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Bloomberg Businessweek
October 8, 2018
37
Edited by
Cristina Lindblad
One of Donald Trump’s most consistent economic
promises has been to spark a revolution on behalf
of those Americans forgotten by the new global
order and to renegotiate trade deals that he says
have given U.S. allies and adversaries alike a leg up
on domestic workers.
The president and his aides consider his rewrite
of the North American Free Trade Agreement a
promise delivered—and a vindication of his t
arifs-
and-tweets form of trade negotiations. “Without tar-
ifs, we wouldn’t be talking about a deal,” Trump
crowed to reporters at a Rose Garden ceremony
celebrating the U.S.-Mexico-Canada Agreement on
Oct
. 1. Calling it “the most important trade deal
we’ve ever made by far,” he predicted it would pass
Congress “easily” once he signs it in late November
and get “cash and jobs” lowing back to the U.S.
There’s no doubt that the deal marks a sig-
niicant political victory for Trump, yet viewed
soberly, his new Nafta amounts mostly to a
rebranding of the 1994 accord he labeled a “disas-
ter” rather than a wholesale insurrection against
it. Clinched just before a midnight Sept. 30 dead-
line, the agreement reads largely like an amalgam
of the existing Nafta and the 12-nation Trans-Paciic
○ Trump’s hard-won new
trade pact is more rebranding
than rewrite
Partnership that Trump pulled the U.S. out of on
his irst full working day in oice.
Despite Trump’s insistence that the unpro-
nounceable USMCA is an improvement on its pre-
decessor, some trade experts warn that some
industries could be worse of. Mary Lovely, an eco-
nomics professor at Syracuse University, argues that
some of the new rules—particularly those governing
trade in autos—could raise costs for American com-
panies, denting their competitiveness vis-à-vis rivals
in China and elsewhere. That could prompt them
to move production out of North America. Rather
than ix Nafta, the Trump administration “will have
added bricks to ‘Fortress America,’ ” she says.
Manuel Balmaseda, chief economist at Cemex,
the Mexican cement giant, says it’s appropriate that
the words “free trade” have disappeared from the
pact’s name, because its tweaks do more to restrict
trade than liberalize it. “There is no free trade in
this new agreement,” he says.
Still, for many in the U.S., Canadian, and
Mexican business communities, an imperfect deal
is better than no deal. Corporate executives had
feared Trump might carry out his threat to pull
out of Nafta and thus upend the region’s highly
integrated supply chains.
What’s more, contrary to Trump’s rhetoric, the
changes aren’t all that dramatic. U.S. dairy farmers
will be allowed to sell more duty-free milk to
Canada than they do now, though at a level largely
in line with that negotiated in the TPP. In return,
NAFTA
[
naf
-tuh]
USMCA
[
naf
-tuh]