President Trump is still threatening to dump the decades-old North American Free Trade Agreement. Such a move would be bad for America and especially bad for Western New York.
This region has depended upon trade with both Canada and Mexico to support and grow small businesses. Western New York’s position on the border with Canada makes it ideally suited to take advantage of free trade.
There are winners and losers in every trade deal. Low-tech jobs may go where labor is cheaper while other jobs will be created in areas with a better educated workforce and an entrepreneurial bent. NAFTA was full of compromises, but overall all three nations are benefiting. If the U.S. puts its thumb on the scale, companies that depend on the free flow of business across borders will suffer. Manufacturing jobs may return to some U.S. workers, but prices are likely to rise. One estimate is that a new vehicle would cost $1,000 more.
Perhaps all of this was on the mind of Canadian Prime Minister Justin Trudeau as he met the president at the White House. Trump made clear that he has no problem withdrawing from the deal, despite the concerns of American business leaders about disrupted supply lines and higher consumer prices.
Trudeau also met with members of the House Ways and Means Committee, which oversees trade issues, giving Rep. Tom Reed, R-Corning, the opportunity to speak up for the New York dairy and wine industries. The state’s dairy farmers compare the Canadian dairy industry to a cartel blocking outside competition. And a lot of U.S.-made wine exported to Canada is subject to a tax; Canadian wine brought into the United States is not.
These bits of unfairness are worth negotiating to strike a better deal, and Reed indicated that Trudeau was “amenable” to changes regarding New York farmers and wineries. But the president wants to tilt the deal so far in the United States’ favor that our partners are unlikely to go along.
For example, the administration wants to ramp up the “rules of origin” provisions affecting the auto industry. The proposal would require 85 percent of every vehicle to be made in one of the three countries for the vehicle to qualify for tariff-free status, an increase from 62.5 percent.
Trump sees it as protecting workers. Manufacturers see it as increasing the cost of doing business. The president wants to take a harder line in negotiating any new agreement, making any new deal subject to approval in all three countries every few years. Rep. Brian Higgins, D-Buffalo, likes that provision and also wants to see stronger provisions on labor rights and the environment.
The U.S. Chamber of Commerce and 310 local chambers, including the Buffalo Niagara Partnership, wrote Trump to let him know about the benefits of the deal. They are right; the deal should be changed, not abandoned.