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tv   20th Anniversary of NAFTA  CSPAN  December 30, 2013 1:00am-2:36am EST

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>> next a discussion on the north american free trade agreement. this was hosted by the center for strategic and intern ational studies. it is an hour and a half. [applause] >> thank you for that very generous introduction. thank you for coming out when it is freezing cold and it is only this gorgeous building. this building is very special. it is wonderful to be at csis. scott has already reminded you that president h. w. bush signed the trade agreement in 1992.
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it was signed into effect by president clinton in 93 and became enforced in '94. with 20 years of experience, the question that scott has put to me, what has significance for the future? making this assessment, i think we need to be clear about what the agreement actually did. it was the first comprehensive trade agreement to join developing and developed countries. reaching wider and deeper market openings. industrial goods guaranteeing unrestricted agricultural trade
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between the united states and mexico. opening a range of services including financial services. it was the first international trade agreement to do that and it established clear rules to protect the rights of investors by prohibiting barriers such as local content restrictions and import substitution requirements. as a result of the market
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openings that this agreement created, the activity between the three nations exploded. the single largest export market, 98% of their energy services and products. more than 8 million u.s. jobs depend on our trade with canada. mexico is our second largest export market and some 6 million u.s. jobs depend on our trade with mexico. a highly efficient and integrated supply chain has developed among the north american economies. interregional trade flows have increased to about 290 billion dollars in 1993 and over $1 trillion in 2012. more than $1 billion a day cross our southern border.
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about half of our trade with canada and mexico take place between related companies. and the resulting specialization has increased productivity in all three economies. we not only sell things to one another, we make things together. quite remarkably, for every dollar of goods, $.25 of u.s. input is in canadian goods that come across our border. and $.40 of mexican goods is u.s. content that comes across our border. and with china, it is four cents.
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mexico has made a substantial investment in the united states signing the nafta in sectors of cement, bread, dairy, and retail. and u.s. investment in mexico has grown substantially, about half of it in the manufacturing sector. most of that in the auto sector. and much of the output in our investments in canada and mexico come back to us which add to our competitiveness and production of final products. canada has invested about $200 billion in the united states which makes it the fifth largest investor and we have invested
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$310 billion in canada to become its largest investor. in spite of this really remarkable growth that can be traced to the opening of the regional markets, the agreement still has critics. most that attack nafta focus on mexico, not on canada. we claim that the partnership is one-sided. that the agreement is mexico's gain and america's pain. but having mexico as a nafta partner has served u.s. economic interests extremely well.
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last year, 13% of our nation's total exports went to mexico. that is succeeding sales to brazil, india, china, and russia combined. mexico buys more goods than all the rest of latin america combined. and goods bought by germany, great britain, france, and the netherlands combined. i think it is generally agreed that the market openings created a substantial increase related to exports. an average of 15%-25% more that are domestically focused. and with 113 million consumers with purchasing power of over $1 trillion, mexico offers
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opportunities that are quite substantial to entrepreneurs whether they be large or small. it is a large that particularly benefit from mexico's proximity and it has opened up to our trade. mexicans purchase 11% of the exports produced by small and medium-sized enterprises that account for more than half of this nation's job creation. and making this economic picture even brighter for every dollar that mexico earns from its exports worldwide, it spends
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$.50 on u.s. goods. the economic integration that has occurred among the three north american economies in the past two decades has made the north american region one of the most competitive in the world. the rest of the world is not standing still. supply chains circle the globe. the united states has proliferated. continuing to open global markets to investment ideas and people originating in this hemisphere and ensuring that our supply chains work at maximum efficiency. there are actions that we could take that would maximize opportunities to build on the nafta platform and create new commercial opportunities, cut costs, create jobs, and generate substantial economic benefit of all of our citizens. if we evaluate the benefits, we can assess the potential benefits not only from a national basis, but from a regional basis lest we lose
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substantial opportunities by using the nafta platform. it was a positive development that will better enable us to take positions and maintain the competitiveness of the north america region. as we move forward to negotiate the transatlantic trade and investment partnership with 28 states that comprise the european union, we would benefit substantially from having mexico and canada join those negotiations. i think the reason for doing so is very persuasive. it would strengthen the
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agreement, give it more have to buy at a 100 50 million consumers and $1 trillion in gdp, thus expanding market opportunities. second, it would reduce the complexity if the neighbors are excluded. mexico already has a free trade agreement with europe and has had one since the year 2000. canada announced it negotiated a trade agreement this past october. having to deal with three separate agreements with different rules of origin would not only create a headache but unnecessary cost burdens for consumers. it would erode the unique and hugely beneficial economic integration that we have achieved as a result of nafta. having all three north american governments purchase a paid in
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the negotiation would give us all an opportunity to upgrade and expand nafta. significant advances have occurred in the area of data flow, telecommunications, and other areas not on the table when we negotiated the north american free trade agreement. it would provide us another opportunity to provide greater regulatory coherence. between the u.s. and europe is about three percent. higher in some areas. it is burdensome and quite different on both sides of the atlantic. it facilitated president pena's economic reform that we so strongly support. pointing to the benefits that mexico could potentially gain from this mega agreement to be rather similar to how president
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salinas used nafta to begin economic reforms. as we move forward in the 21st century, we need to take steps. we can educate populations about the benefits that can result from thinking about and dealing with trade and investment opportunities not only as a single nation but also as a highly integrated region that north america has to come. there is no better time than the 20th anniversary of nafta to move forward on this. i am grateful to csi ask for picking up the banner and starting the process. thank you for being here and i look forward to listening to the panel. [applause] >> i would like to invite the panel to come forward.
