tv Discussion Focuses on North American Trade Relations CSPAN February 22, 2017 11:06pm-12:40am EST
been a winning architecture since the end of world war ii was to make wins and increase the economic time by reducing the barriers at the border very briefly. but can doubt is so important and play such an important role, i think of sylvia, who had led the charge for so many years intellectually in canada, to ensure canada was part of the quad. the quad was the u.s., japan, europe, and canada. pushed, if you will, many of the rules of the road, commercial rules of the road, at the wto and its predecessor. those rules of the road have brought us to the kind of economic level that we have had today. >> instead of tension and rekrim nation and reproach. t has fossterd a safe boundary and 1.5 billion crosses. reyeoh grand.
question the unquestionable. did the question make a mistake by vetting its future on north america. we saw massive marches. the leftist candidate that locked in the top spot in national polls. if we antagonize, we risk our neighbor and turning its back on deck ayes of strategic cooperation. this center will continue to play a constructive role in way to move it forward. on march 7, we will lead the leading candidate for candidates to zussstrat gus. and the way forward, nobody can begin to do that job better than a dear friend and somebody who knows a thing about trade and obs. >> paula stern our chairwoman of the international trade commission, peter mckay and former defense, justice and former minister of canada ap the professor in the school of citizen shm. as etary guteteryezz served secretary of commerce from 2005- 009.
and well know food brand and chief executive officer, the youngest c.e.o.. joinut further ado, please me in welcoming him. [applause] >> good afternoon. and thank you for having me on this very timely meeting. it's a pleasure to be here with peter, paula. i want to thank peter and jason for the invitation. the discussion is about nafta, t we know there is a big elephant that is called immigration policy. i think it's important that we just realize that we are talking about our free trade agreement th mexico and canada and the
backdrop is this new executive order that should be finalized very soon. i think all the details are out, but that's going to add a level of complexity to this that i don't think that we are fully acknowledging. peter is going to discuss canada and i'm going to focus on mexico, because it seems like that is the episent are of waste is going on here. we are going to talk about the details and whether we renegotiate or whether we update and whether it is the environmental chapter and rules of origin and those are very important things, obviously. but i want to step back because there is a lot more at stake
than the rules of origin and who ins or loses on particular category. we are are talking about a big strategic issue. and i thought how the relationship has evolved and how there is a certain confidence in he relationship whereby it's becoming somewhat byling galt nd by cultural and english words that have creeped into the words. spanish words that have creeped in, cultures, food, you name it. the relationship has never been better. this is what was on my mind. today, you are talking about a level of angstite in mexico that
we can't see about it. we hear about it and read about it in the papers, but there isn't anyone in mexico who isn't thinking about what's going on. so we have worked very hard to get here that relationship today is at risk. and i think what we need to understand and i trust that our government here in the u.s. will derstand this, we cannot humiliate a country to the bargaining table. can't negotiate without humilitying. it is about the bottom line. you can't quantify national dignity and that's what is at stake here and will be extremely difficult for mexico to do
anything but take a combative position. and in many ways, it's our position and our tactics that have forced mexico into acorner and they have no option. we have given them know option and it's not going to be an ease y task. i wouldn't call their pluff. because you know, if this means going spoo a recession for a couple of years and keep our national sovereignty and dignity, that will happen and i would hate to test it. so we are creating the presidential a election in 2018 in mexico, where the winner could well be
n anti--american pop lift, anti-imperialist, what have you in mexico, something we haven't seen in decade, decades, decades . that would be a strategic issue. to eed to have the wisdom try for a tactical vick hat would realize it was a strategic defeat. and the motivation for a quit victory is there. i hope we have the wisdom to look down the road a little pit. i started my career in mexico. for me, it's a country i know very well. i was actually general manager kellogg-mexico from 198 to
1988, before nafta. i remember that mecks key supremely well. we are talking about nationalist policies, protectionist in many ways and proungets we couldn't import become then and things had to be nationalistic and not open but very nationalistic and being on the corporate side of things you could see it on our ability to create jobs . a lot of people forgotten that. but when i managed the business, 100% inflation. low growth rates and we remember this boom-bus cycle and it would be a major did he valuation and it would have impabblingts on
border towns and border states and jobs in the u.s., on jobs in mexico, on corporate balance heets and led to more down sizing. nd haven't seen that in 20 years and this could insides with the nafta period. today, what the thee count tries built is breathtaking. and-a-halfa is well over a trillion dollars. supply chains have been integrated sbrute the three count tries and agricultural pply chains going to get produce to the countries on times. we no how to do that and we have
building this infrastructure for over 20 years. computer systems. a.m. fta is digit and the computer systems that have been integrated to consolidated information to work invoice a hains to customer. it's not like switching of swisk off a light. these are billions and billions of dollars invested in this infrastructure that we call nafta. 14 million u.s. jobs are tied to nafta. 14 million u.s. jobs. as we aapproach this. geographic proximity always makes a difference.
and you would expect that mexico is the main export market for the majority of u.s. companies. let me explain that. 7,000 u.s. companies export to mexico. 50% se 57,000 companies, re small to medyummed-sized. if you start exporting, you might as well export to your neighbor. a lot of jobs, a lot is as stake . i was hearing this morning of the dominoe effect of something like this. and eived avocados tomatoes. items e are high value
and happen to be in the states of mecks key. these are the states where we have seen the drug crime and we have seen the impact of organized crime in mexico. what are those families going to do if they are out of a job? if you can't find a job in the after cadoof business, where else do you have to go? we have to connect dots and understanding that this is a lot bigger than how much are we paying for mexican goods and how much are they pieic and how much are we buying. canada and mexico are the top customers for u.s. products. some we are -- we're dealing with the biggest thing we've got going. the world is regional eyed.
nd globalization has hurt e. it is a regional world. he e.u., in spite of brexit, e e.u. is the biggest market for british goods? why? because they are there. china is leading the way to what arcep.ll countries . without the u.s. dollars. that's division. and may not happen for seven years or 10 years, but they are billing rouds from loose, china, they are getting ready. let's look at the americas. we are slinttered.
