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A Bogus Deal on NAFTA

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The Editorial Board
, New York Times
A Bogus Deal on NAFTA

The North American Free Trade Agreement is a nearly 25-year-old agreement that needs to be modernized to address new technologies, update intellectual property rights and protect U.S. industry and workers from unfair competition. Instead, President Donald Trump has proposed replacing NAFTA with something worse, a vague agreement that could hurt American workers and raise prices for U.S. consumers while antagonizing America’s neighbors.

In the Trumpian worldview, Canada isn’t a friendly neighbor but a frosty enemy bent on ruining our steel, auto and dairy industries while cutting down forests in British Columbia and trucking the lumber across the border. Fiends! Likewise, as he sees it, Mexico ships tequila, produce and people north, and imports our higher-paying manufacturing jobs. Desperados! Yet his solutions would simply add complications with few benefits.

Under the revised, don’t-call-it-NAFTA bilateral deal with Mexico that he awkwardly announced last week, 75 percent of the value of vehicles exported to the United States would have to come from North American-made parts, up from the current 62.5 percent. And 40 to 45 percent of the value would have to be made by workers who earn at least $16 an hour, even though no Mexican autoworkers earn $16 an hour, and none will. Otherwise, Mexican-assembled vehicles would be subject to a 2.5 percent tariff.

The logic here is that auto-related jobs would supposedly flood back to the United States as labor costs rise in Mexico. That logic is dubious. Automakers in Mexico would rather pay the 2.5 percent tariff, figuring it would not raise prices enough to hurt sales seriously. If it did, they could stop making those cars for the U.S. market.

Trump has particular animus for the dairy industry in Canada. There’s no question that protectionist constraints keep milk prices there high and farmers profitable. The Canadians have pointed to subsidies that American farmers get and are resisting Trump’s no-compromise demand to throw their cows under the bus. Trump also wants Canada to join Mexico in agreeing to drop Chapter 19 of NAFTA, a dispute resolution protocol. Canada has used it to fight off tariffs on its softwood and paper products. Trump’s softwood and paper tariffs are hurting Canadian industry, but also are raising lumber prices in the United States so much that the housing market has slowed. Isn’t that a great deal?

American farmers have been big losers in this trade war and would remain so under this trade deal. After Trump assessed tariffs on Mexican metals, Mexico imposed tariffs on corn and pork. The bilateral agreement restores the status quo on agriculture, but Mexico has, in the meantime, cultivated other sources of supply.

Auto companies have developed global supply chains since NAFTA began in 1994, costing thousands of manufacturing jobs in the United States, as low-value work shifted to Mexico and other lower-cost countries. Auto companies have also built plants here using the same supply chain rationale, though, partly because labor costs in those American plants have decreased in the aftermath of the Great Recession. Mexico, in turn, is becoming less dependent on the American market every year — meaning the deal is covering fewer and fewer jobs. So Trump’s deal isn’t going to be getting jobs back from Mexico.

Trump’s threat to impose 25 percent tariffs on cars if Canada doesn’t submit to his demands will be painful — to Canada, and to General Motors, which produces the Chevrolet Impala and other models there. He’s also threatened the European Union, which has offered to remove tariffs on autos if the United States does the same. That’s not good enough for Trump, who thinks Europeans should be forced to buy American-made cars. Should the president carry out threats to hit imports, the United States stands to lose 200,000 jobs, according to Kristin Dziczek of the Center for Automotive Research, because cars assembled in the United States contain imported parts, including engines. Prices would rise; sales would fall. Auto sales are cooling globally, so creating obstacles for the industry is foolish policy.

Having failed to browbeat Canada into submission by the American-imposed Aug. 31 deadline, the administration told Congress it will go ahead with the Mexico deal. Canada is free to join under those terms, within 30 days. No thank you, said the ever diplomatic Canadian minister of foreign affairs, Chrystia Freeland. “Once we have a good deal for Canada,” Freeland said, “we have a deal.” The ever-petulant Trump then tweet-threatened not only Canada but his own Congress: “If we don’t make a fair deal for the U.S. after decades of abuse, Canada will be out. Congress should not interfere w/ these negotiations or I will simply terminate NAFTA entirely & we will be far better off ...”