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we have several experts in the north american region to discuss this topic today. i am delighted to be joined -- ambassador hill made the comment that a lot of people would like to do this very thing. we will do that. it is my great pleasure to turn this panel over to our moderator. the ambassador is our senior international partner. and as both her priority government service and after government service have helped u.s. businesses deal with the north american free trade agreement. i look forward to listening to the panel. [applause] rex. i would like the panel to come forward. we have several experts in the north american region to discuss this topic today.
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i am delighted to be joined -- ambassador hill made the comment that a lot of people would like to do this very thing. we will do that. it is my great pleasure to turn this panel over to our moderator. the ambassador is our senior international partner. and as both her priority government service and after government service have helped u.s. businesses deal with the north american free trade agreement. >> thanks so much, scott. let me start by congratulating carla on her remarks and for her tenure. let me also say that every organization builds a new
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building. the peterson institute, new building. council on foreign relations, new building. csi ask, new building. if you live -- csis, new building. if you live here and think we're in decline, that's why. it's timely, thank you for your work on nafta and so many trade initiatives. i thought i would make a few remarks. let me also knowledge another former -- and one of the great people of washington, truly. let me start by recalling what kennedy said about canada. it applies with equal force to mexico.
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hello, jim. it could introduce all of you to each other. john kennedy said with respect to canada, geography has made us neighbors, history has made us friends, economics has made us partners and necessity has made us allies. one of the strongest concrete expressions of this observation is nafta. as carla said, it is deeper than any previous free-trade agreement. they began to tackle issues of labor in the environment that were new to the trade agenda. it was the first between the developed and developing
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country. it included robust enforcement measures that was a precursor to the wto at the same time that they fail to have. overall, they have more than tripled since the agreement took effect and it topped the trillion dollar mark for the first time in 2011. with respect to mexico, two-way trade has surged over 500% compared to half of that for non-nafta countries. this is one of the most enduring contributions to economic competitiveness. the accompanying growth. today, more and more
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manufacturing processes span both sides of the border and factories are able to achieve greater economies of scale. mexican per capita gdp more than doubled and we have seen a fivefold increase into mexico from the united states. with respect to canada, two-way trade has also increased. about the same as trade globally, but bear in mind canada darted from a very high base. it was already our number one trading partner when nafta was negotiated. the 270% increase is saying a lot. in addition, if you look at specific sectors of trade, the agreement with canada has proven extraordinarily beneficial on
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both sides. agriculture and two-way trade has tripled compared to non- nafta countries. and today, canada is the single largest market for u.s. agricultural products. mexico is number two. nafta has been a resounding economic success and has enhanced north american competitiveness and cooperation. there is quite a bit of room for improvement. korea is a good example, a chorus of agreement with far more robust disciplines in areas like state owned enterprises. and nafta never addressed the 21st century challenges. there was no internet when it was negotiated. social media, there was no social media.
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cross-border data flows, not an issue. biotechnology was not an issue. nafta is beginning to show its age. and without repair, it will erode. there are also areas where nafta hasn't achieved its promise. if you look at i.t., canada has provided innovative pharmaceutical companies with only a very limited right to appeal marketing approvals for generics. canadian courts have been opposing very high utility requirements for patents, discriminating against innovative pharmaceuticals. canada was on the ip priority watch list with russia and canada. canada has since graduated to the ordinary watchlist, but come on.
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nobody should be on any watch list areas like this. these deficiencies need to be cleaned up. another area is security related and security restrictions on the flow of goods and people. in the wake of 9/11, border security increased to such an extent that it began to hamper trade, create long wait times at the border and prevent goods and workers from crossing freely. we certainly need to ensure security, but we also need to ensure that border bureaucracy does not unnecessarily stifle economic growth. many items that are and should be on the trilateral agenda to ensure that the foundational status is maintained for the
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good of all three countries. i think it would be unwise and unnecessary to reopen it formally. i don't see any particular point in that, but if think there are four main paths for building upon that success and updating. first, targeted solutions for specific outstanding irritants in the trade relationship. movement of personnel is an example. the obama administration should rededicate itself to effectively using bilateral forums including the forums it self has created which have been underutilized and are not yet producing concrete results. we should make incremental improvements including chapter by chapter updates of agreements as needed, particularly where those can be implemented by
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regulation rather than legislation. these kinds of updates can be negotiated in the existing forums and working groups and can take their cue from more recent fta and agreements on the table. we can use it as a vehicle to enhance nafta discipline. canada, mexico, and the u.s. are all parties that would involve services, investments, competition policy, and the range of 21st century issues. where it imposes a higher standard, i think it should be the governing discipline in north america. where it conflicts with nafta but does not impose a higher standard, the nafta parties should negotiate as needed to resolve the conflict. this approach would make it possible to dramatically improve
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upon it while maintaining its primacy in north america. and we can use it as a potential template for enhanced talks on regulatory harmonization among nafta countries. to a certain extent, regulatory talks are underway in the forums that have been created. they can provide a much more robust example and provide a template for accelerating and deepening regulatory reform. these strategies, targeted solutions, chapter improvements, the agreements can in sure the vibrancy of nafta while most importantly driving convergence between the legal frameworks governing trade in north america, europe, and asia. convergence here is absolutely the key.
