Honest, thoughtful analysis of trade policy impact needed when approaching changes to NAFTA

February 20, 2018|Director's Update

Director Bonlender delivered these remarks on Feb. 20, 2018 at an event hosted by the Consular Association of Washington.

First, I’d like to thank Petra Walker for inviting me to this event this afternoon and the Consular Association of Washington for hosting this important conversation.

I also appreciate that Consul General Dondisch representing Mexico and Consul General Brandon Lee representing Canada have taken the time to be here this evening.

The trade relationship between Washington State, Canada, and Mexico is extremely important to the economic health of Washington state communities.

Canada is our number one market for our world-famous apples and our second largest trading partner. Mexico is Washington’s number one market for dairy products and our 7th largest trading partner.

Taken together, they would be our second largest trading partner representing about $36 billion in bilateral trade and investment.

Washington state is the most trade dependent state in the United States, with at least one third of our jobs at least partly dependent on trade.

Suffice it to say that we very much take notice and are concerned when the federal administration, regardless of political party, takes an extreme reaction approach to trade policy. This is particularly disturbing when that administration provides few signs that they understand the impacts of their actions and seem to have no long-term plan.

Can NAFTA be improved? Absolutely. It’s an old agreement, that doesn’t contemplate or deal with a lot of today’s new technology. It needs modernization. We should also fix the investor protection provisions, and improve some of the labor and environmental protections – similar to what the Obama Administration was attempting to negotiate into TPP, the Trans-Pacific Partnership.

But let’s not mistake updating and modernizing NAFTA with scrapping the whole agreement. These are not the same things.

Let’s set aside for a moment the substance of NAFTA.

I think it’s important to reflect for a moment on the kind of tone that trading partners, particularly neighbors, should and should not take with one another.

I wanted to come up with a good analogy here. The one that kept come to mind for me, which is an imperfect analogy, but helpful for comparison purposes, is the one that President Franklin Roosevelt used when he had to convince isolationists in Congress in the public to pass the “Lend-Lease” Act, that would finally allow the United States to provide arms to a Great Britain virtually under siege by Nazi Germany.   In making his case, Roosevelt famously compared Lend-Lease to lending a garden hose to a neighbor while their house was on fire.

Instead of using a neighbors dire straits to negotiate tough terms, you should help him or her out. Recognize it’s the neighborly thing to do, and that you have a long term relationship that would suffer if you were unwilling to help.

From what we’ve seen so far, I don’t think that the Trump administration recognizes the importance of relationships over time, and perhaps they do not care. That kind of approach wears thin, spends future capital and is destined to fail.

But we have to live with the fallout of these actions and decisions. In the meantime, let’s not mistake inflammatory negotiation tactics via Twitter with respectful engagement of trading partners, particularly neighboring countries.

In closing, I want to reiterate two main points:

  1. Let’s not mistake modernization of NAFTA with gutting it entirely and;
  2. Let’s not mistake negotiation via Twitter with the appropriate respectful engagement of a neighbor.

The difficulty with the federal administration is that it is hard to know if, in the end, for all their belligerence, modernization will be the end result. Trump may move on to the next country to start levying new threats, while in the meantime making changes to trade agreements that are within the mainstream.

That’s probably the most optimistic outcome. It’s possible that they are true believers stuck inside their own echo chamber and that thinking will catapult the United States into a trade war by rolling the dice with threats.

The current administration largely does not appear to know where they want to end up, and they haven’t demonstrated a full grasp of the impact of their actions.

It’s important to have forums like these to keep the dialogue between our state and our most important trading partners alive.

Thank you.

 

 

 

Share this Post: