NAFTA and Donald Trump

One of the basic tenets of the Trump doctrine is that the North American Free Trade Agreement (NAFTA) has been a very bad deal for the people of the United States, and it has to be thoroughly renegotiated, or even better, scrapped altogether and replaced by a new trade agreement.

Before proceeding any further, it is important to clarify a very important fact that strangely enough has not been exploited in the current debates between both candidates Hillary Clinton and Donald Trump. and that fact is that NAFTA was not an initiative launched by a Democratic president, it was launched by a Republican President, George H. W. Bush (George Bush Senior). And oddly enough, at the time it was the Democrats, not the Republicans, who opposed NAFTA arguing, among other things, that NAFTA would result in a loss of American jobs.

When the Republicans lost the White House to Bill Clinton, one would assume that the very first thing President Clinton would do after taking over as president would be the scraping of the NAFTA proposal, sending all the paperwork to the trash can. After all, if NAFTA was not going to be a good deal, why fight over it?

President Clinton saw that NAFTA, being negotiated at the time in what was called the fast-track negotiating authority that enabled the executive branches of government in the USA, Canada and Mexico to hammer out the fine details and present the final deal to their respective legislators for approval or rejection as a whole, beyond the previous criticisms laid against it the NAFTA initiative had something good in it worth fighting for. And Bill Clinton fought as hard as he possibly could to gain the approval of the US Congress of the NAFTA deal.

At the time NAFTA was being debated in Congress, the European Economic Community (EEC) was taking shape on the other side of the world as a result of the forming of the European Union. Before that major event, the United States held a worldwide predominance over economy, technology, you name it. But the consolidation of the European Economic Community around the euro and later on around the issues of free trade in member countries of the EEC began to pose a direct threat to the US predominance. Alarm bells were sounding very loud in Washington, and there were those who thought that the United States of Europe would end up being a formidable challenge to such an extent that, in the long run, it would dethrone the USA from its role as world leader. The response given was the only kind of response that could be given to such a possibility: the creation of something akin to the European Economic Community but letting the member partners keep their identities. The only two nations that could be considered as candidates to form the new trading block were Canada and Mexico. Considering the enormous potential of Mexico as a trading partner, sharing with the USA one of the largest borders in the entire world, a new trading block including only Canada was considered by many simply as not being enough to counteract the challenge being posed by a continent which after the devastation left by World War Two was in no mood to undergo that kind of social upheaval. Indeed, one of the reasons of why the USA was able to vastly surpass Europe during the XX century was the constant squabbles between nations with different languages that shared the same continent, geopolitical divisions that left Europe in ruins with two world wars that left nothing in the old continent except grief and despair. But with a Europe willing to learn its lessons from the past and starting to work towards a common goal, the USA finally faced a true bona fide challenge which could, in turn, end up costing American jobs, lots of them.

There were of course other reasons of why President Clinton decided to support the NAFTA initiative left on his desk by his predecessor, but the shadow of a powerful and united Europe competing strongly against American industry was one of the main driving points to keep NAFTA alive.

But beyond the issue of whether as a whole NAFTA has failed to keep its promise or has delivered both good things as well as bad things, there is another overriding consideration which opponents of the current NAFTA such as Donald Trump have failed to consider. If the USA simply pulls out of NAFTA effectively rendering it useless and obsolete, with the hope that a new trade agreement more favorable to US interests can be negotiated, the odds of that happening are nearly zero.

To begin with, and if history repeats itself, a new NAFTA proposal would be almost impossible to gain enough votes in Congress in order to survive and become a working trade agreement. At least not with the current gridlock in Congress that has kept even extremely important issues such as funds to fight the expansion in the USA of the Zika virus stalled. And here in the case of Zika we are talking about life and death issues. What makes Donald Trump, or any other US politician for that matter, so sure that something can be worked out with the trading partners (Canada and Mexico) that will be acceptable to a majority of Congressmen?

In the times of President Bill Clinton, there was not so much gridlock as there is today, and even then gaining enough votes in Congress to get the ratification of the NAFTA deal ended up being an uphill struggle for President Clinton. Indeed, it came to the point when number of remaining votes needed to gain the approval of the NAFTA deal could be counted with just one hand.

Very few people seem to remember how hard it was for President Clinton to get the approval in Congress of the NAFTA deal, and Donald Trump is most certainly not one of them. Fortunately, among the survivors who had to undergo such a painful experience is Bill Clinton, who is still alive. He can give Donald Trump or any other politician a primer on how hard it was to get the NAFTA deal ratified in the US Congress. Just a few days before a vote was  to be taken in Congress on the month of November 1993, President Clinton was on the phone non-stop all day speaking personally to each undecided Congressman or Senator offering them one by one whatever he could for their districts in order to convince them to go along with the NAFTA initiative. It became a strenuous effort, to such an extent that Bill Clinton surely remembers it. At the end, the House of Representatives passed the North American Free Trade Agreement Implementation Act on November 17, 1993. The agreement’s supporters included 132 Republicans and 102 Democrats. The bill passed the Senate on November 20, 1993, Senate supporters were 34 Republicans and 27 Democrats. On the US side, Clinton signed NAFTA into law on December 8, 1993, and the agreement went into effect on January 1, 1994.

If getting NAFTA approved in the USA by Congress was far from being an easy matter, in Canada it was just as hard if not harder. As a matter of fact, the 1988 Canadian election was fought almost exclusively on that issue to the point of becoming extremely emotional. In that election, more Canadians voted for anti-free trade parties (the Liberals and the New Democrats) but the split caused more seats in parliament to be won by the pro-free trade Progressive Conservatives (PCs). The Prime Minister Brian Mulroney and the PCs had a parliamentary majority and were able to pass the 1987 Canada-U.S. NAFTA bills. However, Mulroney was replaced as Conservative leader and Prime Minister by Kim Campbell. Campbell led the PC party into the 1993 election where they were decimated by the Liberal Party under Jean Chrétien, who had campaigned on a promise to renegotiate or abrogate NAFTA; however, Chrétien subsequently negotiated two supplemental agreements with the new U.S. president. In the U.S., Bush, who had worked to “fast track” the signing prior to the end of his term, ran out of time and had to pass the required ratification and signing of the implementation law to incoming president, Bill Clinton.

As things stand right now in Canada, it might be easier to raise Caligula and Nero from the grave with the help of the Devil, than trying to get a new free trade agreement with Canada going after the scraping of NAFTA. If the USA kills NAFTA altogether, the odds are that there will be nothing left to replace it. Perhaps this is one of the reasons of why not even Donald Trump is making any suggestions mentioning Canada as a trading partner with whom NAFTA has also got to be renegotiated.

This leaves the question of “the Mexican problem”. Would Mexico join the USA in a new NAFTA deal if the USA pulls out and sinks the current NAFTA into a bottomless pit? In this case, the odds are even worse than the odds with Canada. Far worse.

When NAFTA was on the verge of becoming a working reality, Mexico was being ruled essentially by a single party system, with the official PRI holding an absolute and trouncing majority in both the Camara de Diputados (the equivalent of the US House of Representatives) and the Camara de Senadores (the equivalent of the US Senate). It was, for the most part, a simulated democracy. Whatever the Mexican president wanted, he got from the Mexican Congress even before his requests had been sent. For all practical purposes, it was a rubber-stamp Congress. Yet, in those days there was a lot of opposition to the approval of the NAFTA deal not from the Mexican politicians very submissive to the requests of President Carlos Salinas de Gortari whose will was to be taken as an absolute order with no dissent, but from powerful Mexican merchants and industrialists who where fearful that the Mexican market, which was very overprotective at the time, would be overrun by a flood of US imports under NAFTA. In a way, and judging by the amount of imported goods from the USA under the umbrella of NAFTA, they were right, a fact that is not being mentioned at all by Donald Trump. But not only was there a lot of opposition in Mexican commerce and industry to the signing of any NAFTA deal. There was also a lot of opposition among the working class in Mexico, even more fierce than the opposition shown by the working class unemployed who now support Donald Trump.

As a matter of fact, the Mexican president had to pay dearly for using his overwhelming powers and authority to ram the NAFTA deal through the submissive Mexican Congress. He had to face an armed uprising in Chiapas, in a date chosen deliberately by the rebels to coincide with the date that NAFTA came into force, January 1, 1994.

That was back in 1994.

Today, 2016, the Mexican president no longer enjoys the absolute majority in Congress his predecessors once did. He no longer controls Congress, neither the Mexican House of Representatives nor the Mexican Senate. As a matter of fact, he no longer controls the Mexican Supreme Court of Justice either. Mexico is now a full fledged democracy, and if the Mexican President wants anything approved, he has to negotiate with a Congress which is becoming more and more rebellious (pretty much like the US Congress).

If under the leadership of a buffoon such as Donald Trump the USA pulls out of the NAFTA deal altogether in the hope or trying to strike a new deal with Mexico as he has advertised in his campaign, the odds are that he will get nothing from Mexico, for the Mexican president is no longer in any position to promise the US government anything as his predecessors once could. And among many very powerful people in the Mexican commerce and industry, there is a plethora of them who are more than willing to seize the opportunity to return Mexico to what it was before NAFTA came into effect.

A very restrictive market with a lot of protectionism and a lot of trade barriers that could end up costing right now hundreds of thousands of American jobs, another fact that Donald Trump is hiding from his followers.

Thus, in effect, and herein lies a paradox, there are those in Mexico who would actually benefit with the killing of NAFTA, which means in turn there are tycoons in Mexico who actually view favorably a Trump presidency in spite of his offending remarks against Mexicans. And these Mexican tycoons care nothing about preserving American jobs, nor Mexican jobs for that matter. They are greedy entrepreneurs, pretty much like Trump, with an eye on profit and another on tax evasion.

It can be safely assumed that if the USA government, say under a Trump presidency, kills the NAFTA agreement, the odds of striking a new trade agreement deal with Mexico are a mathematical zero. Such a thing would not happen in our lifetimes. With NAFTA dead, there will be nothing there to replace it at least on the Mexican side. It would be hasta la vista baby. And the odds of doing it alone with Canada as the only trading partner in the deal do not seem very promising either. The social conditions are no longer there to re-enact what happened way back in 1993 and 1994. Indeed, looking back, it is very surprising that a thing such as NAFTA could ever become a reality with a lot of odds stacked against it.

It is very ironic that now, thanks to Donald Trump, millions of working Americans have been convinced that NAFTA has been a very bad deal for the USA and is taking away American jobs, and even Hillary Clinton herself is advocating a renegotiation of NAFTA, there is another major agreement in the making that will make NAFTA look childish in comparison. It is the Trans-Pacific Partnership or TPP. Indeed, TPP can render NAFTA obsolete, and in the final analysis it may not be necessary to try to renegotiate NAFTA with Mexico and Canada, since TPP has the potential of covering most aspects that need reviewing. But this will only work for the USA if the USA joins the TPP. But here comes the good part, and it is indeed very good. If Donald Trump and his millions of followers are sincerely convinced that all these trade agreements only steal jobs from American workers, then the only course of action for the USA regarding the TPP after the NAFTA experience is to abandon the TPP negotiations altogether. Will the USA government do it? So far, President Obama is actively involved in seeing that this agreement gets through. It is indeed a very important trade agreement. But if the USA, especially if Donald Trump gets his wish of becoming president, pulls out of the negotiations arguing that these trade agreements steal American jobs, then that trade agreement will still become a reality, but with the USA left out. And who will end up winning? Guess who. China! Indeed, China, not the USA, will be number one. As a matter of fact, many Chinese entrepreneurs are hoping that under Trump the USA will indeed commit hara-kiri and will be a no-show. Most economists argue that what will end up costing a lot of American jobs will be the USA pulling out of NAFTA and becoming a no-show at the TPP, and are warning that if such a thing comes to pass it will mark the end of the US predominance in the global market, pulling many USA jobs down the drain. This would be a hard lesson indeed that NAFTA was not such a bad deal after all, but if that’s what it takes to learn such lessons, then it will have to happen if Trump gets his wish. Remember communism? It was an experiment betting that a state planned economy could bring more secure jobs and equality than a market-driven economy. The experiment with communism turned out to be a fiasco, it failed, and in Eastern Europe they don’t want to know anything more about it. Well, same thing here with the TPP. If the USA by electing Donald Trump adheres to the belief that these trade agreements only bring a net loss of jobs, then precisely right now is a good time to carry out the experiment of not joining these trade deals at all. But, caveat, it may end up being a major disappointment. And when it happens, Trump will no longer be around to take the blame. Who will pay for the blunder then? Well, the American worker, who else?

If NAFTA gets killed next year, there will be nothing left to take its place, and most economists agree that the consequences of such a thing would be far-reaching. In the meantime, the European Economic Community, even without the partnership of England after its Brexit, will continue to grow becoming an ever increasing economic superpower if we consider the EEC as a single nation. And as far as Asia goes, things don’t look very promising either to the USA, not with China on the brink of becoming the foremost economic world superpower.

NAFTA may be good, or it may be bad, or it may be a mixture of both good and bad. But if NAFTA is destroyed, it will be  gone for good, and no man of the deal will be able to bring it back to life. Just one more thing to be considered before casting their votes by the thousands and thousands of gullible Trump supporters who truly believe that the Trump doctrine will create tons and tons of very good paying comfortable jobs, gullible people who may have forgotten the old saying: “If something sounds to good to be true, it probably is”. The only one who has not forgotten another famous saying may be Donald Trump himself, sticking to his main motto: “There’s a sucker born every minute”.