. ide from naftave there are a lot of different things, but isn't one america. he crown jewel that we have is nafta and i hope we think about as role that our region play we are competing with other regions in the world. and we would much rather have jobs stay here in the hemisphere and it is an economic reality. and again, i hope we keep that in mind. we have the opportunities to see a massive shift of wealth if we could get our act together and build energy supply chabes. we have the oil and the goods and this is the time we could be
doing that and negotiating that. by 015, mexico will be the seventh largest economy in the world. our southern neighbor. and canada will ails be one of the most developed per capita income economies. nafta is not only important today but will get more and more important. nafta shush updated. let's agree to that. he world has changed in 23 years. we should look at ruse of origin and nafta was signed before the internet took over. cloud, the ut the things, the he u.s. on could have a significant
advantage where we could negotiate on better agreement game, t's not a zero-sum where one party wins, the other party loses. it's about growing the market. i think the question ta i would hope that we are asking going into these talks whenever they start to happen, how do we make nafta stronger and how does north america better compete? those are the two strategic questions. everything else is tactics and politics and you know, sort of a peeling to the political circumstances in individual countries. we should be working on
imdepration and working on bilateral agreements on border security. i had the opportunities to work with the president on a major study that we did to woman up ith a bilateral depreement for low-skilled workers from mexico. for now, they have to go to a black market and we are outsourcing that the labor that our companies need to a plaque market. why not negotiate some kind of an depreement. those are the things that are possible and we should be ocused on if we have the right attitude and we are going to show them or put our foot down.
we know from history and history looms large in our relationship with mexico that's not going to work. i thank you for your interest in this. and i thank you for your leadership and come hit. but above all, i hope that we wisdom e a voice of because there is an awful lot of at stake. thanks for being here. it's been a pleasure. thank you. cheers and applause] >> outstanding. very well done sm
>> thank you for your important leadership on a pivotal moment and thanks for your insight. and thank you for joining us for this important discussion. 'm jason the director of the latin american centers and we are going to talk about these the timing of discussion today could not be more appropriate. tonight, secretary rex tillerson and secretary john kelly will arrive in mexico with the objective of trying to calm the waters. i'm sure we can all guess what will be part of the topics in tomorrow's meetings. security, migration, the economy, border issues.
of course, this will be against a backdrop where a once constructive relationship is now under threat. politics on both sides of the border now will be as important as policy or potentially more important in finding common ground. it comes just within a week after prime minister justin trudeau came to washington. a visit that again raised questions about broader north america integration. that would be a huge loss for u.s. jobs. we have an all-star panel to do so today. beginning on your right is peter mckay. peter is someone i have had the pleasure of working alongside of four years now. everything you have heard about him is correct. he has held an impressive number of posts in the canadian government. that includes minister of defense and foreign affairs.
he was also minister of justice until 2015. he is currently a partner in the baker mckenzie toronto office in a firm that we have had the good fortune of collaborating with for a number of different conferences. peter, thank you for joining us. next to peter is paula stern. she is a wealth of knowledge and a privilege to call paula a dear colleague. as far as trade goes, i think it is hard to find someone with both the experience and expertise of paula. that's why she is one of my first cause -- calls on any trade-related matters. she served as chairwoman of the u.s. international trade commission has commissioner for nine years could she analyzed and voted on over 1000 trade cases involving a broad range of industries and issues. next to me is rafael who is a professor at mexico city.
rafael, you are really the ultimate expression of a strong u.s.-mexico relationship. i've had the pleasure to note -- to know rafael and work with him for a number of years. he is also a prolific writer who has written over 30 books on u.s.-lactic relationships and mexico or policy. he is someone who knows -- foreign policy. he is someone who knows what he's talking about. he was also foreign-policy advisor to philip a calderon. thank you all for joining us. here is what we are going to do -- we will spend the next half hour or so of taking a deep dive on a number of issues. we will talk about the future of nafta, short the long-term repercussions of today's environment, and we will leave plenty of time for questions from everyone joining us today. there is a lot to cover, and so i would ask analyst to keep --
panelests to keep comments short. let's start with the visit of the secretaries to mexico tonight. border policy and security will be on top of the agenda. they will meet with the mexican president and secretary of interior, formulations, finance, and national defense. peter, starting with you. giving off the new relationship and president trump's personal interest in driving this agenda, what do you think can be realistically accomplished at this point? peter: firstly, i want to thank peter and yourself for the invitation. firstly, it is clear to us from a canadian perspective that the president's quite serious criticisms of nafta have been
very much and undoubtedly in the direction of mexico. the visit of president trump with prime minister trudeau here last week i think demonstrated that. the word that he used was tweak, not tweet. with respect to your question and this upcoming meeting, i think it's an opportunity to maybe step back. and u.s. officials, tillerson and kelly, who are going have an opportunity to hone in on legitimate concerns around security. i think if they go back to the basics of the security as being perhaps the primary concern that has been expressed by this administration, that may allow them to, i daresay, rethink some of the rhetoric, particularly around the wall.
