Transcripts For CSPAN NAFTA Negotiations 20171212

[captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. Visit ncicap. Org] [captions Copyright National cable satellite corp. 2017] [indistinct conversations] scott just got the thumbs up. We will begin. Thank you for being here this morning. Welcome to csis. We appreciate you being here early monday morning for this event. My name is scott miller. Im a senior advisor. Three programs working cooperatively. Our program for prosperity and development and americas program. For those of you online, we welcome you. If youre interested in the rebroadcast of this event, it will be posted on the event page immediately following the program. To any of you who follow this, we are delighted you came and invest your time thank you for doing that. We have a excellent lineup today to talk about a subject we hope will provide context. Our programs are doing that on a regular basis. A trade website, for continuing coverage. To get things started, director of the Mexico Program richard miles. Richard. Richard thank you. I am the director of the u. S. To mexico futures initiative. You may wonder, we will have people talking about a possible nafta doomsday scenario. It should it is the Job Description to see the big picture, the whole relationship. We want to look beyond trade and examine what could happen in the issues and all with these bilateral relationships for one of the parties of nafta. We will probably hear about things like Security Cooperation with mexico, about defense cooperation with canada, cooperation with both companies both countries on issues like venezuela and haiti, global issues, and most importantly, canada and mexico are our neighbors. The people to people relationships angle that ambassadors care a lot about, cultural and educational ties, and things like education. To start things off, we will have another ambassador set the stage. Carla hill is one of those people in washington who needs no introduction but i will give one for her anyway. Born in los angeles, attended oxford and started her career as assistant u. S. Attorney in los angeles, and the Civil Rights Division in the department of justice, and during the ford administration, she was the secretary of health and she was u. S. Trade representative to which time she led negotiations for the north American Free trade agreement. It would be hard to find a better person to speak about what nafta has achieved and what the world could look like without it. Please join me in welcoming ambassador carla hill. [applause] thank you. We have got a great panel so i will be brief. I think in starting to think about what we lose from a pullout of nafta, we ought to remember what does the agreement do for us . Let me briefly say it brought together 490 Million Consumers and created a 19 trillion market. It eliminated tariffs on all industrial goods and most agricultural goods except for a few. It opened a broad range of Services Including Financial Service is an provided treatment for Service Providers across lines. It removed significant Investment Barriers and provided protection for north american investors and provided enforceable protection for trademarks and copyright, which have become more important in the 20 years since. As a result, our commercial relationships throughout north america expanded, making this region the most competitive in the world. Today, canada and mexico account for one third of our global trade but we are not to talk about trade or what happens if it shrinks. Actually i want to also mention , that canada is our largest exporter destination. And mexico is our second largest. The number and vibrancy of these commercial relationships has created great bonds, people to people and government to government paying dividends in areas way beyond trade. For example visitors from canada , and mexico constitute the top two sources, a major industry for the United States. The top two sources of tourism. In 2015, 1. 5 trillion to our economy. Today, one out of nine jobs are hinged to tourism. It has already occurred in this year. As a result of concerns about the breakdown in our regional relationship. Another cause for withdrawal is the in crease in investment. Our nafta partners have invested 280 billion in the United States and the uncertainty created by the threat of our walking away from the agreement after 24 years, without question, will reduce interest in investment and jobs connected to investment. And not just from northern and southern neighbors. Much more broadly. Uncertainty with respect to the future action also affects job creation. Think of it. In 1993, our jobs connected to mexico total 700,000. Today, as a result of nafta, it is 5 million. Exiting from nafta would obviously shrink the number significantly. You take the auto sector. We would lose jobs if we break up our highly synchronized supply chain that makes our auto chain the most competitive globally. Our companies would see costs increase and that would adversely affect their Global Competitiveness and the result is a decrease in our sales, which would mean fewer jobs. Some companies are predicted to relocate to asia, which would again adversely affect jobs. Or take the agricultural sector. We have got 10 states that are keenly related to what they produce in agricultural markets. The tariffs and the food sector, are above 30 . So the states would truly feel that pinch. In addition to the harm done in that regional relationship, we would suffer challenges maintaining security. In the past two decades, our three governments have worked together to handle the increased flow of trade trying to separate those items that would create a danger so they could focus on facilitating the items for which there is no concern. Today, we share intelligence and collaborate on confronting challenges to International Crime to various areas of organized crime, creating a stronger border requires attention and action on both sides of the border. Pulling out of nafta nafta would most assuredly erode partnerships in dealing with a broad range of security issues. Finally, i have no doubt an exit in nafta would result in serious leadership erosion for our government. Not only with our two neighbors but throughout the hemisphere and beyond. To turn our back on an important agreement with our neighbors, over concern about bilateral deficits raises questions with respect to our reliability and our leadership. What other government would want to sit down and negotiate on any topic . A concern would loom that we could not be relied upon to deliver tomorrow what we promise today. We have a great panel to talk about it in greater detail, the cost and consequences of exiting from nafta. I will exit the podium and turn it over to our great panel. I thank you for being here. [applause] good morning, everybody. Im a senior fellow here at csis. I will be moderating this panel. What a treat