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it will facilitate greater consistency and treatment and outcomes and avoid the regional balkanization of trade. convergence will help guarantee the future of north american competitiveness globally and ensure that our trilateral partnership remains robust and forward-looking. with that, i would like to turn to our distinguished panelists that i will now introduce. laura dawson on my left is the founder of an ottawa-based consulting form specializing in investment in regulatory issues. she was previously a senior adviser on economic affairs in ottawa and also keeps one foot in academia serving as a public policy scholar. second is chris wilson, an
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associate at the woodrow wilson center where he develops research and programs on racial and economic integration. he is also the author of working together, economic ties between the u.s. and mexico and is co- author of the state of the border report, published by the wilson center. our third panelist is another chris. senior fellow at the hudson institute or he specializes on u.s. canada relations. he also teaches at johns hopkins, the american university school of public affairs, the state department's foreign service institute and at the department of homeland security. he is a frequent commentator on print and on television.
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last but not least, our captain. scott is senior advisor for international business. before that, he was the director of global trade policy at procter & gamble where he led i think every campaign supporting u.s. free-trade agreements. he also served as liaison and a state department advisory committee on international economic wallace he. he has been -- economic policy. he has been and remains a leader in our field. so please, laura. >> i think if you will forgive me a minute, i will catch my breath and be dazzled. it is quite an honor that these two women have led the united states and canada through many important trade initiatives and it is a bit overwhelming for a trade professor to be the third speaker.
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i would also like to thank scott for the invitation to speak this morning and putting this program together. it is lovely to see so many friends and colleagues from canada, mexico, the united states, this is like the nafta all-star team in this room. if i say anything wrong, please throw something at me. we are here because we were involved in the creation of a report commissioned by the government of canada. we were to do some thinking about the future of nafta and a framework for north american competitiveness. there is no doubt, based on your own knowledge and the comments
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made by ambassadors this morning, nafta was and is a very successful agreement. establishing a framework for regional trade agreements when there were few, if any models prior to that. but as both of our speakers have said, it is an agreement that needs updating. it was negotiated before the internet and deals very little with energy issues which are so important to all of us. digital transfers, movement of people. nafta doesn't contain a mechanism for continued growth. there are the working groups but it wasn't an over arching enforcement mechanism that would
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force us to move forward. i would say that nafta has languished in many respects. the fact that we did do a good deal initially combined with the really bad press that nafta has received, particularly in the u.s., has made it very difficult to promote a robust and evergreen agreement. we have therefore moved on to stop gap measures. one of the things that we have adopted is a series of dual bilaterals where, on important issues like regulatory cooperation, borders, energy, rather than the three parties sitting down and having a robust and meaningful cooperation. a down in the leaves conversation about the problems and how to fix them.
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i would argue this is the best .ay to go the beyond the border process has definitely made some very strong progress in the last couple of years. bilaterallye faster and we can move trilateral he. the problem for me, however, is that this bilateral initiative attention.cal it is rapidly running out of gas. is goingsee that there to be life in these agreements past 2014. maybe i am wrong. in order to maintain the political momentum and economic for the agreements that we have, we need to trilateral lice them. this is not the mexico of 1992. -- trilateralize them.
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this is not the mexico of 1992. mexico is one of the fastest- growing economies with a growing middle class and growing skills. they are our engine of growth for the region. they are an emerging market that is contestable. india are and interesting and important, but mexico is important. i want to focus on the focus of sme's. i argue that nafta was the agreement of big business. large companies lobbied hard to get these looked after. once those large barriers move out of the way, we lacked a business consensus which continued to push for progress and a deepening and a widening of the agreement.
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why? because these enterprises are too busy to lobby on behalf of new initiatives. also, the work that we need to do is in the area of non-tariff barriers. these picky little standards, these little inspections, things that are notoriously difficult to root out. what we need to do is reduce the transaction costs by getting rid of these nontariff barriers. so that our small and medium- sized enterprises. i believe the basis of north american competitiveness is a platform for our regions competitiveness throughout the world, asia, africa, etc.
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i also believe that it is very important that our three governments exercise the leadership to pick up the flag for the small and medium enterprises to reduce transaction cost to make it easier to function in an integrated market. in the paper that chris published, we recommend trilateralization. of the regulatory cooperation process. not necessarily full -- for heaven sakes, we ought to have a mexican representative attending some of the canadian meetings, and a canadian representative going to some of the mexican meetings. we need to find consensus where there is consensus on some of these initiatives to bring the sectors together.