i fully expect we will have a discussion on the wall. and at the same time, i think it will allow mexican counterparts to make a very strong case for the continuation of this unprecedented relationship here in north america. how integral it is to the success of all of our countries from an economic perspective, but from an overall quality of life perspective. let's go back to basics here. to make america great again, you have to make nafta great again. i agree with many of the comments, all the comments frankly of the secretary who spoke of the need to modernize this agreement. i think this opening salvo and this visit tomorrow is a tremendous opportunity to recast what has perhaps been a wrongfooted approach and go back
to the basics of security, improving some of the concerns that do exist in an agreement that is 23 years old when it comes to nafta, and not reach french or double down -- re-trench or double down on the rhetoric of how horrible nafta is. i know that was the approach that preminger trudeau took last week in washington. jason: obviously secretary guajardo is not part of these discussions tomorrow. in addition to the wall and border issues and law enforcement cooperation front and center, what do you see being realistically accomplished tomorrow on that level, whether it is behind-the-scenes? what do you see as far as potentially public statements that could come out, obviously taking into account that the
folks traveling on the u.s. side are the homeland security secretary and our secretary of state? paula: i'm glad you asked about trade. we heard about one elephant in the room, which was a immigration and opening statement. -- which was immigration and the opening statement, but i think the elephant in the room is trade. so maybe two elephants here. the president of the united states of america ran successfully on a trade agenda. he said two things that he wanted to get done. 1, he wanted to reduce the trade deficit. the second, he wanted to throw out those "dumb" agreements made by "stupid" officials. and nafta was numero uno on the list. said on day one that he would move against both the nafta and
the tpp, the transpacific partnership agreement, which had not yet been ratified by congress but had been negotiated. he did that with the tpp. with nafta, it is very clear. he has had discussions already with the mexican president, both phone calls and personal conversations went badly. i think that the mission of the two secretaries from the united states who are going, tillerson and kelly, is to try to smooth and deal with the backlash, the naturalistic backlash, which is making president pena nieto position even more difficult to
negotiate a new nafta. one is to a kind of smooth down the feathers. the other thing i would like our secretaries to do in the visit is to put the trade issue in the context. i think we should do that here as well. trade agreements are a subset of trade policy. trade policy is microeconomics. what drives the trade deficits, what drives the disruption from competition come a globalization, technological change, which has affected our voters and disaffected are voters and made them anxious is all these other matters that are both macroeconomic as well as technological.
we need to put this nafta agreement, which is old and needs fixing, into a proper context. otherwise as a nation and with our neighbors, canada and mexico, we will find ourselves in an impoverished, reduced state -- lower growth, lower productivity, and we will not be gaining on the competition with the rest of the world that we had enjoyed. jason: you make an excellent point of what can be accomplished by tillerson and kelly specifically with regards to trade. one of those is smoothing over the nationalist backlash. you cannot humiliate a country and you cannot underestimate national pride in mexico. it's also important to emphasize that these are two men who know mexico very well, who have deep relationships with the mexican
government, from secretary tillerson's time as head of exxon mobil and secretary kelly's time as head of u.s. southern command. these trade agreements are also strategic agreements. our first agreement with israel was not necessarily because of the importance of the israeli economy to the united states at -- but the strategic imperative to the event states. paula mentioned the political environment that exist in mexico, the political environment that secretaries tillerson and kelly will see when they arrive in mexico city tonight. if you could compare the article -- the political temperament between the two countries right now to a past moment in this relationship, what would that be? is there historical precedent for the point in which the relationship is right now? rafael: let me start by saying something about my recollection of the newly appointed secretaries.
i remember vividly i was working with president calderon. february 2009, janet napolitano came to mexico. a few weeks later, hillary clinton was a podium to secretary of state -- appointed to secretary of state and came to mexico. the meetings went very well and were key to khamenei kitchen between hillary clinton and our foreign minister and president calderon. she came very well prepared. for example, in the meeting, we saw the very important issue. we were getting black hawk helicopters for the mexican military. they were coming in 2014. president calderon was leaving office in 2012. thanks to hillary, those helicopters came that your. -- that year, 2009.
it helps to understand the complexities of this. the narrative that mexico needs is that we are the friend. we are the southern ally. we are not the enemy. i am pretty sure that both secretaries will understand. they are already getting prepared. the complexities of the relationship of mexico. i never saw what i've seen in my lifetime with what i am seeing. trump is amazing and has created a perfect sense of mexico. from the far right to the far left, we all hate mr. trump. he made mexico a political piñata during the election. he made the migrants and called -- he made migrants heroes and called them things. if you want to draw a comparison, i would compare him to ambassador wilson in 2011. in 1911, he was an ambassador who fought against the mexican revolution and fought for the
assassination. we would compare him with president polk who sent u.s. troops invade mexico in 1846. i've never seen this consensus in mexico. mexicans are rallying around the flag. there are two politicians who .ave been defeated these politicians have increased seven or eight points. it is hard to trust the pollster, but i will say that president peña nieto has received a push. why? trump is the public enemy. not only that, but i would say peña nieto has once again found a sense of purpose. he has given the u.s.-mexico
relationship a sense of urgency. he made a very important change in his cabinet and i would say he is focused. once he is focused and has purpose, he is doing fairly well. this is the end. we are in the fifth year of his administration. the political times are coming to mexico, but i will say peña nieto has benefited a lot from the way mexicans hate mr. trump. jason: perhaps unknowingly unleashed a variety of forces. for those who do not know, the candidates for the mexican president election will occur in 2018. peter: i just wanted to underscore that throughout the history of north america, there have been other polarizing figures. let's be honest. this may be a new standard, but personal relationships in politics matter in the extreme.