We will certainly not be better off. Nor is Congress planning to cede its authority in treaty making. The president can and should expect a bipartisan pushback against an unnecessary and abusive bad “deal.”

“Canada has oil, electricity, water, all the things that the United States desperately needs,” notes Jerry Dias, national president of Unifor Canada, a leading trade union. “So for him to pick a fight with us makes no sense, either philosophically or economically.”

Correct, Mr. Dias. Welcome to our world.

Yes, Mr. Trump, Hurricane Maria Was a ‘Real Catastrophe’

It has become customary to gauge the scale of calamities by the official count of the dead. In this perspective, Puerto Rico’s revision of the death toll from last September’s horrific Hurricane Maria to 2,975 from 64 elevates the storm to one of the greatest catastrophes of recent times in the United States, far exceeding Hurricane Katrina and nearly equaling the terrorist attacks of Sept. 11, 2001.

That should prod the federal government and the American people to finally provide the attention and resources that this ravaged U.S. territory still sorely needs. Alas, that was not President Donald Trump’s response to the latest and most authoritative analysis of the devastation wreaked by the great storm.

On Wednesday, the president smugly declared that “we did a fantastic job,” and he expounded on geography and pre-hurricane problems with the electrical grid as reasons for the level of destruction, just as he did in the immediate aftermath of Hurricanes Maria and Irma. Ten months ago, he contrasted the then-modest estimate of the death toll in Puerto Rico with that of Hurricane Katrina in 2005, which he called a “real catastrophe.”

No hint of horror at the scale of suffering. No sign of recognition that fellow Americans had gone through one of our era’s most wrenching disasters. No words of sympathy. No promises that his government would be better prepared next time.

The president appears unaware that the Federal Emergency Management Agency acknowledged in an after-action report in July that its response to Hurricane Maria had been chaotic and tragically inadequate. The governor of Puerto Rico, Trump blithely avowed on Wednesday, was “happy with the job we’ve done.”

True, Gov. Ricardo Rosselló, whose administration has been blamed for lack of preparation for a storm of this magnitude, has not been critical of Trump, but on Tuesday the governor acknowledged that he had made mistakes and said “everybody’s going to be held accountable and everybody’s going to be expected to make changes.”

The mayor of San Juan, Carmen Yulín Cruz, who has been scathing about the president’s attitude, minced no words: “President Trump continues to demonstrate his inability to understand what his job in this crisis was all about: This was never about him, this was never about politics, this was about saving lives.”

It was also not about specific numbers, she said. The earlier official figure of 64 was based on local mortuary tallies of deaths directly related to injuries from the winds, and two earlier analyses of increases in island mortality in the months following the hurricane — one by The Times and another largely by researchers from Harvard — had already placed the toll in the thousands and established Hurricane Maria as one of the most destructive natural disasters in recent U.S. history.

The analysis announced Tuesday, prepared at the request of the Puerto Rican government by George Washington University’s Milken Institute School of Public Health, was likewise based on excess deaths over six months. The figure of 2,975, despite the seeming precision, was in fact an estimate, though arguably the most authoritative to date.

The very fact that it has taken a year to update the official death toll, and that it can only be estimated, was in itself a reflection of the ferocity of the storm, the collapse of normal systems, the mass confusion and the failures at all levels of government. People vanished in floods and mudslides; they died waiting for medical assistance that never came; they died for lack of basic services (full power was restored only last month); they died over weeks and months; tens of thousands fled to the mainland. Not surprisingly, the poor fared the worst.

The obvious conclusion from the revised death toll is that local and federal authorities must be far better prepared when the next storm strikes Puerto Rico. It is also essential for Americans on the mainland to appreciate that their fellow Americans in the Caribbean have suffered a life-altering catastrophe greater than Hurricanes Katrina or Harvey and require the same outpouring of help and sympathy as New Orleans or Houston. This is a time to open hearts and wallets; self-congratulation is utterly out of place.

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