to have three former ambassadors here. Today, Earl Anthony Wayne is a former u. S. Ambassador to mexico from 2011 to 2015. The former mexican ambassador to the United States from 20072013. And michael wilson, a former canadian ambassador 20162009. We can talk about trade as well. I would like to start with, putting this topic more on the level of a regular citizen. How do you think regular citizens would be affected by an exit of nafta. What do you tell a regular joe how does that impact them . The basic message is that things would cost more. The winter vegetables you get from mexico would probably cost a bit more. We do not know. Daytoday, that would be the place where people note things. We will talk about this a little bit more, we see a reduction in security operation in fighting crime. That is already a serious problem that both sides are working together now very collaboratively. I think cooperation would be negatively impacted the u. S. Were to exit nafta. Good morning and thank you for having us this morning. This is an important week, the socalled intersessional meeting before round six in canada at the beginning of next year kicks off. We will be seeing a lot of discussions on hot button issues, some of these issues in the conversation. One thing i would add to the list of how it impacts daily lives of americans is cost if the u. S. Were to impose some of the issues it would like to impose on the automotive sector, there will be a very important impact on the price of automobiles manufactured in north america. At the end of the day, it is a hard question. A campaign not on Public Policy debate discussions but on narrative and storytelling. How do you transform that data despite that we seem to live in a factory washington these days. How do you translate all of these numbers and all of this data into something that connects with americans . One way i think that helps is to underscore there is no bilateral relationship on the earth that touches the daily lives of so Many Americans in their relationships with mexico. Its the avocados that you buy, but it is also what happens with scarce resources on the border, and what has been done on collaboration but there is a compelling story to be told that how do we create storytelling that will connect with your average joe to underscore how important this is . One of my hoax is that, given that one of the sectors that would be severely hurt by the denunciation of nafta is the bag sector, which will provide a real pinch in states that elected President Trump. Profoundly red states, agricultural states that would , lose significantly if this disappears. We can go into some of the specifics of all of this, which im sure we will do this in the panel, but at the end of the day, the challenge we have as former officials and think tanks and policymakers is how do we create a narrative which connects to the average citizens in canada, mexico and the United States as to what the impact of nafta going south, pun intended, would entail for security and wellbeing of north americans . A lot has been said and ill try not to repeat it. Agriculture, cars, and textiles, these are the three sectors that would be most severely affected and they are with the average joe or jane will feel quite directly. A little bit less directly, there is an uncertainty as to what will happen if we have no nafta and there is nothing to replace it with. That will in fact that will affect investment, and investment affects jobs. So there will clearly be an indirect effect on jobs. If all of this happens the way we have been discussing, i would be concerned about an antiamerican sense in mexico and canada that will be damaging for the relationship among all of our countries. We just dont need that. I think it is something we have to be concerned about. The final point i will make is 35 states, have as the number one export destination is canada. I think there is a number that other states with mexico and the number two in both cases is usually mexico or canada. It is not just here in washington. It will be felt through the United States, those negative impacts of three of us talked about. Thank you very much. I would like to focus on security aspects. The three countries have cooperated on border issues and drugs and illegal immigration, how would exiting impact those areas, drugs, immigration, especially from Central American countries, and potential terrorist threats . Those are key issues that citizens care about. A good place to start is precisely where mike left off , which is that it leads in a lot of these issues. Which is perceptions. You do not need to be kissinger to figure out why a country where positive favorable perception of United States has collapsed the most is mexico. It went from 66 to 33 in a year. People may say, how does that impact the relationship . When you have that impact in mexico in less than eight months and you see what mexicans are being told and asked, there is a key question i would like to put next to this collapse which is you ask mexican citizens whether the administration is dealing adequately with the Trump Administration, the overwhelming majority, 63 or 62 , say that the Mexican Government is not responding adequately to u. S. Administration. Imagine what the negative perceptions and this poll tell you about the ability the Mexican Government has to do stuff with the United States . As mexico heads into the cycle of next year, then it impacts everything in terms of it has a profound impact on security collaboration, something tony and i worked on hand in hand when he was in mexico city and i was in washington, d. C. And there is already a challenge because this is not the forum to discuss whether we agree or not, but as the u. S. Has moved in a de facto legalization, many in cannabis,ation of many in mexico are increasingly saying why should mexico be investing blood sweat and tears in eradicating marijuana if nine states in the United States have legalized cannabis for Recreational Use . There is already a relevant tension and to this, you add u. S. Administration that decides to invoke article 2205, it will have a profound impact on how mexico has articulated a number of policies, whether it is regional, bilateral, or hemispheric level. It is not that mexico will necessarily become an antiamerican country. It is simply the ability to do stuff that we have been doing for the past decade and a half on issues like security would go out the window. I will give you a prescient example, given now that immigration was one of the third rails of the gop primary and has played such an Important Role in these months and we have a decision over what happened with the dreamers in daca. When the famous gang of eight bill was being developed on capitol hill, which was later approved in the senate and failed in the house, some of the followed it closely. There was a debate on what was called a touchback