following on your example, i recall the early days and my tenure as foreign minister meetings with patrice espinoza and secretary rice. there have always been outstanding issues -- water issues between canada and united states, trade issues, software, lumber, and similarly with mexico. but the ability to sit down and have an open, honest discourse, develop trust among ministers, not only from the very top but from line departments, u.s. governors, mexican governors, premieres in nova scotia, chambers of commerce. those relationships matter as well. i don't think at this early stage we should sound too much alarmed.
yes, there has to be pushed back. yes, the early signals and list of priorities mr. trump has put out there, particularly around trade, are cause for alarm. but i think you will see in the coming days, and tomorrow will be a good example of how these ministers make a connection with her opposite number and allow people a little breathing room to step back from some of these positions, because in my estimation, we have to move away from the personal and back to the practical about what is going to pull the economy forward collectively in north america because of the cement -- because of the tremendous competition that we will face from the asia-pacific and other parts of the world. we have seen events like brexit that have also caused tremendous discord and future elections obviously in european union post that threat as well. theresa may's visit with president trump is an example of a relationship that could be rekindled in terms of the
u.s.-great britain relationship. i think it is worth mentioning that the united kingdom, now as they extricate themselves from the european union, there's a lot of unknowns, but there's a possibility to renew and establish trade relations with great britain with mexico, canada, and united states. with every situation comes opportunity. rafael: there was a good message by the mexican team by the trade minister. they went to canada and is great news. the canadian foreign minister said we will go ahead bilaterally. they will receive in mexico. jason: paula, i want to go to you on the importance of the north american integrated market. a quick follow up on prime minister trudeau's visit last
week. there was a lot of concern after that visit about where relations and a lack of reinforcement of the importance of north america as a whole and then the freelance statements about nafta negotiations -- canada and mexico will not want to negotiate separately with nafta. i think we are seeing different signals from the canadian side. peter: that's right. there was tremendous excited in -- anxiety in the early days of this presidency. this visit was watched very closely. our prime minister moved with his arms and legs intact. a lot of rhetoric of this being a and b meets godzilla and it rhetoricwas a lot of of this being bambi meets godzilla and it didn't happen. [laughter] it all worked out ok. there were collective sighs of
relief, but there were still signals about nafta there and there were expressions of concern around the border. we will deal with them over time. that's the reality. we have to get down to the hard facts, the tremendous advantages that can be laid out in very specific terms of this agreement, and modernization around things like dispute resolution mechanisms, rules of origin -- those things can and should be dealt with because of the many changes that have happened since this agreement was put in place. jason: the value chain integration that has occurred in north america as a result of nafta has not been discussed as much but has allowed our global exports to be more economically competitive. what are the risks to the united states if we break this up? what does this mean for china and for china's position in the world with a less competitive unified north america? paula: the integration which has occurred and accelerated, facilitated by nafta, really
started with u.s.-canada on the auto agreement, which then became a u.s.-canada agreement more generally, but auto dominated the nafta considerations once the u.s.-canada and then mexico got into the final nafta. what we have seen is a dramatic shift in which the automobile industry in this country, which was being battered if you will buy japanese competition, it was able to study itself -- steady itself. it engaged not only using the nafta rules but during the same period saw an increase in technology, which allowed the supply chains to span the borders very, very quickly.
there is no question that technology has had an enormous disruptive effect on manufacturing jobs in the united states and, i presume, canada has felt a similar situation. we in the united states -- are -- our manufacturing production is higher than it has ever been, but the number of manufacturing jobs is the lowest since the end of world war ii. what you have seen is a shift and the shift was also occurring in mexico. so you saw mexicans who had been eking out a living agriculturally on small plots being attracted to a new desk
-- to new factories that were being invested in mexico. the combination of the technology, the combination of lower wages in mexico for these factory jobs saw the capability of both the auto industry and other manufacturers to compete with the tigers of asia -- japan, south korea, taiwan, etc. that has been, i think, a tremendous north american success. meanwhile, agriculturally, agriculture in the united states enjoyed a great surplus. we export around the world, but in particular vis-a-vis mexico.
that is being, if you will, jeopardized by the future of whether we will have a nafta agreement that all three nations can agree to. so we have seen shifts that are both technological as well as lubricated, if you will, by these nafta agreements. jason: it has lifted millions of people out of poverty. peter: the integration of both economies and policy is absolutely right. there are canadian auto manufacturers operating in mexico very successfully. it has also -- and i think others may speak to this much more authoritatively than i, but it has improved labor standards across the board. it has had a big impact in terms of bringing people into a more modern, more lucrative quality
of life in terms of how they can employ themselves, feed their families, and contribute to their communities. paula: meanwhile, we did not deal adequately in the united states with the disruption that comes about with the technological dynamism. jason: go ahead. rafael: nafta had a lot of spillover into mexico and that relationship. one of those was environmental norms. because of nafta, mexico started to implement environmental norms. it helped mexico a lot. it not only helped trade in jobs, but it helped diplomacy. mexico decided to play the game because of nafta. we decided to move our embassy where we now have a really nice
cultural institute to signify that we are close to the white house, that we are here to affect decisions, and all that is at stake now with mr. trump. jason: one of the big challenges with nafta is nearly 14 million americans whose jobs depend on nafta don't even realize it or the 5 million who depend on the mexico-u.s. trade. the integrated nature of supply chains that any kind of disruption to this would have severe consequences across the economy. people don't actually realize it. paula: it's not just making the stuff. it's also delivering and servicing. it is the services as well as manufacturing, which also go
into this whole component of a healthy north american economy. jason: i want to get beyond economics. in interest of time, i want to drill down a little bit more on nafta and the current environment. secretary gutierrez mentioned about not being able to humiliate a country to the negotiating table. the national pride that has now been unleashed in mexico as a result of discussions. what could be some of the points forward for modernizing nafta? especially this current political context? paula: i think the political context is about jobs. as long as we can see that even though there is increased productivity that comes about, and as long as we have a system in place for helping those who are inevitably disrupted by change, i think it can be a win.
