Here we go again. This week, President Trump appeared to renew his threat to withdraw from the North American Free Trade Agreement (NAFTA) if Democrats do not pass his new United States-Mexico-Canada Agreement (USMCA). His threats may worry pro-trade Republicans, but they are music to the ears of anti-NAFTA Democrats, who would love nothing better than to get rid of NAFTA without giving Trump a trade victory.
Sen. Rob Portman, R-Ohio, has a better idea: Trump should tell Democrats that they will own NAFTA if they oppose his deal to replace it. The message should be "if you're a Democrat, you essentially are voting for NAFTA if you vote no on USMCA," Portman explained in an interview on the American Enterprise Institute's new podcast, "What The Hell Is Going On," which I co-host. If the USMCA fails, he says, "you go back to the status quo, which is NAFTA."
Besides, Portman says, there is no good reason for Democrats to oppose the USMCA because "it is such a much better agreement for Democrats than NAFTA. ... It's everything that they've been asking for, in terms of improving the NAFTA accords." Take the automobile industry for example. America has lost about 350,000 auto jobs since NAFTA was ratified in 1994, which is a third of all jobs in the industry. Meanwhile Mexico has gained hundreds of thousands of auto jobs during that time.
The USMCA will reverse that decline and bring auto jobs back to America. It increases the percentage of a vehicle that must be made in North America from 62.5 percent to 75 percent. It requires at least 70 percent of a vehicle's steel and aluminum to be from North America. And it requires between 40 percent and 45 percent of a vehicle be produced by workers earning a minimum of $16 per hour. Portman's office estimates that, given Mexico's low wages, this will significantly shift auto production from Mexico to the United States.
"Look at the details of this agreement," Portman says. "There's a minimum wage in Mexico for autoworkers. That's not a Republican approach, but it's very helpful for autoworkers. ... The rules of origin, where you have to have more things made in North American countries. ... That's something Democrats have been asking for years." How, he asks, can Democrats vote against that and in favor of the NAFTA status quo?
Portman points out that the U.S. International Trade Commission estimates that the USMCA would raise U.S. employment by 176,000 jobs. And the Office of the U.S. Trade Representative (USTR) says the USMCA would result in $23 billion in new U.S. auto part purchases and create 76,000 U.S. auto jobs. Would Democrats prefer those purchases and those jobs go to Mexico?
Or, take labor and environmental standards -- longtime Democratic priorities. There are none in NAFTA. Labor and environment commitments were added only after the fact, as "side letters" by President Clinton, but since they were not in the actual agreement, they are not enforceable. USTR says the USMCA "includes the strongest, most advanced, and most comprehensive set of environmental obligations of any U.S. trade agreement" and "unlike the NAFTA, the USMCA's environmental provisions have been incorporated into the core text of the agreement [and] are fully enforceable."
As for labor standards, the USMCA guarantees secret-ballot votes by workers on collective bargaining agreements, and according to USTR, it requires the three countries to "practice core labor standards as recognized by the International Labor Organization, including freedom of association and the right to strike, to effectively enforce their labor laws." Do Democrats want to throw all that away in favor of an agreement with zero enforceable labor and environmental standards?
Portman says Trump should tell Democrats, "Wait a minute, this is all the stuff you said you wanted." If Democrats block the USMCA, so long as NAFTA remains in place Trump can hang it around their necks in key battleground states such as Michigan, Wisconsin, Pennsylvania and Ohio, which they need to win the presidency. He can tell working-class voters that Democrats voted to keep sending auto jobs to Mexico, and against the environment and the right to strike.
Democrats understand this, which is why Portman thinks the USMCA will pass. "I think it's going to get done for a very simple reason, which is logic will ultimately prevail." But logic will prevail only if Trump stops threatening to leave NAFTA.