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similarly, we would like to see that move forward with the border and initiatives. there are important issues to be considered in economic benefits that could be derived from rationalization and cooperation on our multiple borders. we are recommending harmony where harmonization is possible. and the ambassador already outlined some the ways that we can do that. i will not go into detail, except to say that sitting at the same table is not the same as negotiating together. i think there has been a belief that canada and mexico are the bird in the hand. we got them. now we are going to get asia. we also recommend more intense focus on infrastructure, cooperation, not just on building things together, but
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needs assessment and feasibility. human capital. that is our way of saying movement of people and labor mobility where possible, investments in research and development. and energy. we need an energy dialogue which focuses on ways to rationalize movement and distribution of energy. and looks at ways to really capitalize on the fact that our region is unique in the world that we are self-sufficient in energy and we have things to trade externally. the fourth point i have has to do with leadership. in my original notes, i said
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that we in leadership from our three governments, in order to get a north american competitiveness object of the road ash and i suggest there is incremental ways to do that, but unfortunately they stole my thunder this morning. if you read the miami herald, and cnn and spanish, john kerry said he is going to deepen the north american trading relationship with canada and mexico and other north american trading partners, and that this initiative may be fleshed out in february. to that i say hooray, our work is done. thank you. >> thanks very much for the opportunity to speak with you today. when we are considering whether to deepen the partnership there are two ways that you can think about the question. one is to look back and see what it is done and say was nafta a good idea? it was the integration a positive for the region. i believe the answer to that is yes. nonetheless the agreement is seen in public eyes as very contentious.
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we could rehash the public debate. there was a sucking sound of jobs that may or may not have happened. or we can take a more forward- looking approach. and we can say where we are now is fundamentally different than where we were 20 years ago. the decision on whether or not to move forward is fundamentally different than whether or not to create nafta 20 years ago. that is the approach we have taken with the paper, and it is a much more forward looking approach. that is important. the relationship is fundamentally different. nafta did not just expand the trade between the three countries. it also deepened it in a profound way. this creation of production sharing, joint manufacturing platforms, that means that we trade materials, which means we
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are building products together and not just selling them to one another. that has deep implications that because it means that the competitiveness of our countries depends on the competitiveness of the other countries in north america. if mexico improves productivity in the manufacturing sector that means that there are better impetus to be used in production in the united states. that means if our products are more competitive that means they're more competitive in china, in europe and the rest of the world. we are linked together in competitiveness in a way that we were not linked together 20 years ago. i think that changes the way that we look forward in asking questions. reframing the question, given how deeply connected to the manufacturing sector is, what can we do to boost the industry?
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and so that is the key question, is how to make north american exports more competitive on the global market. i think there are some things that we should look at that are happening right now. there are some new changes right now that will guide us in some new directions right there. so much of what the trade in north america is about the co- production of manufacturing. i think it is important to reflect on what is happening right now the world of manufacturing. we talked about that today already about the changing nature of the global trade in architecture and how that demands that we update nafta. there are changes in the way that we are manufacturing products, in technological advances that demand that we rethink an update nafta. i mean advanced manufacturing, the industry's use of manufacturing in the production cycle.
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what that means is that of portion of the pie is what the different costs are? the low skilled labor is shrinking. we don't need as much skilled labor to create products and more. what is the implication of that? everything else in the pie is more important. if the companies trying to decide where to locate their manufacturing, where to locate their plant, it becomes more important with all the other factors of production. the first of those is energy. we are a great moment in north america with energy. energy is an important input into manufactured goods. right now we are undergoing a shale oil revolution. mexico has passed through and the constitutional reform that has gone through the state congresses. it is looking very positive. so mexico the process of passing
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this is the biggest change in 75 years. this fundamentally changes the ability to have north american discussion of energy. there was a sensitivity previously, sort of like there was before nafta in the relationship, in terms of mexico's participation and their ability to participate in a regional discussion. energy was off the table at the moment. energy is on the table now. it is at a perfect moment. there's other technology that is allowing energy prices to drop in north america. that means that many factors in manufacturers in mexico can participate and that advantage in a way that brings
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competitiveness act to the entire north american region. the second is human capital. as the need for low skilled labor shrinks, the need for high skilled labor increases. you need people to be able to fix these complex machines and be able to program them, and the research and design component are important. all of that is integrated into the manufacturing process. it is important for manufacturers to have folks close to and in close communication with the people who are putting the product on the market. what do we need to do in north america to make sure that we have the human capital to attract manufacturing in the north american region and keep it here? there's a lot that each country needs to do in terms of education to do that. there are couple of things that we need to do as a region. mexico and united states recently launched an initiative
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to look at the change between both countries. the numbers are low compared to what they should be. there is an effort there. it needs energy. maybe this is an opportunity to bring in canada and put this in the context of reflecting back on where we were in the last 20 years and where we can go together. one of the things that we need to do is boost the level of educational exchange and research partnerships between universities in the countries. the list goes on and on. i encourage you to look at the paper. i will leave it there so we will have time for more discussion. thank you. >> thank you. it is great to be here. i was lucky enough to be at csis as a junior canadianist. you can imagine what my parents thought.
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it was very exciting at the time. here i am now. i have not accomplished that much. [laughter] it was an exciting place to be 20 years ago. as it is an exciting place to be now. i will never forget it as a moment in my career because i had the opportunity to really see what makes csis great. what still makes it great is a combination of foresight, vision, and action. it really helped bring things together. 20 years ago there was a project on mexico and canada. somebody is here in the room today, the head of the americas program and knew that we would
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need to understand canada and mexico better as they became deeper trading partners and deeper economic progress. he was interested in the economy and policy. he made sure there was the money that we could hire and expand and become the strongest program here. that was how i got to be the junior guy. when i got here shortly after i got here, again with some heavy influence from george, i had the influence on the william simon chair. sidney weintraub. a lot of you remember sydney. 30 years ago he published his famous book, free trade with mexico? he raised the idea that trade with mexico could be a development engine. that would it would help to
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change the nature of the mexico and u.s. relationship. that was a vision. he saw that after years of working in economic support in the state department. state department ran trade in those days. he really articulated it persuasively so that a generation of american leaders were really thinking about what nafta could do. that made a big difference. there was one other component. the senior mexicanist. she was the senior on the mexican project. when nafta was on the horizon, she did something so well. she created the commission. nafta and beyond commission. she convened every former living u.s. president, every former u.s. secretary of state, every former u.s. secretary of treasury, and every
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former ustr trade representative, plus the top leaders from around the country, who all came together to sign on to the importance of nafta and getting it done, and getting it ratified. as close as the nafta fight was, i don't think it is an exaggeration to say that it was in large measure contributed to by this institution and by all of them. coming back 20 years later, we tried to take a look at where this relationship could go. i am not going to repeat what my colleagues said. but i want to underscore some things that deserve attention. in 2001 this relationship changed. it wasn't just nafta we are thinking back on.