the problem, as i said, is we really neglected that. we have not talked about human capital, so what trump really managed to tap into was this neglect. i haven't seen, by the way, however, the president talk about this. and i think that no matter what he negotiates, whatever the terms of a new nafta might be, he has got to wrap it into adjustment plans for re-training, community colleges, digital literacy, all the kinds of preparation which is voters -- his voters and the nation as a whole needs. that's the case in any country, but we, if you will, have been
the leader and are setting the pace now. this is what trump has put as his number one issue to negotiate these trade agreements. i happen to believe that you can take this 23-year-old agreement and really pull out the things which were way too controversial from the tpp negotiations and really see that tpp in those seven years, where 12 nations negotiated, dominated, if you will, economically by canada and the u.s. together, with mexico making up, if you will, at least a third of the tpp countries. they were able to agree on new rules on environment, new rules on labor. they were able to agree on new rules that had not even existed with regards to services, intellectual property, digital trade, all kinds of matters that
had not even been in our minds or adequately politically gelled in our systems a quarter century ago. i think the president frankly could make lemonade out of lemons and quickly borrow what you would see an agreement between the three nations -- canada, u.s., and mexico -- already and really come out and say, "i thought of the future. i'm not just thinking about voters disrupted because they had some jobs in manufacturing and they didn't come back and productivity put them out of business." jason: you can say that any of this came from the tpp
negotiations themselves. peter, let me ask you a question about canada. peter: just before that, the tpp negotiations that were protracted, similarly canada embarked on a conference of trade agreements with the european union. a long process, nine years in its final format. what that tells you is a very important, often unspoken truth is that in all of our countries, mexico included emma we have some very capable, professional public servants who have their a game right now when it comes to trade discussions ready to engage. that helps in a detailed, mature, not fake news discussions about trade. i think that is very important. you cannot negotiate these things in 147 characters. or 140. maybe it's the exchange rate in canada. [laughter] what i'm saying is we have some really capable people other than the political figures involved in the discussions. i have a lot of confidence spending time in government and
those individuals who are engaged, who are doing a lot of the heavy lift ring out of the glare of the public eye. i think when we get back to all these important elements and considerations, we are going to be able to make those improvements. rafael: you are right, peter. the mexican team has a lot of experience and have worked hard with the secretary for 25 years. he was a nafta negotiator and has a lot of experience. he went into politics and now is a politician as well as negotiator. they were negotiating tpp. mexico and canada teamed a lot during tpp. it seems to me that is why to remain bilateral would be important. paula: i want to reinforce the trilateral. i really think it's so important and therefore canada plays an incredibly important role here.
rafael: pivotal. paula: pivotal because this will set the stage for the next 25 years or 50 years of what is our trade architecture? trade architecture which has been a winning architecture since the end of world war ii was to make win wins and to increase the economic pie, if you will, by reducing the barriers at the border very briefly. is so important and plays such an important role. sylvia, who had led the charge for so many years intellectually in canada, to ensure canada was part of the quad. the quad was the u.s., japan, europe, and canada. pushed, if you will, many of the rules of the road, commercial
rules of the road, at the wto and its predecessor. those rules of the road have brought us to the kind of economic level that we have had today. but again, i want to emphasize, it is not enough. each of our nations has to worry about those who were disruptive by this turbocharged economic system that we are in. new business models, new digital worlds. but on the trade side, and that is why i say it is just microeconomics, and it is smart negotiators, but it is essential but not enough. david: trade architecture is there, the bones are there. some of the same individuals. we have seen our former prime minister a merge prominently in this discussion around nato. peter: he attended the meeting yesterday.
spoke very positively. said they would be difficult negotiations, as they were in the beginning. i do come back to an often referred to expression about security trumping trade, and that has taken on a whole new meaning, but canada has this existing or red relationship, our nato relationship, g7 relationship with the united states of america, but we also have tremendous ties with mexico that goes back decades as well. you mentioned the auto pact. this is a relationship that has been cultivated, ebbed and flowed. i put a lot of faith in a leadership as well as those professional public servants, not only nafta but the acid rain treaty is one that would not have happened were not for the personal relationship between ronald reagan and brian mulroney. david: i want to get back to
nafta, the specifics from the canadian perspective. there are a lot of folks in this room who are familiar with but the trump administration wants out of nafta, the potential modifications. when nafta is open to be modernized, there are a number of things in the agreement that are not serving canada's interest, and canada will be coming to the negotiating table to fight for changes. what are some of those? peter: one of them, i suspect, will be access to some of the infrastructure projects that will be presented. this is yet to be really unpacked, in terms of how this will impact the american economy. there seems to be a lot of indications that there will be restrictions placed on mexican and canadian dissipation and infrastructure building. they are going to need labor, canadian softwood lumber, other products that will be part of building the infrastructure that president trump has spoken to.
