U.S. opens NAFTA talks with focus on trade balance — and a deficit of facts
While Canada and Mexico talk about a win-win-win, it's clear the U.S. goal is just win
Robert Lighthizer didn't give a long speech on Wednesday to open the talks to renegotiate NAFTA. But he really didn't have to.
Donald Trump's choice to get a better trade deal for the United States had only one message, one that comes straight from the president.
These talks will not simply be about tweaking, or adding a few upgrades that take into account the technological advances since the original deal came into effect two decades ago.
"We feel that NAFTA has fundamentally failed many, many Americans and needs major improvement," Lighthizer solemnly intoned.
"We cannot ignore the huge trade deficits, the lost manufacturing jobs, the businesses that have closed or moved because of incentives — intended or not — in the current agreement."
What Lighthizer and the White House seem happy to ignore in setting out this opening position are any facts that might get in the way of what Trump told voters in 2016 — that making America great again includes gutting NAFTA.
It was, Trump said then, the worst trade deal ever, a lopsided arrangement under which America constantly comes out on the short end.
Except it wasn't entirely true then. And it isn't now.
NAFTA isn't perfect. But it isn't the job-killing, America-emasculating deal the president claims.
Earlier this year, U.S. Commerce Secretary Wilbur Ross said trade deficits should be divided into two categories: blameless and blameful.
Ross considers blameless trade deficits as those created when the U.S. buys what it can't produce enough of on its own. The list includes Canadian oil and electricity.
"We are not yet self-sufficient in energy, so naturally we're going to have something of a deficit," he said.
What are blameful, he added, are goods that are subsidized or not produced on a level playing field with the U.S.
What about the numbers?
In fairness, Lighthizer began his brief remarks Wednesday with a nod to what is demonstrably true: NAFTA's been good for American farmers and communities on both its southern and northern borders.
He's also been told by governors in many of the 35 states that list Canada as their top export destination, not to mess up that relationship.
Even so, the U.S. position is not to negotiate a win-win-win, as Mexican Economy Minister Ildefonso Guajardo urged Wednesday. Trump wants a win-lose-lose.
Start with those "huge" trade deficits.
"In recent years, we have seen some improvement in our trade balance with Canada," Lighthizer said. "But over the last 10 years, our deficit in goods has exceeded $365 billion."
That's true, but only to a point. Canada enjoys a surplus in the trade of goods, but it's declining fast, from nearly $36 billion in 2014 to $12.1 billion in 2016. Still, it fit Lighthizer's narrative.
But a quick look at the U.S. trade representative's own website shows the overall trade picture — worth $635 billion — is quite different.
When total trade is considered, including services as well as goods, the U.S. ran a $12.5-billion surplus with Canada in 2016. Oh, and that trade supported an estimated 1.6 million American jobs.
Neither fact merited a mention on Wednesday.
Freeland: It's not about surplus or deficit
Laura Dawson, director of the Wilson Centre's Canada Institute in Washington, D.C., says no one should be surprised that Lighthizer selectively chose the facts he wanted to highlight.
"The United States trade representative is a product of the White House. He takes his marching orders from the president, and Donald Trump has been very clear in his views that NAFTA is a bad deal."
Canadian Foreign Affairs Minister Chrystia Freeland wasn't about to let the sleight of trade pass.
"Canada does not view trade surpluses or deficits as a primary measure of whether a trading relationship works," she told reporters at a news conference at the end of the day.
She said trade between Canada and the U.S. is "balanced and mutually beneficial," and her team intends to protect NAFTA's record as an engine of economic growth.
Dan Ujczo, an international trade lawyer with the firm Dickinson Wright, whose practice includes both U.S. and Canadian clients, said Lighthizer is simply employing an aggressive opening posture.
"He fundamentally believes trade deficits cause the loss of jobs, particularly in manufacturing states like Ohio and Michigan."
Those also happen to be among the states that flipped to the Republicans last year.
It's those Americans with whom Trump and Lighthizer want to close the deal at the end of these talks.
"American politicians have been promising to renegotiate NAFTA for years," Lighthizer said. "Today, President Trump is going to fulfil those promises."
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