clause, what you do with 11 million undocumented immigrants who were in the United States to legally be in the United States. There was a discussion on capitol hill as to how you would make these 11 Million People leave the country and then come back legally to then start whatever process of immigration and legalization was put on the table for them. Mexico at the time told congress, one thing is mexicans or Central Americans were relatively close. If you are from india or china or poland, and you go back and then come in, it is a bit of a challenge. Mexico said, we would be want to 11 millionto take in people if you could process them in mexican consulates, and then that way we could help ensure that those individuals in the country without papers could come back in with a legal status so we can get that off the table. That debate which was happening 2009, today in the current circumstances despite how important it would be to what weve the needle forward, it is off the table. It would be political suicide for anyone in mexico today to put that on the table. That is an example of how this use of mexico as a pinata added to the potential of nafta going down the drain because of unilateral denunciation, how this could impact a lot of what we do together on narcotics on regional security, on challenges we are facing in the caribbean and south america, where we had been working hand in hand. To finish on that one and then maybe talk about canada, it is important to remember that in the 1980s, the United States and mexico were called distant neighbors. They really did not cooperate on much. There were friendships but there was not a cooperation on the governments. After nafta, what happened of the subsequent 25 years is gradually, let me underscore gradually, we developed more mutual trust and Mutual Understanding and started expanding the area where we were able to cooperate. It started in the trade and then the financial area. We wrote a paper about it in the Foreign Policy area, how long it took. It took through the first decade of the 2000s and then beyond to get us to the point where we were willing to collaborate around the world and other places. The same is true in the security area. There just was not mutual trust or understanding in agencies. They would Work Together on cases that it was limited. Same thing on the border. Up until a few years ago, people were still shouting at each other across the border and pointing fingers and they moved to a shared paradigm of shared responsibilities. We share the responsibility for solving these really difficult problems. Neither of us could do it ourselves. In the Law Enforcement security area, starting in 2008 and moving forward increasingly every year that it was better collaboration. They did not solve all problems but they found new ways to address the problems that were more effective. A lot of it is endangered by what arturo was talking about, the Public Attitudes in both countries, but also in mexico where you do not have the space to take the steps forward and your own Law Enforcement people will be less trustworthy because of what they perceive to be clear insults not against criminals but against mexico in , general and the mexican people in general. And so the big danger here is we will see big steps afterward. Significant steps backward. The worst part of it to me is the young mexicans who grew up in nafta and came to see real values in the United States that they admired are now changing their opinions. That is evident in the overall poll, but it is evident in what we have both heard from our friends who say, you know, my kids are coming to me, and they are very critical of the United States now, and they have a whole different attitude like they are pulling out old views held by me when i was younger and by my parents, of the United States. It is not the kind of relationship that we want to have with a neighbor. I think tony said something very important. What nafta has done has brought our three countries together, not just mexico and the United States but also canada, mexico, and the United States. After a nafta termination, that will dissipate, no question. We are concerned about a dissipation of the strong relationship built over the last 25 years between mexico and the United States. A broader point here, what is the message to the rest of the world . If the United States cannot get along with her two neighbors, mexico and canada, and they have to destroy a trade agreement, which has done Tremendous Positive results for all three countries, if they cannot get together with their two neighbors, how will they get together with other countries and other parts of the world . Carla made the point a little earlier on a trade agreement with another country, how can you count on the United States . So there is that effect. The third point i would make is on order management. When i was ambassador, after 9 11, a real challenge we had was Border Management. If there is a breakdown in attitudes toward managing the border in the positive way, we are going to get affected in canada almost as much as it would affect mexico. That is something we have got to be concerned about as well. Final point, in 2011, president obama and Prime Minister harper launched something, i think beyond borders is the name of the association. A focus on Border Management and harmonization of regulation. A lot of it was done very quietly below the radar stream a lot of good things came out of that over the course of this i would worry that the momentum that we had that arose from that 2011 agreement would decline and possibly, we might see things in reverse. And impactirect between canada and the United States as between the United States and mexico, but certainly, we would not be immune from the concerns that have been expressed by tony and arturo. Romina thank you. My other question is, you mentioned we have mexican elections in july. How would this process, the nafta exit, impact democracy and human rights, and all the issues if the u. S. Pulled out . I have seen a lot written about this. Some of it has been gobbledygook. Lets be clear. The mexican election will not be won or lost depending on what happens in nafta. Not even this country determines electoral outcomes based on Foreign Policy, with a couple exceptions. But it will have an impact in the sense of attitudes and opinions, which we talked about, and it will have an impact because there will be the action the question of, who lost nafta . Fellow be utilized electoral he. I dont think, regardless of whether nafta is still alive, whether it has already been denouncing aided, i do not think mexicans will go to the polls and cast your vote depending on what happens with nafta. The drivers will be in cap unity impunity, corruption, but those will be the main drivers based on which mexicans decide who they choose as their next president. There is not a direct correlation