let's not forget he is a businessman, a contractor. i think he owns a golf course. >> [laughter] one or two at least. he will quickly come to the realization that you cannot go it alone and the enormity of the type of infrastructure he is speaking about. the dispute resolution mechanism has also been contentious. we have seen it breakdown over the 30 years and the canada-u.s. relationship. i guess putting on my justice had for a moment, it strikes me that pulling back from the independent dispute resolution mechanism entrenched in nafta, going to the american courts, may not be the best idea. you have to be careful what you ask for, as we have seen in recent decisions coming from your courts. so the independent mechanism has worked well overall. changing the rules of the game significantly at this point is
where we will get bogged down. if it is tweaking, updating, modernizing, including things like ip, currency manipulation, those things can be worked out. david: the u.s.-mexico relationship extends far beyond nafta, an incredible amount of intelligence sharing, cooperation at the u.s. mexico border as well as at the mexico-guatemala border. el chapo was extradited to the united states only before president trump took office. a huge amount of cooperation at the agency level. between governors, mayors. what are some of the cards that mexico could potentially play to hold its position vis-a-vis the united states, with regard to the nafta discussions?
rafael: very important the strategic one, i would say the northern triangle of south america, honduras, el salvador, guatemala, has become the syria of america. the levels of violence is like syria. the lack of economic opportunity is like syria. i believe mexico is the essential partner of the u.s. to try to control that problem, and to improve central america, especially the northern triangle. let's put it this way. central americans are leaving america. the last few years, the otm's, other than mexicans, coming to the u.s. through the mexican border, more than mexicans. the flow of central americans are now larger than mexicans. we can discuss why. out of 10 central americans coming to the u.s., mexico is deporting five, the u.s. is deporting three, and two are making it into the u.s. some mexico is a key ally.
i do not see a way for the u.s. to come and try to improve conditions in central america without mexico. economically speaking, i would say, especially the four border states, california, new mexico, arizona, texas, the top destination is mexico. those four states have made 25% of the u.s. economy. california is huge. it seems to me, the border states will come to mexico. i believe time is going to help mexico because the natural allies of mexico will come out. so far, the narrative is that we will negotiate nafta. it will take time. in terms of candidates, we will see ambivalence. we have the promise of canada. canada come in the 1980's, was a
champion of globalization. because of canada, we are close. canada was the champion. i'm sorry but we also have -- he imposes visas on mexican nationals. in the midst of the h1n1 crisis. by the way, that was a north american crisis. the number of people having h1n1 was very alarming, not only in mexico but entire north america. if you look at a map and you look at the cities with more than 500 people affected, north america was red. why was that? because of the connectivity
between canada, the u.s., and mexico. so the connectivity is there. there are some conservative people in canada, some that prefer the bilateral way. we have a lot to win. when we negotiated nafta, there were only about 40 regional agreements. now about 300. now the world is basically trading regionally. north america could be very strong if the three remain there, but we don't know. i know there is a lot at stake with canada. i believe we have a lot to gain, canada and mexico, especially in trying to balance mr. trump. if we do not remain together, we don't have the power to balance. david: you mentioned the four border states.
we have a number of different social media tiles and other things that you saw coming into today's event, not only those four border states, but over 30 states that have mexico as a number one or number two trade partner. i want to open up the questions for the audience. please start thinking about the questions. i want to make sure we had time to address the questions. pollock, my question to you, , my questionpaul to you, what are some of the industries in the u.s. that would suffer greatest from any type of breaking a part of nafta are moving toward bilateral with mexico? what would be the most severe things -- how the american workers would be most severely affected?
paula: i really want to emphasize, when it comes to manufacturing, the numbers of jobs in a successfully global sector will be reduced. we will see robots where there might have been people before. you will increase and see increasing production and shipments and exports, but you may not see the concomitant increase in jobs, in those particular situations. electronics. we see it every day with televisions, flat-panel displays, the assembly of -- electronic factories that are
assembling and doing value added as well in mexico. often with the semiconductors. a very high value added input that may be reflective of american u.s. values added coming across the border, not just once, but two or three different times before we are finally seeing the assembled product. so if you disrupt that, i think we basically, as a continent, as a continental economy, will lose to competition in asia. i think that is across the board. as far as the agricultural goods, we heard already from the texas cattlemen. if you wait long enough, you said, you will see others pushed back. you are hearing texas cattlemen who basically have some of their cattle on the other side of the border, moving back and forth
and coming back. likewise, of course, corn. we are already seeing a threat to our agricultural sectors here in the united states and the representatives speaking out and speaking up now, concern that mexico is, indeed, shopping in argentina, brazil for the corn that had really been responsible for much of our exports, export numbers. and they are not many jobs, again, particularly in agricultural area. but i don't think we can afford to shoot ourselves in the foot, if you will, by unwinding all of the progress we have made. yes, there needs to be something
done to deal with the anxiety, yes, we can upgrade the trade agreement, but we should not be seeing this as an opportunity to expand and not come back with a fallback position. david: peter, i want to give you a quick word and then open up to the audience. peter: that is why talk of a border tax right now is unhelpful. that is not to say that the u.s. congress and senate will not have a lot to say about these negotiations as they progress. paula: constitutionally they are entitled. peter: checks and balances in your country are very strong. one of the areas that we have not touched on that will figure prominently is energy. this sex all three countries in north america. being energy independent in
america is one thing. being north american energy independent, in my view, should be the goal. the way to achieve that is closer cooperation. that also includes closer cooperation around climate change, around the environment, emissions standards. we are yet to see what the president will do with the paris climate change record. it is a pretty clear signal coming already that there is a backing away from that, as we saw with kyoto. that is problematic. if we are not holding to account china, pakistan, india, ourselves, we are whistling past the graveyard on these important environmental issues. going it alone in that area is disaster. david: u.s. energy exports to mexico could themselves errors the trade deficit. i'm going to stop the panel so we can have questions from the audience. there will be microphones
circulating. introduce your name, your question. i will take three questions together. first question here in a second row. >> diana negroponte from the woodrow wilson center. if the key political problem is jobs, is there, within nafta, the capacity to raise additional revenues to invest in the skills retraining, which we need to meet the new economy? david: i will take a couple of questions. middle of the third row. then to you, sir. >> brett with inside u.s. trade.
