This article is from the source 'nytimes' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at https://www.nytimes.com/2017/10/24/us/politics/nafta-lobby-congress.html

The article has changed 5 times. There is an RSS feed of changes available.

Version 2 Version 3
‘Army’ of Lobbyists Hits Capitol Hill to Defend Nafta ‘Army’ of Lobbyists Hits Capitol Hill to Preserve Nafta
(about 5 hours later)
WASHINGTON — Dozens of business and industry leaders descended on Capitol Hill on Tuesday in a coordinated push to preserve the North American Free Trade Agreement, a pact that has appeared increasingly at risk as the Trump administration presses Canada and Mexico for significant concessions. WASHINGTON — Automakers, retailers and other business leaders stormed Capitol Hill on Tuesday in an extraordinary show of force against a Republican president they fear will cripple or kill the North American Free Trade Agreement, an outcome business leaders said could devastate their profits and harm the United States’ ability to compete in a global market.
More than 125 participants from the automotive, retail, agriculture and other industries plan to meet with all 100 Senate offices on Tuesday to ratchet up pressure on lawmakers — many of whose constituents work for companies dependent on Nafta — to keep the deal intact, the U.S. Chamber of Commerce said. More than 130 representatives from an array of industries met with senators on Tuesday to ratchet up pressure on lawmakers — many of whose constituents work for companies dependent on Nafta — to keep the deal intact.
The demise of the 1994 trade pact has become a growing threat in the wake of dramatic changes that the United States says it wants and that American businesses and foreign negotiators say are nonstarters. The future of Nafta has appeared increasingly at risk in recent weeks as the Trump administration presses for significant changes that businesses and Canadian and Mexican negotiators say are nonstarters. The United States’ position has pitted the Trump White House against the business community — an unusual position for a Republican president who cast himself as a friend of the business community.
As recently as two weeks ago, the president threatened to pull out of Nafta unless negotiators succeed in significantly rewriting the agreement, which governs commerce across the three countries. It’s an outcome the administration says might be necessary, but one that business leaders contend could devastate their profits and harm America’s ability to compete in a global market. But the Trump administration’s proposals to rewrite Nafta have triggered alarm bells among automakers, retailers, agricultural companies and other businesses, who say the provisions the United States is pushing are “poison pills” that would hurt American companies and jobs. They have mounted an increasingly frantic effort to persuade lawmakers to preserve Nafta and push back against the provisions the United States is advocating.
The meetings are part of an increasingly frantic effort by business groups to persuade lawmakers to preserve the deal and push back against some of the provisions that the United States is currently advocating. The U.S. Chamber of Commerce organized a visit to the House of Representatives on Oct. 11 to deliver a similar message. The daylong lobbying session was organized by the U.S. Chamber of Commerce, which promised to send an “army” of lobbyists to Capitol Hill to fight the provisions. The group organized a similar visit to the House of Representatives on Oct. 11.
The president has long threatened to ditch Nafta, but businesses largely discounted that as more bluster than reality. That has changed in recent weeks as negotiations with Canada and Mexico have become rockier, prompting industry leaders to organize and speak out. The next round of trade talks were postponed until mid-November to give the parties more time to resolve their differences. Business groups are worried about a number of United States proposals, including a “sunset clause” that would terminate the trade pact after five years unless the three countries voted to continue it. Businesses argue that the change would reduce the certainty the agreement gives them over their future operating environment — a key consideration when investing long term.
Bill Lane of the Trade Leadership Coalition, which advocates preserving Nafta, said that until recently businesses had been largely silent on Nafta because they did not want to undercut other policy priorities, such as rewriting the tax code to secure a lower corporate tax rate. “Any proposals that would risk a crisis every five years on Nafta wouldn’t provide the certainty our members need to bring these investments forward,” said Greg Skelton, who heads the global affairs division at the American Chemistry Council, a lobbying group. “We are going to have a huge increase in domestic production, and there is no way we can consume that domestically.”