between what happened with nafta and the result on july 2, but it will have an impact in terms of attitudes and perceptions and the space, the bandwidth which with which this government, we have this horrendously long transition from july until december 1, so we will have a lameduck president for almost five months. The president elect at the same time. This will be a very difficult moment to articulate forwardlooking policies, even in the best of worlds, regarding a strategic relationship like the one we have with the United States. If nafta is no longer there, imagine the complications that will trigger as the new government starts to devise its policies towards the u. S. Where i think the derailment of nafta does play an important an issue where most americans dont stop and think about, which is that nafta in mexico had an impact beyond the trade agenda. Trade with the u. S. Quadrupled and we support 5 million u. S. Jobs directly in u. S. States linked to nafta, and yes, we are your second largest buyer of exports after canada. The numbers are there, and they point to what a resounding trade success nafta has been from a two way bilateral relationship. Of mexico, nafta had a profound institutional footprint. In terms of rule of law, predictability, in terms of investment, in terms of how the country became much less automatic than it was before nafta was negotiated. In the way mexico linked its destiny to the United States in terms of economic and trade prosperity. Fieldated a level playing for u. S. Businesses and investment in mexico, and it angered many of the changes that we have seen and mexico. In fact, some of the policies being articulated by this administration hark back to how mexico would manage its economy before nafta was approved. In many ways, there is a larger institutional footprint nafta has developed in mexico which might be lost and where certainty regarding investment and business footprints, i can mention one big area where this is critically important, energy. When we negotiated nafta and 1991, the u. S. And mexico each vetoed one issue that our respective countries put on the table. Mexico wanted more mobility, which continues to haunt the relationship as it fits into the larger immigration debate in the u. S. And the u. S. Said no can do. The u. S. Wanted energy on the table and mexico said no can do, not only because we werent ready to do that but because lawsos internal domestic were such that you couldnt have domestic or Foreign Investment in the energy field. What has happened in the last years as to the Energy Reform in mexico and the impact this has for the north American Energy footprint in terms of efficiency, security, nafta is lost,f you lose, if you are a u. S. Oil major or Transactional Oil major, you lose a lot of legal certainties in the mexican marketplace if nafta disappears. So it is about trade, but in the case of mexico, where there is still asymmetry between the rule andaw and transparency accountability with our north American Partners, this has had an important effect which could be lost, or could disappear. That, if thed to u. S. Pulls out of nafta before the election, it will change the tenor of the debate. The estimates are that mexico could lose anywhere between 900000 and 1. 2 million jobs if nafta were ended. That is going to be something candidates will have to take a position on. They will have to change that agenda. And if jobs rise up in the agenda and people are fearful about the future of their economy, that means other things will be relatively less important. Ro is right that the anticorruption themes will be in front, then violence and crime in the country. You will have next to it a whole different debate about what do you do about the future economy of mexico . You develop new export sources . What impact is this going to be, to have on mexican citizens . You are not going to have anybody championing cooperation with the United States, even those candidates who personally might believe that, they are not going to have the space to do that. Those who may personally not believe it anyway will be a bit more aggressive and nationalistic in their response because you are protecting your electorate, your mexican citizens. Im not going to talk directly about the u. S. Or the mexican election, because others have commented on it before, but what i would say is that if there are, if things arise that talked about,o that will raise uncertainty about investment into mexico by canadians. One of the things that has happened in the last few years that was slow in coming was canadian investment into mexico, and i would hate to see that slow down, because we are just getting a degree of momentum. A number of investments or potential investments are related to the Energy Reform that has taken place. If there is any slowdown or reversal of that, that type of investment will stop. One of the great areas of potential for the three countries working together is in the energy area. If we could ever get to a regionwide energy policy, it would put this region, the north american region, in a very strong position. We would be selfsufficient in , electrical gas power, nuclear power, and it would be really, the model for the rest of the world. And that is something that i would be very concerned about. We wouldnt be able to achieve that if we had some setback electorally in mexico. Related to the mexican political scene is not going to be good for a very wide rangeof region is wide of reasons and we are ready touched on that earlier. I would like to add to what mike has said. A lot of the conversation has been sort of gravitating around the u. S. Mexico access or the canadau. S. Axis, although michael mention the impact it will have in terms of mexicancanadian relationship. The larger picture in play is what an implosion of nafta does to north american footprint worldwide. And what it does to the ability of free north American Partners to compete geostrategically and economically in the 21st century. If there is so much education these days about what china means and entails for u. S. National security, Foreign Policy, economic policy, i am convinced that the 21st century can be an north American Century if we get the renegotiation right. If we modernize and revamp nafta to 21st century standards. This allows north america, paired with what has happened in the Energy Sector in terms of the energy revolution, in canada and the United States, and what has happened because of mexicos decision to open up its Energy Sector, if you add energy to the template, you have the potential of the 21st century truly being an north American Century in terms of our ability to compete with the asiapacific, particularly china. There is a larger piece here, and there is also something that has been very dear to my heart, which i worked with my canadian and u. S. Friends, which is, how do we deepen the security collaboration between