how will the idea of renegotiating nafta bilaterally, with separate negotiations, happened between canada and mexico? how will that impact how that renegotiation will happen? is that a realistic way to do so? how do you deal with issues such as rules? there has also been talk about other issues like a border adjustability tax, immigration. is it possible that those other areas poison the well, in terms of this renegotiation, that they overshadow any possible update with nafta? david: thanks. question in the right side, middle. >> kirk. i want to ask the flip side of the question that diana asked.
from the mexican point of view, there is a lot of concern that wage growth over the past 20 years has not been adequate. the flip side of the jobs equation there is lack of wage growth. how would a renegotiation address that? david: thanks. let me start out with paula, the capacity in nafta for funding for greater worker capacity building. the question on the impact of bilateral/multilateral, other things that macleod the discussion? the lack of wage growth in mexico and how that is part of the discussions. paula: you are right to put this together. the need to deal with the adjustment that comes from trade, there has never been, if you will, a tax that has been
kind of put aside. talk about the wall that president trump wants to build. he has suggested that a 35% tariff on mexico's goods, he could pay for the wall, if you will. but that means you are taking money out of the american consumer's pocket when you take it out that way in a tariff. what your challenge is, to the congress and president, when it comes to allocating funds for this, there are many excellent proposals that academics have made that deal with both wage
insurance, various ways of assisting those who are impacted not only by changes in trade but changes from technology. but congress has never shown a willingness to advocate those kinds of funds. as you know, we as a nation, compared to other industrialized nations, basically think the individual should deal with these disruptions. i happen to believe that that has brought about the toxic situation that we saw in this last election. i think the bigger competitiveness agenda, the bigger bargain, is something that you have to turn back to president trump and ask, now what are you going to do, in addition to just going back to
trade negotiations? but you have to remember the role of the consumer here, when it comes to allocating a new tax or tariff. peter: very briefly to the question about skills training, job training. i don't believe, in the reading of the original agreement in 1993, that it did really envision the impact of technology and that sector. not only in automation, but the number of jobs. as the secretary said, this is an area of modernization that should happen and will happen. thank you, to the woodrow wilson institute, for remarking these issues. on the negotiation, the signal
that came clearly from the foreign minister yesterday was that we are not going to throw mexico under the bus. this is not going to be a go it alone bilateral. however, having made a declaration, a lot will depend on the signals from the white house. it is easy to make that declaratory statement. the concern will be the propensity of the president, who has stated his preference for bilateral relations in trade negotiations. go on back to square one, he wants to win. he wants america to come out with at least 51% better than whoever he is negotiating with. so if that means starting way over here and making quite extreme statements to get back to middle ground, that is a negotiating tactic. that is not new. but it is certainly part of the president's personality, if i can say that.
canada and mexico will have to come to the table with clearly enunciated positions, well articulated, backed up with facts, and let the negotiations begin. rafael: there is an american consensus in mexico that if trump were to denounce nafta, it would not be end of the world. why is that? because we have the wto. terrorists would raise about 2%. .t is not the end of the world paula: except on small trucks. rafael: it goes both ways because then the u.s. auto industry will have to scramble. ford, general motors. out of business. you are right, the gap between mexican sellers and u.s. sellers has not been bridged. nafta has not done much. but if you look at another
index, the human development index, you will see that mexico is reaching the gap with the u.s. in the last 20 years. education has increased a lot in mexico, and also health. about 95 million mexicans are covered by health insurance. this is a new mexico. and also because of that, there have been a lot of mexicans coming back, some of them willingly, deportation for some of them. if you don't have health care, if you don't have educational services here, they better go back to mexico. that helps explain why in the past seven years there has been zero net migration of mexicans into the u.s. the good thing about renegotiating that stuff, now we
have to have a labor agreement within nafta, then we can really talk about salaries. there is a new or emerging consensus in mexico. the mayor of mexico city has been talking about raising the minimum wage. he is getting somewhere. for now, listen about this from every single political side. you will finally listen, the transportation minister of mexico talking about this. we know we had to bridge that gap between mexico and the u.s. salaries between the u.s. and mexico, about $20 here, two dollars and mexico. we have to change that. we believe that we have to update nafta. we see this as an opportunity for updating that.