“But they also realize it doesn’t matter what the tax rate is if you’re not competitive, and Nafta makes North American manufacturing competitive,” Mr. Lane said. Mr. Skelton said the group has “picked up the pace of our meetings on hill.”
Businesses argue that the administration’s proposed changes to Nafta would reduce the certainty the agreement gives them over their future operating environment — a key consideration when investing long term. They say other proposals the United States seeks would increase their regulatory burden and costs. In an age where capital is mobile and businesses move around the world to increase their profits by a few percentage points, they argue that tighter restrictions could push manufacturing out of North America altogether. Manufacturers are also concerned about the administration’s demand to increase the amount of a product that is manufactured domestically. The United States wants to require 85 percent of the value of an automobile to be manufactured in North America to benefit from Nafta’s zero tariffs, up from 62.5 percent currently. The proposals would also require half of the value of cars manufactured in Canada or Mexico to be sourced from the United States.
The administration’s proposals for reforming Nafta include adding a clause that would terminate the agreement after five years unless the three countries voted to continue it. The White House also wants to set a higher threshold for the proportion of automobiles and other goods that must be made in North America and the United States to benefit from favorable tariffs. Other provisions would make it easier for American businesses to levy punitive tariffs on Canadian and Mexican products, helping to wall off the United States’ market from what the administration describes as unfair competition. Novelis Corporation, an Atlanta-based aluminum producer, buys most of its primary metal from Canada since there is not enough of it produced in the United States to satisfy demand, said Marco Palmieri, the president of Novelis North America. The company brings Canadian raw materials to a plant in Oswego, N.Y., where they are melted down and transformed into coils that ultimately wind up in Ford or Toyota automobiles.
In remarks to the press after the fourth round of Nafta talks, Robert Lighthizer, the United States trade representative in charge of the talks, acknowledged that the administration’s current strategy involves rolling back some of the advantages enjoyed by businesses under the pact, with the aim of redistributing those benefits elsewhere. “Our business can be very badly hit depending on what direction this goes,” Mr. Palmieri said. Restricting cross-border trade “would be much higher cost, and it would make our business much less competitive.”
Mr. Lighthizer described his objective as getting “back to the days where there was a substantial majority of people in both parties that voted for these trade agreements.” But in order to get to that point, he said, “everybody has to give up a little bit of candy.” Matt Blunt, the president of the American Automotive Policy Council, which represents Ford, General Motors and Fiat-Chrysler, said the so-called rules of origin restrictions would probably encourage companies to shift automobile production outside of the United States and pay a tariff to import the vehicles. That would essentially create a tax on the auto industry and harm its competitiveness, he said.
“I think it’s possible to take a little bit of the sugar away, and have them say yeah, we’re still doing pretty well,” Mr. Lighthizer said of American businesses. “I understand that everybody that’s making money likes the rules where they are, that’s how it works. They can make a little less money or make more money in a different way, and we can get the trade deficit down.” Those arguments fell on largely sympathetic ears among Senate Republicans, many of whom support Nafta because it supports companies and jobs in their home states. But, privately, Congressional aides say lawmakers feel they have little influence over the White House’s trade policies.
In the final analysis, Mr. Lighthizer said, he believed businesses would support the revised agreement. President Trump has long threatened to ditch Nafta, but businesses largely discounted that as more bluster than reality. That has changed in recent weeks as negotiations with Canada and Mexico have become rockier. The next round of trade talks were postponed until mid-November to give the parties more time to resolve what they described as “significant conceptual gaps.”
So far, however, many businesses have expressed firm opposition to the proposals. Speaking in Mexico City earlier this month, Thomas J. Donohue, the president of the U.S. Chamber of Commerce, said that several proposals on the table could “doom the entire deal” and that the chamber would send an “army” of lobbyists to Capitol Hill to try to stop them. Bill Lane, the chairman of the Trade Leadership Coalition, which advocates preserving Nafta, said that until recently businesses had been largely silent on Nafta because they did not want to undercut other policy priorities, such as rewriting the tax code to secure a lower corporate tax rate.