the three countries that are regional on a global level . How do we engage on issues that matter to us where we have . Oincidental agendas whether it is Disaster Relief and collaboration to respond to Central America or the caribbean, we have started to discuss the prepositioning of equipment and troops and materials to be able to respond quickly to natural emergencies in the cap in the caribbean and Central America. Has finally moved into p kos after decades of keeping the u. N. At arms length. We started a slow process of engaging with our canadian friends where they where there were less historical reasons less antibody to work with our canadian friends than with our u. S. Friends. During my tenure, this allowed us to bring navy and army liaisons to colorado springs. There is a debate if one day mexico should become a member of norad, but this discussion that has been slowly moving forward in ways that wouldve been unthinkable 20 years ago is something north america could lose, and which would, i think, would be to the detriment of the Strategic Interests of the region going forward. Arturome pick up on, mentioned china and north america versus the asiachina region. We also have the competition of the third Major Economic region in the world today. If the United States is thinking strategically here, the main challenge economically in trade, finance, other related issues, is not mexico, not china, and not canada, but it is going to be china. China is where the main challenge is going to come. Lets look at the major sector that the United States is in this renegotiation of nafta, the automotive sector. , or the surplus mexico has in auto parts is about 80 of the deficit, the surplus, however you want to look at it. That is a major fork us focus, and something has to be done to address that. Lets be careful about addressing that. China has car production today, small truck production, 28 million vehicles. North america, the three countries, it is likely over 20 million. They have the capacity to move into this market where they have not moved to date. I just came back from a couple weeks over there, and it is very clear that china is going to, is targeting to come into the north american market, primarily the u. S. Market, within five years. Capacity to do that and they are developing the technology. Quality isnt quite there, but if you go back to japan 20 or 30 years ago, and korea 15 years ago, the quality isnt there. What do we see . We see a lot of japanese and korean cars. I happened to pick up a copy of. He South China Morning Post what caught my eye was this. Looked at it and i said, that looks like a corvette. I looked a little more closely and i said, that is a pretty splashy, fancy car. I read a little bit further. It is not a corvette, it is a chinese car. It is reputed to be the fastest electric car in the world today. China, as we read all about tesla, china has 43 of the Global Market for electric vehicles. That is the basis on which they are going to come into this market. Are, in this negotiation, we are trying to weaken the north American Automotive production. As you have heard from others earlier today, is drawn together by the supply chain, the north american supply chain, where the best of the United States, canada, and mexico is brought together to make this a very competitive region. We should be looking at how we this northhen american region against the challenges from europe and china, rather than weakening it in that major competitive auto production area. Away from got to get the wind when the smallscale wind we will get trying to get at the negotiating table, get our minds on the strategic level where it is extraordinarily important that we Work Together as three countries to be able to address the competition, which is bound to come from asia and china, because they are the dominant country over there, obviously. We have to have a strategic overview guarding these negotiations, as opposed to a transactional approach at the negotiating table. Romina thank you, ambassador. That is a great segue for my last question. How do you visualize a modern nafta . What is the best alternative . We have talked about exit. Lets be positive. What are the elements that we need to strengthen to be a big north american block . Taking up michaels comments, what we need to do is focus on the future issues that will make countries more competitive or not. Rather than looking backward to the economies of the past, and how is the industry going to transform over the next 15, 20 years, and how do we make sure this the roles we write in new nafta are flexible and open enough to take care of these kinds of changes. Right now, were trying to keep up on data and eservice. Those were not happening when nafta was written. We have to leave that space for what is coming. What we know is that all it economies in the world are going to be hit by these waves of new technology. We will have to have workers, where if they dont lose a job, they will have part of their job redefined. How do we Work Together to have that space opened for Workforce Development in all three countries . How do we have the space for new services and how do we encourage what will in fact compete with china in the future, and not just china with germany and japan, because they also have these regional models that help them produce things competitively, so it really is about strategic vision, not very narrow and specific vision. There is a place for fixing things in the trade agreements that have not worked. Opportunity is creating a trade agreement that will take us 20 years into the future and serve all three of these economies well. If i can just add, that is sort of the same thing on the security front also. The vision for a lot of people at the height of the collaboration was extending security to and beyond north america because of the cooperation between the three countries. You are not just thinking your national borders. Youre thinking how collaboratively can we expand the security look to other areas, and not just border areas, but who is coming in . How do we Work Together to keep terrorists and radicals and others out and that was really the potential of where we were going. It was transforming borders between the u. S. And canada and the u. S. And mexico, in their very nature, to make them a creative place where you are providing security but facilitating that traffic and you are doing it in the context of an network of information sharing that really lets you know who is coming and going. That vision is also endangered if we move back to an isolated idea of the three countries, sort of getting along with each other but not really taking advantage of all the potential that is there. I think the sine qua non is coming up with an upgraded 2. 0 and 3. 0 Free Trade Agreement is to jettison the my way or the highway approach of negotiations and a zero sum mechanics with which this administration was has approached most issues and the negotiation itself. You have to get rid of sunset clauses. It is absurd, it runs counter to why you have a Free Trade Agreement and the first place. You are not going to sign a Free Trade Agreement if every five years, if youre a company and youre going to invest, youre not going to do it if every five years, you have to renegotiate the agreement. You have to get rid of the sunset clause. You should do no harm to the joint supply and production platforms we created in north america which have allowed us to compete, and which have ensured that not more jobs are lost and it also means that through what we do what we are trying to do with tpp. When canada and mexico decided to join tpp, tpp at the end of the day, the reason why canada and mexico joined was that this was the best way to upgrade nafta without having to renegotiate nafta. By adhering to 21st century standards on stuff that didnt exist when we negotiated nafta,ony mentioned ecommerce digital and ipra and biotech andes, by modernizing tpg having canada and mexico and the United States be tpp members, it would automatically renew the Regulatory Framework by which we trade without having to say nafta and renegotiate in the same sentence. The fact that many of the disciplines that negotiators look at today come from the tpp itself is an indication of what freetraded upgraded agreement between the three countries that improves our ability to compete looks like. This is very important on the issue tony has mentioned and mike, and the paradigm is not a wall, it does membranes. It is membranes. Membranes allow the good stuff to come in and the bad stuff out. We have the ability to do this, not only in terms of what our security and intelligence is intelligence agencies have done together since 9 11, despite what you hear about the campaign trails, but the collaboration between the United States, mexico, and canada in terms of passenger verification, ensuring that no one who has been denied a visa can get a visa in canada or mexico and enter the north american space, the common domain awareness is a very important piece of all of this. All of these appeases of the ,uzzle that if brought together could really upgrade and modernize our trilateral relationship. All i would end up by saying is that oscar wilde used to say when the gods wished to punish us, they would listen to our prayers. In the americanized version, it is basically, be careful what you wish for. I think the administration has to be careful what it is wishing for on the nafta front because the profound economic trade and National Security effects it can have on the trilateral relationship as a whole. What should a modern trade agreement look like . I think the basics of approaching a trade agreement among free countries who are friends, allies, neighbors is to look at the broad region and then identify what can be done in the critical sectors. We talked about energy, digital, automotive, transportation is another area, and then decide how we can best design a trade agreement that looks at the strengths of the three countries in these key areas and how do we put together a trade agreement that allows them, those various sectors, to work more closely together to develop a strong national, a strong north american region. And that i think is the big challenge. I think there is another point here. The whole focus of the administration has been on the trade deficit. Economics 101 will tell us that a trade deficit does not, is not based on a specific trade agreement here or with whatever other country. It is based on the structure of the u. S. Economy. The u. S. Economy has a high federal government deficit, High Consumer spending. 70 of gdp as opposed to 60 in most other comparable companies. That produces a low savings rate and an automatic current account deficit, the trade deficit being a significant part of that current account deficit. So we have got to realize that hammering away at one country or another country on a trade agreement such as nafta is not going to solve the u. S. Trade deficit. It is a red herring. It is something that the United States has had for 40, 45 years, so it will not be resolved by making a change to nafta. Structurally, there has to be a change, and that will be extraordinarily difficult. The thing i worry about the most on this is that if we revert to the old ways of lets have a trade negotiation where i will hammer you, you will hammer me, and we each try to get a win at the table, the implications or of this, or the messaging to the worldends trade organization and any future discussions around that table, is very negative. We have got to be looking at trade in a positive way, and if the three countries, if our three countries cannot Work Together to find that more modern way forward, it sends a very negative message to members of the wto. Ms. Bandura thank you very much. We have about 20 minutes for q a from the audience. I will take two questions. Please identify yourself. The lady here and the lady over there. Theres the microphone. Thank you. My question is about the possibility that the u. S. Pulls out of nafta. The Mexican Government has stated that it might reduce Security Cooperation if this happens. How credible is that warning . To what extent is the Administration Just bluffing but not willing to reduce Security Cooperation . Good morning. You mentioned about the true key issues for nafta. You mentioned the first sunset clause. Second, but you havent touched on other issues. You have not touched on wto issues. I would be interested in your views. Would you open your views on how the u. K. With will deal with a brexit in the ua . In the eu . Next year, they will have to deal with a trade agreement. It appears to me Single Market is out. Can you take lessons from that . Thank you very much. Two parts, two questions. What happens if the u. S. Pulls out . It is a very interesting question. My understanding is, policy of the government of canada, i think it is the Mexican Government, but i cannot speak to that, is nafta will continue. There is provision for nafta to left it would have advantages coming into canada, and likewise canadians coming into mexico. Which, the neighbor in the middle would not have. That is going to create tension within this country. Particularly in the agricultural sector. This is a point that needs to be made. Inspute settlement p. M. i a 15 8 1 5ally told at p. M. , i personally told jim baker we had problems with what the United States was proposing. We finally got an agreement because he realized we would not have a deal if he did not have a dispute settlement mechanism. He overwrote. He took a strategic view. A strategic view and it was important for the United States to have an agreement with canada, a trade agreement with canada, and he overrode his which had taken the same position as is currently being