat of instability from withdrawal will create the motivation Congress needs.
The key quotes:
• “As someone who counts votes that would not be a totally shocking scenario,” said one source who has advised Lighthizer on NAFTA. “If you actually want to get the vote done and you want to pass the damn agreement then you need to create the scenario of either nothing or something different.”
• A White House official said the administration “is considering all possible policy scenarios around NAFTA“ as Lighthizer works toward reaching a preliminary deal in the coming weeks.
• The Bottom line: As the POLITICO story notes, Congress doesn’t like to be strong-armed. This kind of move could spur Congress to take steps to reclaim some of its trade authority.
#2 – ISDS: THE BIG NAFTA STUMBLING BLOCK ON THE RIGHT
• Inside U.S. Trade, while also noting Lighthizer’s high-stakes strategy preference, reports that NAFTA negotiators have circled May 4th as the target date for the possible announcement of an agreement in principle.
• According to the report, one of, if not the biggest, roadblock for Congressional passage is Lighthizer’s personal objections to including Investor-State Dispute Settlement in a new NAFTA:
“One area where Lighthizer has not shown much flexibility is investor protections. He told reporters in October that he believed investor-state dispute settlement (ISDS) was akin to the U.S. government buying companies’ political risk insurance and incentivizing outsourcing, and that he opposed that mechanism because it was not market-based.”
• The big question: Lighthizer has butted heads with Rep. Brady, Sen. Hatch, and Speaker Ryan on ISDS. But the unanswered question will be whether those leaders actually whip against a new NAFTA to keep ISDS. Many in Congress believe it will be tough to keep an increasingly populist Republican caucus in-line in opposing NAFTA over a provision like ISDS, which is seen as benefitting “the swamp.”
#3 – MEXICO LABOR: THE BIG NAFTA STUMBLING BLOCK ON THE LEFT
• Last week, 94 House Democrats sent a letter to USTR warning that an upcoming vote in the Mexican Senate could pull the rug out from under any efforts to improve Mexican labor standards in NAFTA.
• The issue: The Mexican Senate is considering legislation that would implement constitutional amendments that U.S. labor leaders favor, and that were passed in February 2017. However, the implementing legislation is said to actually continue practices in Mexico that hinder the independence of labor unions and that shuts out workers from collective agreement processes. More HERE.
• Why it’s a big deal for a potential NAFTA vote: Particularly with ISDS potentially bleeding Republican votes, the Administration could need, and has been planning on getting, some Democratic support. If Congressman Sandy Levin (a long-time advocate for improving Mexican labor standards) and U.S. unions team up to oppose NAFTA over labor standards, it could spell doom for the Administration.
• The politics: Regardless of where the Mexican labor issue comes down, U.S. labor groups will also have a huge political decision to make on NAFTA once the deal is sealed. Holding hands with the Trump administration on NAFTA would take a potentially significant wedge issue off the table for Democrats running against Republican incumbents in labor states like Ohio, Michigan, and Wisconsin. According to the most recent Cook Political Report rankings, over 30 of the most hotly contested Republican-held House seats will play out in those types of states.
#4 – SORGHUM TRAPPED AT SEA
• Reuters reported last week that 20 ships with over 1.2 million tons of sorghum from the U.S. are currently trapped at sea. The situation – which is still unfolding – comes after China announced a new 178.6 percent tariff on sorghum imports from the U.S. last week.
• Big name companies are being hit by this high-seas drama according to Reuters: “The five shipments, all headed for China when they were loaded at Texas Gulf Coast export terminals owned by grain merchants Cargill Inc or Archer Daniels Midland Co would be liable for a hefty deposit to be paid on their value, which could make the loads unprofitable to deliver.”
#5 – NOT MUCH PROGRESS SEEN IN TRUMP-ABE MEETINGS
• After two days of meetings (and golf) at Mar-a-Lago there was little progress toward either President Trump’s or Japanese Prime Minister Shinzo Abe’s trade priorities. While there was a vague announcement that both sides would begin talks toward a set of “free, fair, and reciprocal” trade deals, it’s unclear what that would entail.
• What wasn’t announced tells the story: President Trump was not able to secure a commitment to launch the bilateral deal he craves and Abe couldn’t get either an exemption from steel and aluminum tariffs or nudge the U.S. closer to joining TPP.
• More from the AP on trouble in the Trump-Abe “bromance”
#6 – TRUMP OFFICIALLY ENDS TPP FLIRTATION
It’s official, the 24 hour Trump TPP flirtation has ended:
And yes…there were plenty of people on twitter and elsewhere who pointed out that South Korea isn’t in TPP.
#7 – NY TIMES ON EX-IM BANK LANGUISHING IN TRUMP ERA
The NY Times last week explored the strange reality that even amid President Trump’s push to attack trade deficits and boost exports he has allowed the Export-Import Bank to remain handicapped by politics.
Key graphs:
“Proponents of the bank, including some lawmakers, argue the institution could be a powerful weapon for a president who wants to increase domestic manufacturing and narrow the gap between what the United States imports and what it exports overseas.”
“Ex-Im provides the kind of government subsidies that other nations regularly use to help domestic companies compete abroad. Mr. Trump regularly blames those subsidies for a flood of cheap imports, saying they exacerbate the United States trade imbalance.”