Among the biggest opponents of the administration’s changes is the automobile industry. Under the administration’s proposed changes, 85 percent of the value of an automobile would need to be manufactured in North America to benefit from Nafta’s zero tariffs, up from 62.5 percent currently. The proposals would also require half of the value of cars manufactured in Canada or Mexico to be sourced from the United States. “But they also realize it doesn’t matter what the tax rate is if you’re not competitive, and Nafta makes North American manufacturing competitive,” he said.
According to Matt Blunt, the president of the American Automotive Policy Council, which represents Ford, General Motors and Fiat-Chrysler, these restrictions would probably encourage companies to ignore Nafta altogether, prompting them to make automobiles outside of the United States and pay a tariff to import them. That would essentially create a tax on the auto industry and harm its competitiveness, Mr. Blunt argued. Warren K. Erdman, an executive vice president of Kansas City Southern Railway Company who came to Washington to lobby senators, said he believed new restrictions on trade would harm the economy. “While we support growth of the American economy through tax reform, we don’t want at the same time to impose tariffs, which are essentially taxes on production,” he said.
On Wednesday, the American auto manufacturers, parts suppliers and dealers announced they would form a coalition called Driving American Jobs to fight to preserve Nafta. The Trump administration does not appear ready to give in. In remarks to the news media in mid-October, Robert E. Lighthizer, the United States trade representative, said that businesses should be ready to forego some of the advantages they receive under Nafta as the United States seeks to negotiate a better deal for workers. In order to win the support of people in both parties, businesses would have to “give up a little bit of candy,” her said.
Hun Quach, a lobbyist for the retail industry who planned to visit the Senate on Tuesday, said retailers saw opportunities to update and improve Nafta in a number of areas. But her group, the Retail Industry Leaders Association, was concerned about tighter regulations for apparel and textiles, the introduction of more uncertainty into the deal through a sunset clause, and more protectionist trade cases by the United States that would block imports from Canada and Mexico, she said. “I think it’s possible to take a little bit of the sugar away, and have them say, ‘Yeah, we’re still doing pretty well,’” Mr. Lighthizer said of American businesses. In the final analysis, businesses would support the revised agreement, he said.
But business leaders say it is less about taking sugar away and more about pouring salt into the wounds of companies that are trying to compete in an era of global trade, where capital is mobile and businesses move around the world to increase their profits by a few percentage points. Many argue that tighter restrictions could push manufacturing out of North America altogether.
Hun Quach, a lobbyist for the retail industry who visited the Senate on Tuesday, said retailers are concerned about tighter regulations for apparel and textiles, the introduction of more uncertainty into the deal through a sunset clause, and more protectionist trade cases by the United States that would block imports from Canada and Mexico.
“Anyone doing business within the Nafta region would like to have certainty to know that their supply chains they build over decades will remain in place,” Ms. Quach said.“Anyone doing business within the Nafta region would like to have certainty to know that their supply chains they build over decades will remain in place,” Ms. Quach said.
Mark Zandi, the chief economist at Moody’s Analytics, said a study he is currently conducting on the effects of the Nafta proposals show that the Trump administration’s efforts would have either very little benefit to the economy or a substantial negative effect.
Some of the administration’s basic proposals — including its plan to raise the threshold for automobiles manufactured in the United States — would actually slightly raise economic growth in the United States, though by an almost imperceptible amount, Mr. Zandi said.
However, tearing up Nafta entirely would stunt the United States economy in a way that is comparable to a $150 billion tax increase, he said. And leaving Nafta and restoring 20 percent tariffs on all exports — which Mr. Trump frequently discussed during the campaign — would be enough to stall out the United States economy in 2019 and push Mexico into a recession, most likely triggering a wave of illegal immigration across the southern border, Mr. Zandi’s research indicates.
Mr. Zandi said he was “hard pressed” to think of any industries that would benefit from these proposed changes.
“I don’t think there’s any upside here,” he said. “I see this as a big waste of time. And it’s just creating angst unnecessarily among business people.”