taken by the United States. So, that is one lesson that the people at the strategic level to have an ultimate responsibility to get a deal if they see the deal is appropriate for their country and i think we can easily come up with that combination. We have professional negotiators. What are the Lessons Learned . Worked onbeen analyzing what is happening with the dispute settlement mechanism and in some cases, the United States wins and in some cases the canadians when but they are small amounts in terms of the overall trade relationship between the two countries. Very small amounts. This inesitate to say the United States, but the United States is a somewhat more can us country van then canada is. I can tell by some nodding of the heads that there is a little bit of agreement on that. There are more challenges from the United States and people will say that, ok that shows working instem is canadas favorite. I would say it is working should like the system work. So that we take the litigious, sometimes politicallymotivated actions and reduce those two and inective to an objective arbitration where we have some independence outside both of our countries. Andndependent participation that then comes up with a reasonable solution and i would say that people who look at these from an objection, reasonable way without trying to put numbers on things they can say the decisions that have been taken have been good so i will not say anything more than was except it was it extremely important for us theuse you know some of politically motivated actions have been taken and some actions were outside the normal trade dispute procedures. Like, we have to have some attention against that. The United States is a lot bigger than both mexico and canada and if we are going to not be disadvantaged because of that size and the litigious nature, then we have to have that balancing item which is the dispute settlement mechanism. I will address the two respective issues on nafta first and then go to mexico. And canada it is much better than to be on top thehe elephant ban to be elephant. Then to be the elephant. One of my predecessor said there is too much bush in the hills between us. [laughter] excuse me. There is no doubt, i did mention dispute resolution mechanisms in becausent procurement of expedience of time but there is no doubt the canada round well him pitch upon the foremost contingent issues, rules of origin, sunset clause, Government Procurement, and dispute resolution mechanisms. These are big items that could negotiation ithe think for mexican and canadian governments in the last round here. Round five, i think started responding and pushing back on some of these issues particularly Government Procurement was a good one in the last round where the Mexican Government put the first proposal on the table regarding Government Procurement. Again, i remind ustr they better be careful with their wishing for because mexico could go down a titfortat route. The way we play procurement and the way the u. S. Place procurement in mexico, i know what the conclusion would be if this were to go down the titfortat route. On the issue of what happens if enunciation,s. Both mexican and canadian governments have signaled that the moment President Trump presses the Nuclear Button and it invokes article 2205, mexico and canada will walk away from the negotiating table. Because unfortunately i think there are some voices in washington that ink this is a negotiating tactic. Invoking to 205, this will force mexico and canada to accept some of the issues the United States is put on the table. Mexican think the government and canadian position have said, that is the scenario well where mexico and u. S. Walk away. There has been opinion where these my way or the highway positions by the u. S. At the table, there were many a mexico saying mexico should leave. We are not going to do that. Thee not going to hand United States the excuse to torpedo an agreement because we dont like something that has been tabled. I think there has been a rubik does denunciation then canada and mexico will walk away. As michael said, this does not mean mexico is over for nafta not this over from mexico and canada. We can maintain. I think the position of mexico from the outset was to ensure this was always a trilateral negotiation despite some go to loan voices and canada go it alone voices and canada. Canadianhe mexico and positions now have converged that we will continue to always be sure there is a trilateral approach. Nafta would still be enforced in mexico and canada despite a u. S. Denunciation. Mike just talked about some impact this would have. Whether the Mexican Government is bluffing or not, i do not know. You should ask them. I think it is in earnest. I think there would be significant political pressures not to respond to a unilateral denunciation of nafta but at the same time, lets be real. There are direct consequences of toning down, dialing down, day u. S. Collaboration with collaboration in the fight against organized crime. Upon inteldepended support from the United States, particularly in terms of signals of intelligence to confront organized crime. But i think there has been an occurrence in mexico and i think people in washington would be making a mistake of they do not consider this. Decades, i am a career diplomat and u. S. Hand. I have done all my work in regards to the u. S. Mexico relationship. Paradigm is that we would not contaminate the bilateral relationship as a whole because of singular specific disputes in different issues of the bilateral agenda. The logic being this was such a complex, many moving part relationship that if we and use that leverage security collaboration, the whole relationship with stall. So, for 20 years, the paradigm of the relationship was noncontamination and keeping thesomatic silos thematic silos so one area would not contaminate the hole. After a lot of prodding and pressure because it was the only way for a country like power symmetry like we have to more or was level the Playing Field this policy of linkage as a result of pressures on nafta. That is, that mexico would be approaching the negotiating related to nafta as a whole bilateral relationship approach and we would put Immigration Enforcement on our southern border and others on the table to leverage and level the Playing Field with the United States. Whether the Mexican Government does or does not do that at the end of the day, i do not know. It when i can tell you is will be very important political and public pressure for the Mexican Government now that it has stated that as its negotiating position to do so if it decides not to do it once nafta has collapsed. Arturostarting where left, there is a practical question about Security Corporation between the two countries. Early this year, the u. S. Government under the Trump Administration designed a new strategy for combating Drug Trafficking