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the september 11 attacks brought heavy compliance cost to the supply chain across the american borders. we want to be secure. it is not about abolishing security. we have to find ways to make our borders work more efficiently. second, they built the covenant on east and west infrastructure, and we need more infrastructure, road and rail. even i.t. infrastructure. that is something that government must do. we need more pipelines, more power lines to support the energy market that we have. [indiscernible]
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[indiscernible] [inaudible] i hope it will come after this conversation. thank you. >> thank you. i am going to use my time to pull some threads together for
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the discussion. the first point i'd like to put one is based on an earlier comment. we make things together. it is not a trading bloc. it is a production block. in north america, we don't just sell things to each other. we make things together and then we sell them together to the rest of the world. what happens in north america is that we make things together. nafta was a heroic attempt to advance that notion of making things together. conform in the policy and footprint to the commercial footprint. the second thread i would like
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to pull from that one is that one of the problems that we have in nafta is not that it was not a breakthrough. it is that rules are static, and the commercial environment is dynamic. nafta did a good job of conforming then. but it continued to change. new opportunities were created. that changed the commercial footprint. information technology. the rise of value changed. that changed the commercial footprint. when you look at north america, in some categories and sectors it is almost impossible to find
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the national border. someone showed me a map of the power grid. there are grids all across the united states where they ignore the border completely. in auto production, deeply specialized. today, if you look at the u.s. north american auto industry from space, near highway 401, you cannot find the u.s.-canada border. that is an important statement about integration. the point is not the borders do not matter. the point is that we have bigger goals. the goal is global competitiveness. the point is that economic integration moves on. it inevitably outgrows the political and institutional framework. 20 years later, there has been a
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lot about growing. that is what we in the private sector and in government ought to address. this set of rules, and the constant change in the high- pressure global market, with consumer demand and innovation, the rules stayed the same. it is starting to show. about three years ago the subject of nafta came up. my friend made a statement. it troubled me. the statement included a chart. the chart look like a mountain. mount fuji. it was a measure of the share of the u.s. it started in 1994 and ended in 2011. what happened is that goods subject of the nafta preference have been declining since 1999 or 2000. there was preferential trade
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before nafta. it was the auto pact. mexico was a large participant in the gsp. there were half the imports from both mexico and canada, prior to nafta were subject to preference. that is a reflection more than anything else of the decision- making that goes on in a complex, high-pressure, dynamic economy where the rules stay the same. the apparel industry is a good example of this. the apparel industry worked very hard to get rules that made sense. that is what happened in the nafta. the u.s. market share of nafta apparel, that is produced in the nafta was seven percent in 1994.
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the share of nafta apparel peaked in 1999. north american apparel trade has a smaller share in the united states than it did before nafta. now this is just a reflection -- it was not a bad agreement at the time. i think that the nafta rules on apparel reflected the interests of all three economies at the time. what happened was that the world changed. it did not happen all at once. it did not happen because of a policy decision. one make or buy decision after another, one more workaround, led to that. that is the opportunity. i will take chris wilson's point on this.
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companies in all three countries are trying to draw on the level resources of north america to be as competitive as possible. that is the operating goal and operating policy of every company operating, large or small. whatever barriers exist are part of the transaction cost. most companies don't care whether it is a trade role, whether it is between detroit and windsor but it may not be soon. we think nafta is old. the infrastructure is old as well. it can happen because of regulation. i've only been gone for a couple of years. canadian crest is sweetened with cyclamate and u.s. crest is sweetened with saccharine. never the twain shall meet.
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there is zero tariff. but there is not free trade. there is this fundamental issue. it is the nature of rules versus the dynamic nature of commerce that we need to confront. we don't need more venues to confront it. we have plenty. we have regulatory cooperation councils. they are going on now. i noted to some friends that senator barack obama commented on his political goal to renegotiate nafta, and it caused shockwaves in the press. the transpacific partnership is part of that. we could take the forum to also improve the rules of nafta.
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we are now lacking imagination. no one imagined what digital commerce would be. in 1994, no one imagined that mexico would open to private investment. ok, things change. we need to reflect the change. i think that imagination needs to run both ways. the private sector needs to turn the workarounds into a policy agenda, which we need to engage the government about. secondly, on the government side, instead of beginning with the rule, begin with the transaction. when you begin with the rule, you adopt the status quo.
