US industry gears up to save NAFTA

The business world is mobilizing to convince the Trump administration to save the North American Free Trade Agreement, which corporate leaders say has greatly benefited the world's largest economy for 23 years.

With televised ads proclaiming "NAFTA works for America" and study after study enumerating the dangers of withdrawing from the treaty, the US Chamber of Commerce and like-minded trade proponents have taken their message to Capitol Hill.

The effort has taken on added significance now that negotiators from Canada, the United States and Mexico working to overhaul the treaty are conducting their fifth round of talks in Mexico City.

"We -- along with several other business, agriculture, and industry groups -- made the case on the Hill in recent weeks. On October 24, the group talked about NAFTA with all 100 Senate offices," a spokeswoman for the US Chamber of Commerce told AFP.

Their message: exiting NAFTA would be a grave mistake that could, among many other painful outcomes, devastate American agriculture, including wheat producers, according to the chamber.

According to Monica De Bolle, senior fellow at the Peterson Institute for International Economics, an outright US withdrawal remains "a very, very clear possibility."

The last round of talks in October saw radical propositions from the US side, including a "sunset" clause -- which would require the three sides to renew the treaty in five years, failing which it would expire -- and a call to scrap the trade dispute arbitration mechanisms in Chapter 19 of the agreement. 

Both proposals are anathema to investors, and were immediately rejected by Mexico and Canada.

They were also a wakeup call to lawmakers and businesses who until then had not taken President Donald Trump's threats seriously, said Edward Alden of the Council on Foreign Relations.

"To be fair, this president is hard to predict," he told AFP. "We've never had a president like him before, so it is hard to make a good judgment on what constitutes a laugh and what constitutes a serious threat."

- 'They have money and influence' -

Trump has denounced NAFTA as a "disaster" and the worst agreement ever signed by the United States, blaming it for a $64 billion trade gap with Mexico and loss of countless jobs.

According to de Bolle, different trade bodies and organizations are working to convince the Trump administration "to move away from this very hard rhetoric that we saw in the fourth round."

As a result, she said, the top officials from the three countries are staying away from the latest round of talks to avoid more verbal escalation.

"It preserves the possibility to have a sixth round in 2018," said de Bolle. 

Alden of the Council on Foreign Relations said the business world was now committed to the task, "and they have money and influence."

With US mid-term elections a year away, Trump needs to show results. 

And one fear, according to de Bolle, is that he could make good on a campaign pledge to scrap NAFTA altogether if high-stakes Republican efforts to overhaul the tax code fail in the Senate.

According to an opinion poll published this month, 56 percent of Americans believe NAFTA has benefited the United States. Only among Republican voters do a majority believe the contrary.

Beth Ann Bovino, chief US economist at S&P Global Ratings, said many people were unaware of how trade had grown since NAFTA took effect in 1994. 

"It has tripled since NAFTA was initiated," she told AFP.

She said the agreement had strengthened competitiveness among manufacturers by forcing businesses to innovate, "which has increased employment and investment opportunity in the end."

Exiting the treaty would drive up prices, slowing consumer spending -- a mainstay of the US economy -- and depressing corporate revenues as a result, Bovino added.

Citing an ImpactECON study, she said job losses for unskilled workers could rise as high as 250,000 positions in the three to five years following a withdrawal.

Adding skilled labor would see job losses rise by another million positions