Washington Lawyer - August 2017 - 17

GOVERNMENT & GAVEL

NAFTA:
What are the potential
problems if the U.S. eliminates or modifies it?
By Sarah Kellogg
D.C. Bar members sound off on the
impact of the Trump administration's
plan to renegotiate the North American
Free Trade Agreement with Canada and
Mexico, with the goal of modernizing
it to "support higher-paying jobs in
the United States and to grow the
U.S. economy."

EDWARD M. LEBOW
Counsel, Haynes and Boone, LLP
Free trade agreements such as NAFTA allow people
to produce what they can most efficiently and to
purchase from others what they can produce most
efficiently. It allows the economic competitive
advantage to operate on a wider scale to the
benefit of everyone. The volumes of trade among
the three countries have grown very substantially
and at higher rates than the growth of their respective economies over the years.
Looking at the trade deficit is the wrong way of
thinking about it. The winners-and-losers conceptualization does not really fit. It's too simple a view.
With trade, the losers are very specific and here
today. The winners are diffused and often appear
in the future.
There are things about NAFTA that need to be
updated. For example, it doesn't deal with digital
trade or services. It's [23] years old. In fact, in the
Trans-Pacific Partnership negotiations, much of
what needed to be fixed about NAFTA had been
agreed to. Updating NAFTA, we would also have to
address labor rights and environmental protections,
ensuring provisions are subject to enforcement
with teeth.
The job losses we've seen are perhaps a few more
than if we hadn't had NAFTA. In some sectors, jobs
are being lost to automation at a much higher rate
than due to NAFTA to Mexico. Having Mexico as
part of the integrated North American manufacturing base allows North America to compete more
effectively worldwide.
Edward M. Lebow, courtesy of Haynes and Boone, LLP; Amelia "Amy"
Porges, courtesy of the Law Offices of Amelia Porges PLLC

AMELIA "AMY" PORGES
Founder, Law Offices of Amelia Porges PLLC
The more you want to modernize NAFTA the
harder it is going to be to get it done in a reasonable amount of time. The only way that happens
is to incorporate large chunks of the Trans-Pacific
Partnership because Mexico and the United States
have already negotiated key points. The question
will be how much of TPP gets incorporated into
a modernized agreement?
The Trump administration's view of U.S. trade has
been selective. They are only focusing on U.S. manufactured goods, and they've left off agriculture.
They've also forgotten about services, which is not
a person working in a dry cleaner. Services make
up 70 percent of our GDP. NAFTA enabled industries
like the insurance sector in the United States, which
was already very competitive, to compete in the
Mexican market. The growth of the North American
economy overall is partly because of more
competitive access to services in Mexico. It's going
to inflict a lot of pain on the U.S. economy if we
eliminate NAFTA.

With the confirmation of Robert Lighthizer as the
U.S. Trade Representative (USTR), there will probably
be some movement on NAFTA. The trade community didn't want to deal with White House National
Trade Council Director Peter Navarro because he
wants the U.S. economy to be much less involved
with the world economy and less dependent on
global trade. Lighthizer has protectionist leanings,
but he's at least from our village. He understands
what USTR negotiators can do. He's been there. He
knows what the instrument is.
As a country, we have a great asset in the Office of
the U.S. Trade Representative. Our guys have done
a whole string of these negotiations, including TPP.
Our guys are tanned, ready, and rested. It's not just
the USTR. We also have an infrastructure for trade
negotiations. We have a series of committees to
consult with industry to get a really good read out
on what's in the best interest of our economy.

Sarah Kellogg is a regular contributor to
Washington Lawyer.
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WASHINGTON LAWYER

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AUGUST 2017

17


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