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my preference is to look at the transaction. let's look at the two parties want to do voluntarily, for mutual benefit. and then we ask what is the government interest in getting involved in the transaction. there are some. then the question becomes, what is the least restrictive way for that government interest can be maintained and allow the transaction to happen, as they do in millions of transactions throughout america. thank you for coming. thank you to the panel. i turn it back over. >> thank you, scott. we are running a bit long. what i would like to do, rather than have the panelist talked to each other, is to open this up for questions from the audience. we have people with microphones at the back of the room.
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if you raise your hand, they will come and give you a microphone. if you will identify yourself and your affiliation before you ask your question, that would be great. yes? >> thank you so much. thank you to the panel. i am with the canadian business council. if the trade deals are a possibility for fixing nafta and enhancing our trade with the world, what is the prospects of getting those deals concluded and in place? thank you. >> i will take one stab. the administration is committing to finishing ttip. they missed this year deadline. they will not miss next year. i think the president is extremely interested in trade promotion authority.
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we talked about this this morning. there is agreement at the staff level, between the senate and house, in terms of the committee, on a potential template for fast-track. the committee chairman, most of the committee chairman seemed to be interested in moving this forward. we will have to see. i think there will be significant activity next year. it is by election. i do not know. it is a hard vote. i think there will be a hard push certainly. tpp is a longer-term proposition. regulatory convergence is extremely difficult. i can tell you from personal experience it is very hard.
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and acrimonious. these regulatory regimes in the u.s. and europe are very dedicated to their regulations and the bureaucracies that build up around those is very substantial. each side believes it is right. i am not saying it is not possible. of course it is possible. but i think it is a longer-term proposition. it will be longer for the tpp. >> i cannot make a prediction about what the pace of negotiations will be. i wanted to say something about the utility, the relative utility of the agreement. one of the things that was a challenge for the nafta was bringing the countries together. mexico really had to conduct a lot of reforms and really had to
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work very hard in order to meet the requirements in nafta. looking at the transpacific partnership, we have a lot of countries involved. and some entrenched positions. they each have a different position on what they think is important. in terms of the north american nafta issues that are manageable within the tpp, i am more optimistic about the ttip. although you have two elephants who have different ideas about how to deal with this in a regulatory area, you do have very similar levels of development, very similar commercial practices, and very similar interest. i think, from a canada perspective anyway, we will get more from participating with the u.s. >> i don't have much to add, but it would to bring this to the
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discussion of north america. you'll remember that one of the reasons why we launched on canada's free trade of nafta is gap talks and there was stalling. the europeans wanted to deepen their integration before widening their trade with other countries. we turned to our own projects. i think one of the challenges for us in pursuing the trade agreements in all directions is that if we remain uncompetitive, having failed to achieve that single market here in north america, we will have to deal with only asian companies who will export here and keep their jobs there, and potentially put some strain on the north american economy. we do not have to change that at we do not have to face that now. we have to think about how to carry that forward. we need to think about how to make ourselves competitive so that when we liberalize further, we will be able to take advantage of that. that is why the two discussions should be linked.
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we are, as people have said, separating them. >> questions, please. the gentleman right here in the third row. >> thank you. hello. my name is josé. there has been some talk about manufacturing reshoring. from asia to north america. does nafta have the tools to re- facilitate that? what needs to change? how might nafta respond to that reshoring? >> the process is underway because of changes in the global economy, things like rising wages in china, high transportation costs, and changing currency values. the trends that have been pushing this reshoring, which is a benefit to all the countries in north america, have been coming from external factors.
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we have the opportunity to continue that trend internally by implementing things within north america. but that is something we still need to do. the nafta is there. it provides a framework that allows manufacturing throughout the three countries. but to deepen it, i mean, one of the biggest things we need to do is lower the transaction costs at our borders. that is one of the first things we talked about. that is something that has increased since nafta in a large respect. the infrastructure, we are trading on infrastructure from 50 years ago, when our trading levels are five times what they were before nafta. we need to change the way that our borders function, so that they are not a barrier growing over time to our joint production system. things like that would be the
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way to further encourage the trends from the winds of the global economy. >> i would be cautious with using the word trend. a trend presumes that something will continue. ok? there is a case where tasks with any supply chain have been conducted in asia. they are relocating to north america. that is because labor costs have increased since 1990. and it increased transportation costs and fuel costs. there are some dynamics, which are not permanent and can be reversed. there are some policy implications for this that need to be taken advantage of. for instance, mexico made a very important policy change that it didn't have to negotiate with anybody. it unilaterally accepted
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standards and conformance of electronic products from any established body. by accepting any known standard, they open themselves up to be a will to participate in assembly chains and supply chains that mexico will use to prevent for the areas that did not have certification. there is a lot that can be done with global value change that is essentially a self-help program. mexico has figured the self-help program out and is implementing it. the more we do the things mentioned like infrastructure and border thickness, border efficiency, the more we have the opportunity to capitalize on this. >> yes, you? >> i am an international trade consultant.
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i think that the panel would agree that nafta has been a success economically. the critics seem to have won the public-relations war on nafta. as we talk about a reset on nafta moving forward, with different things to reform it, what would your advice be on a new public-relations approach to emphasize the benefits to citizens in all three countries from an expanded agreement? >> it is really easy to criticize nafta and really difficult to describe the nuances of international trade benefits in the same 30 seconds. i think not just in the united states, but across the region, all politics is local politics.