peter: i would also say nafta has helped to lift the boats of all mexicans. there is wage disparity, given the nature of the two economies, the direct difference from the get-go. we have to realize that our relationship with mexico is not a zero-sum game. lifting mexicans helps the united states, helps north america. you want a more prosperous country on our southern border. that is important to take into account. coming out of the national review that talks about mexican education, more engineers graduating in mexico than you do in germany. there are significant advances in education, technology. we did a report last year about innovation in mexico. lots of interesting things are happening. four more minutes. let's take two more questions. i saw in the middle.
your question, sir. >> simon. what is achievable, genuinely achievable, in the sense of negotiations? not just taking nafta into account but also the broader more security issues, and the like. although we focus heavily on nafta, the two will be inevitably intertwined. i ask in the context of the political objective of u.s. and mexico, any negotiations, and also the time frames available. the election campaign in mexico starts in earnest very soon. that will inevitably have a huge impact on the way mexico approaches these negotiations. what is genuinely achievable with respect to that? >> rafael from the hill.
is this jumping the gun or getting a head start? david: opening up consultations. rafael, let's start with you. you can keep your response to about 30 seconds. rafael: the mexican negotiators now are under a lot of pressure. this is a sharp difference from the 1990's when we negotiated nafta. then we had a unique party system, and authoritarian system. now senators in mexico, a senator put a bill in the senate about substituting the corn that we import from the u.s. that has caught the eye of senator chuck grassley. he said we have to be careful with mexico.
there are ways for mexico to proceed. the important thing is there is consensus that we can live without nafta. hopefully that is not the case. but if this is a negotiating position of mr. trump, it seems to me mexico has a good response. we know that we can leave and survive. david: what is achievable in terms of nafta? paula: the fact is, president trump taught us, again, that he or she who shapes the debate wins the debate. he made this election about trade. now he is making this discussion here today about a trade agreement. i believe that with enough people in place, civil servants,
skilled people, that we can see, as i said earlier, lemonade out of lemons. the president is going to increasingly have to hear from members of congress who, in turn, are hearing from their constituents how they are being impacted. for the first time in a long time, the ceos have become incredibly outspoken about immigration, on this h-1b visa stuff, the tech companies, financial companies. we have to see the same ceos start talking, along with the agricultural multinationals, about what this can mean, if we do not get a successful agreement. david: the business community has been very silent until now.
peter: a world without nafta is a much more difficult world for all three countries. i agree, all three countries will go into these negotiations with their own very specific issues. on some things, we may have to part company. but that does not undermine the fact that the overall agreement can be improved. security is inseparable. immigration will be inseparable. labor mobility. this is why canada has a much more diversified trade relationship. under stephen harper we negotiated some 30 trade relationships, including one which allows a country of 37 million people to have access to a european union economy. that is not to suggest we can go it alone, but it is to suggest that you need to diversify your trade relations. that is what mexico is doing as well. tpp, while dead for the u.s., is not for canada. there are other trade relationships that can factor
into this as well, including moving the u.k. into a north american trade relationship. david: i want to thank my colleagues at the latin american center, those that put the event together, the deputy director, as well as the entire latin american events team here at the atlantic council. i want to thank secretary gutierrez for his insightful remarks, your leadership on the issues. my colleague who opened the event, and of course, this all-star panel. of course, all of you for joining us today. this is an issue that is incredibly important for the atlantic council and the latin american center and will be continuing to have events and publications and other types of social media awareness about the importance of the mexican relationship in north america overall. thank you for being with us. [applause] [captions copyright national cable satellite corp. 2016] [captioning performed by the national captioning institute,
which is responsible for its caption content and accuracy. visit ncicap.org] >> coming up next on c-span, milwaukee county sheriff and trump supporter david clark third vice president mike pence visits a vandalized jewish cemetery outside st. louis. america discusses how african-americans can increase their political influence. and president trump talks about his budget priorities. >> c-span's washington journal, live every day news and policy issues that impact you. coming up thursday morning, senior editor for the atlantic
discusses his recent cover story -- how to build an autocracy. then senior vice president for policy and third way talks about their new blue campaign, an effort to bring disaffected democrats back into the party. be sure to walk c-span's washington journal, live at 7:00 a.m. eastern thursday morning. join the discussion. you missed it, here are some clips of c-span's programming last week. kentucky senator rand paul spoke at the republican health care news conference about the gop plan to replace the affordable care act. >> it will legalize the sale of an expensive insurance. it will expand health savings accounts so people can save to buy their insurance. they can use it for deductible or premium for vitamins, weight loss, you name it. exercise. it also allows individuals to join an association so they are
not left out in the cold by themselves to buy insurance and a small insurance pool. >> actor ashton kutcher shares his insights on modern slavery. i have been on fbi raids where i have seen things that no person should ever see. of ae seen video content child that is the same age as mine being raped by an american man that was a sex tourist in cambodia. this child was so conditioned by her environment that she thought she was engaging in play. >> senator charles grassley on background check for mentally ill citizens. >> the government is essentially saying that a person with a disability such as an eating disorder is more likely to be violent and should no longer be allowed to own a gun. support no evidence to
that general idea. >> at a news conference, nancy pelosi spoke out against president trump's policy agenda. it stains hard-working law-abiding immigrants and embraces vladimir putin. the disgraceful new ice raids targeting immigrant families are deeply upsetting become a cruel, and designed to spread fear. that makesision america less safe, less stronger, and more fearful arid -- fearful. humbled as amely first-generation american to be sitting before this committee after being nominated by the president of the united states. it is a testament to the fact that the american dream is very much alive for those willing to work for it. >> all c-span programs are available at c-span.org, either on our