EconVue Spotlight: NAFTA, DESPITE ALL THE AMPUTATIONS

I'm just back from Los Angeles, where I participated in a panel on international trade sponsored by City National Bank. I particularly enjoyed the remarks by Ambassador Mickey Kantor, former Secretary of Commerce and US Trade Representative, who has a unexpectedly wry sense of humor for a tough negotiator. When his mobile phone rang on stage, he joked that it was probably President Trump calling him to ask his advice on NAFTA.  And well he should, since Mr Kantor was the force behind US negotiations on NAFTA and the WTO.  Here is a PBS interview  on his legacy.  Ray Suarez’s questions in 2011 now seem astonishingly prescient about the forces that created the Trump era.  

In June of 1993, the White House invited a group of Chicagoans (I was then head of Women in International Trade) to learn about NAFTA. Hillary Clinton spoke to our group to help build support in the hinterlands. This reminded me of her original close connection to the agreement, perhaps one of the reasons for President Trump's current anathema.

I thought we would be discussing China more than NAFTA but the news about auto import investigations changed that. Actually the focus on NAFTA for Californians shouldn't be surprising, given that Mexico and Canada are the state's largest export destinations.  California is a country; its GDP is about equal to that of Canada and Mexico combined.

What I learned from my fellow panelists is that if the US does nothing, NAFTA as it is today will stand.  The problem is that even its proponents agree that drastic updating of the agreement is needed.  Our panel was divided on whether or not the US would move forward, remain in neutral or withdraw.  I'm going to agree with Mr Kantor, who thinks that in the end, business voices will be heard and negotiations will succeed. A possible wildcard is the Mexican presidential election on July 1st.  If as seems likely Andrés Manuel López Obrador (the Trump of Mexico) wins,  all bets are off.

Despite all the amputations, I am hopeful that US trade will be allright. There is no doubt however that we will be rocking & rolling for some time.

Happy Memorial Day to all, as we remember those no longer near, but always dear to us.

RESEARCH BY ECONVUE EXPERTS

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STORIES IN OUR SPOTLIGHT

World

Mexico's Pena Nieto 'optimistic' on NAFTA as country makes new offer
Daina Beth Solomon & David Lawder 5/24/2018 Reuters

Mexico's President Pena Nieto 'optimistic' on NAFTA as country makes new offer--but will the Mexican presidential election on July 1st throw a spanner into the works? Not much time left.

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Innovative public-private insurance to stop epidemics being deployed to fight Ebola.

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Is the cure that claims to enable privacy protection worse than the disease? Will new EU regulations force thousands of foreign websites to block access to EU nationals?

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Mohamed A. El-Erian  5/16/2018 Twitter

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GDP statistics are exaggerated by authoritarian regimes, based on nighttime light comparisons, according to a University of Chicago working paper.

U.S.

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China

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Belt and Road Initiative Quarterly: Q2 2018
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Investment in China’s One Belt One Road in one graph.

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Sensible explanation of the ZTE turnaround. The company has already lost $2B in revenue and is expected to be heavily fined.

FinTech

Bitcoin's fate? This cryptoasset manager sees two possible outcomes
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Chicago

Jack up property taxes for pensions, say three Chicago Fed economists
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