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in order to rehabilitate the nafta reputation, you have to take it down to the local level. you find the companies that have been able to trade and come back from downturns to benefit from greater regional opportunities. you take it to the untold stories of regional prosperity. the trouble with the canada and u.s. relationship, and also the great benefit of the canada u.s. benefit, is that nobody thinks that is foreign. [laughter] nobody thinks the trade between detroit and windsor is international. i think it is locally focused stories and also engagement with the global provinces. >> i can answer very quickly. i would be unabashedly political in the way that i would use china as the new scapegoat.
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i think that china is the new mexico, in terms of where we fear that our jobs will get lost to. but there is a level of truth to it. what we are doing now is competing on a global stage. in order to compete on a global stage, we need to work with our partners. our partners in production are canada and mexico. we need to work with them to win that fight. >> this is not maybe good p.r., but it maybe a story we have not told enough. they want like a trade agreement that benefit a handful of companies and excluded other people, including people who wanted to trade a used car cross-border. but this was better trade for everybody. i think we need to think in
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nafta 2.0 about how to keep the focus on having as many winners as possible. labor and mobility will be a great thing. yeah, people worry at first, maybe a mexican person will take my job. but your kids could go to toronto, or it could go to mexico and take advantage of opportunities. what chris has talked about. we have the best universities in the world here in the u.s. i do not teach it all of them. [laughter] we do have some great ones. we should really be proud of them. that is why i think we should do full recognition on regulatory standards. we should say that we have full mutual recognition and negotiate that. not to sound too libertarian,
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but i think we should do what europe does. at the federal level, in all three countries, we should do is focus government on setting the standards and let the private sector, and the engineering companies set up to do compliance verification. lab testing of products. we could test once by one company that response to public standards and presents those findings back to the government. in the process, the private sector can capitalize much more quickly than the government can. but there will be jobs. and that will be chairman us for our economy. europe does that. we can do that. being part of north america is a win for you as an individual, and i think that will help. >> it is a tough question. al gore won the argument with ross perot on larry king. time has moved forward. larry king is no longer in the air. nafta is still a place for
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discontent for all of the trade opponents in north america. we need to do a better job of helping people understand how we interact. laura's point rang true about people don't think of canadians as foreigners. i remember being at a chamber of commerce meeting as a guest, somewhere in flyover country, and said, by a show of hands, how many people have international operations? some hands went up. and then i said how many of you sell things to canada? then more hands went up. [laughter] we have a moment when small businesses have the lowest trading costs ever. if you are reaching customers or consumers on ebay, you are handling financial transactions through paypal, and you are
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a customs broker at a company called fedex or ups, you have a low-cost way to reach a foreign- based than ever in history. that is important. there are one-person businesses who were working internationally. it is happening now. those of us who believe this stuff need to do a better job with this. >> questions? yes. >> good morning. i represent the canadian province of manitoba. i find this all hopeful and optimistic, but i am wondering how do you plan on getting congressional buy-in so there is not further undermining of successes that we have had? there've been examples of this
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with country of origin labeling. post nafta we were making something together. we were making pork chops together. country of origin labeling and the impact on livestock trade has decimated that. efforts in congress to introduce clean energy standards, none of them have passed, but scott mentioned earlier the north, south flow of the electric grid. despite the existence of that grid, the existence of the electricity trade, the proposals for renewable and clean energy standards all would have differentiated between imported and domestic electricity. so while there is a lot of hope, i am wondering how you propose to tackle that front?
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>> i will channel alexander hamilton. i will recommend energy and the executive. i think to the extent that the president and his administration has an ambitious and active focus, congress has less time for mischief. they have to deal with the agenda he is setting. if the president pushes hard for the partnership and ttip, we will worry less about greeting cards or cattle from canada. the other irritants always creeps back in and find the robust audience. give them more than they can deal with is probably the best solution we have. the dead hand of local politics is heavy on this process. >> having the nafta does not mean there are not interest
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groups with political clout, with money, and with determination on the issue. that is politics. that is the nature of the beast. it will always be there. it is there with respect to our major trading partners, the lobbyist for european trading companies -- we could go around the world. i take a practical approach. if there is an issue that upsets you, you tried to get in the fight as effectively as you can, but these issues that you indicate are not going to go away. they will not be resolved by agreement. if they are resolved by agreement, the resolution will be unsatisfactory. you have to let steam come out of it. you have to let people have
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their say. a number of these issues have been around a long time pre- nafta, and i think they will be around in the future. i do not think there is an easy fix. this is a practical matter. we can say the administration needs to take a tougher line. why? we need to look before we put it on the plate of any administration. not just democrat but republican. whoever is president. i think you have to be realistic about what can be achieved and do your best to defend your interests and get in the fight. but i do not think the issue is going away because of the nafta or because we would like to see it renewed further. >> scott mentioned dave ricardo
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and it is always good to mention the greats. if you go back to ricardo, he doesn't talk about trade. he talks about intercourse among nations. if we could talk about intercourse between nations that could work. [laughter] especially intercourse with cattle. that could be big. [laughter] >> dialing it back slightly, canada is one of the largest exporters of animal genetics in the world. including cattle and pork. but on the issue of rules, some of the things that the representative from manitoba mentioned are things that are resistant to contentment within a rules-based framework. i am not sure that labeling could be dealt with in the
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nafta. something like the buy-america issue, and an issue that canada had with procurement. sometimes you have to dustup and get in there. sometimes you can contain some of these problems within an agreement. this bears repeating, rules are static. but the environment is dynamic. >> thelma? i've been waiting for you. this is for you. >> we are having a reality check. if we go back to your comment about the former senator saying
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he wanted to renegotiate the nafta. i don't think that was positive. i don't think he wanted to renegotiate the nafta by addressing the tpp. it brings me to the labor issue. how do you see that labor issue involving in a positive way? i remember we fought tooth and nail to see that that did not get expended too much. now it is kind of a reality of every trade agreement. i don't believe we are going to get organized labor to work. to give cover to members that can support trade agreements. perhaps you can just highlight how we are moving on the labor issue so that it can be incorporated in a positive way into trade agreements. i want to make one brief comment about rules being static.
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i think rules should be negotiated in a dynamic way so that when congress does rules on labeling we can, like we have in the past and will in the future, say that is a violation of the rule because the rule is a liberalizing rule. and if you have too strict labor requirements you have violated the rule. labor issue, please. >> i think chris might have something to say on the labor related issues, given supply chains and coproduction and so on. and, scott, you might have quite a bit to say about labor. >> let me make a brief comment about the provisions in the trade agreements. we have come a long way in trade
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agreements with labor and the environment. every trade agreement has made progress in trying to accommodate the concerns and do a better job of making sure the agreements themselves are robust and offer the degree of protection. what we have not done is gain support. some remain positive about the ttip. they are not beyond support. if you make things together, you make things in a way that enhances opportunities for labor. if not necessarily the standards for labor. >> i think that this macro change plays into this. it is not shifted the dynamic.
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there is the importance of inputs in production and imported inputs. to the extent that companies and industries depend on imported inputs that are competitive, you are generating trade. that is the macro dynamic that is still playing out. in the long-term, that opens the opportunity for change in the discussion. that is something that is happening very, very slowly. >> i want to make a quick point. labor unions can also be dynamic. in canada, there was a labor shortage, and we have been recruiting workers from the united states. it has been relatively easy to come in to canada on a temporary basis if there is a labor shortage. what is difficult is getting the certification. the labor unions, the counterpoint union on both sides
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of the border that has said, we would rather that use union members from canada rather than nonunion members from other countries. we are going to certify the skills to help that worker get to work faster in alberta. >> all i would say is that you can see from the rhetoric over the immigration debate in the congress, including the use of high skilled labor how difficult these issues are. politically for members. and to the extent the view means movement of low skilled labor across the borders, the concern, including from big labor, becomes even greater. i do think that that was an important point.
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given the nature of the global economy today, given the nature of competitive strain in the united states, as well as in north america, given the rise of the asian economy, which are fiercely competitive. we do have greater room for discussion than we did previously when this was not so apparent. the nature of competition is different now from when we first negotiated. at the time, politicians did not see the need for the movement of labor. the situation is different today. one would hope that the current economic environment will leave space for people to talk much more rationally about the need to move labor and at its best
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use. that is the need for co-joined production chains. it would be an acute need in the case of joint r&d. there is more room today for discussion, but from the debate on the hill and comments, it remains difficult politically. it remains difficult politically. >> with that, let me add my thanks to the ambassador. to the panel and all the speakers. thank you for attending this morning. [applause]
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what is will be showing presentations of a q and a dash >> will be showing presentations of q and a. our guest tomorrow is dr. tetteh / it is after his own experience. here is a preview. >> the day we arrived, for an operating base. the day we arrived with a new surgical team to take over an hour colleagues that are going to be leaving their, we saw our first road casualty. i remember vividly. >> who was at? >> younger than me who had been injured by an
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ied. man -- and i take one quick step back and i was not kidding when i said brooklyn was a formative place to grow up and trained in medicine especially for trauma. i thought i had seen every trauma possible. gunshot and stab wounds. explosive injuries. motor vehicle injuries. everything. i felt very comfortable with my level of experience with trauma based on my experience and so forth. what i saw that day, the first day we were there, and it is so hard to describe the cause even though i had been at walter reed withe and seen individuals extremity injuries and prosthetics and some of them going for additional surgery. real not seen it raw in
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time after it occurred. that is what i saw upon arriving. there was no delay. some of our colleagues in other areas where they did not see casualties for weeks or months after being on station. we size of the first day. >> you can say more of that interview with dr. tetteh on 7:00 p.m. tomorrow. >> the world is on fire. science andomputer stopped my education expires after five or 10 years. the cloud is new. twitter and google isn't new. new programming languages. basicallyve done is a the first five years and learn phase for the next 20 years without a work phase and resting phase.
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ist we should be doing interlinking the phases. work at the same time. fast, youmoves so really have to stay up today. >> new year's day on c-span. and before 1:00 p.m. throughout the afternoon, ceos of twitter and others on the future of higher education and robotics and the data as a new industrial revolution on book tv, unflinching kurds. kay bailey hutchison on the women who helped shape texas. tv,an3, american history daughters of civil rights atders share their memories 8:30 p.m. >> shortly before congress adjourned, the senate foreign religions subcommittee on african affairs held a committee looking at escalating violence in the central africa republic
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as in the muslim 11 government faces opposition from christian militias. among witnesses were officials from the state department and u.s. agency for international development. >> i would like to welcome my partner on the subcommittee, senator jeff flake. i look forward to working with him to promote lasting solutions to this complex crisis. i would like to welcome other members of the committee, as well as our witnesses, linda thomas-greenfield, earl gast,

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