and organized crime. It is going after every point along the train of drugs from production to the sale, crossing comingder, the money back. If you are going to successfully implement that kind of cooperation, you need to have exchanges, more trust, more confidence between the workers on both sides. Those agencies have to become trouble with each other. I do not live that is going to be possible if we are in a situation where the two countries are distancing themselves from each other on a project that involves millions and hasrs in mexico such high cost and additionally, where mexico is being maligned. It will be on two levels. One is the level arturo laid out. The other is the point of view of the actors that have to implement this. Why am i endangering myself going after this powerful, wealthy, killing machine of a Drug Trafficking group for people who are calling us murderers and criminals and rapists and other things . It is just going to dampen hope of getting to that higher level. There will be corporation, there is no doubt about that because it is in the interest of both countries. But to get to a more cooperative level is going to be very, very, very difficult i believe. Just to take up a bit on the we have on the rules of origin issue. Is very interesting. The proposal put forward by the United States has succeeded in uniting u. S. Industry, mexico, and canada. All of their opposition to it. Their statement of we really dont understand where it came from and how it is going to improve jobs and in fact a study by the auto parts industry says it is going to cost up to 20,000 or 25,000 u. S. Jobs. So, even in this key area there of effort forot Getting Better at analysis, working through the facts, working together to find a solution to this complex problem. Solution where you can take her with the rules of origin and have more american content but you have to understand the economics of it and the industry and get it together. You have u. S. Industry saying, this is a dangerous proposal. We have to, in a number of areas, get beyond where we are right now to a really serious negotiation that indeed is win. Ng about win, win, not lose, lose, lose. Let me to get back on what tony is saying. Is like thek this relationship we had when the u. S. Invaded mexico in the 19th century but it is going back to the day when the book was written distant neighbors, when the relationship was catchy. The choice was, do we go back to what the relationship look like in the 1970s and 1980s or do we continue to slowly build upon this huge pragmatic shift which occurred driven by first nafta and then the National Security imperatives of 1911. That is what is at stake care. Let me just make 1 most tony and arturo have talked about. I want to make one very important point here. U. S. Canada National Security relationship has been extraordinarily strong and i trackly am on the right when i say i do not think that is going to be undermined by the loss of nafta. It is more important. Theres overriding importance to maintain that. About, and i test on this earlier in my comments, i worry about more the north opportunity lost. We have seen terrific work cap in the last 1520 years between mexico and the United States. In canadaenefited us as well. We worry about the opportunity lost if some of the things that arturo and tony had talked about do happen with the loss of mexico. Quickhave time for two questions. The gentleman over there and the gentleman over here. Hello. With the u. S. Trade. Thank you for being here. You touched on the tpp or the ct pp would everyone a college, i want to know of mexico and canada, if those parties are in agreement and the United States is not, would you think that implications are and how would that affect the mexicocanada strategy to negotiate nafta . Would, the canadian sorry to interrupt. This question is to arturo, too. We heard talks about the sunset clause, talking about the agreement. We have heard about compromise with mediation. Can we expect something similar regarding the origin dispute . Me comment on the tpp 11. Canada would be very anxious to continue with the discussions on done with ourve agreement with europe. Expandd be looking to the external relationships we have. Tpp 11 would be very much a part of that. Both mexico, one of the reasons i think mexico in inada have been so emphatic continuing to move forward with tpp minus one as we saw in the is not only because we profoundly believe in the agenda despite the hurdles and some of the issues caused heartburn in the negotiations come i think mexico and canada truly believe tpp would deliver a 21st century roles based trading paradigm which we think is important for the competitiveness and economic wellbeing of both countries. It also fits nicely and what mexico has been doing with the specific alliance with its chilean, and other partners. It is part of this growing new multilateral trading arc in the americas, if you wish. Our own version of a free trade collision of the willing, if you like. But now, discussion about probability of President Trump dressing the Nuclear Button probably even as soon as the sixth round and canada, this becomes plan b. It is one of the reasons mexico has been looking at argentinian and brazilian markets for grains and meet. Wyatt has deepened discussions with canada in these sectors. Why we are about to conclude the modernization and upgrade of our 17yearold and 18yearold union and why tpp plays an Important Role which is precisely if we have to have a plan b. This is a very important piece of that equation so i think that is how you should be thinking of how mexican looks at tpp minus one in the coming weeks. Are there compromise is possible . Yes. In principle, of course there are. But i think in many ways some of the willingness you have seen at least from mexico, particularly as it relates to this review and stead of a sunset clause every five years is because mexico is trying to prove it is the adult in the bilateral relationship with the United States. It is behaving like an install. I think there is room to optimize. There could be room for compromise on rules of origin but it will be continued contingent. The doctrine of my way or the highway, the zerosome approach of either i get everything in a maximalist approach. You know, this idea of 50 of u. S. Content within the heightened north american content for automotive which is not going to go anywhere. You will not see a compromise. I think there are, you have seen it in ecommerce where the parties are moving forward where there could be an Early Harvest of Success Stories precisely in this intersessional session here in washington, d. C. , they could wrap up some of those chapters were there very close to achieving closure. My hope is that with send an know u. S. Message to and canada are not playing to wind the clock down. To play with the clock and kick the can down the road. But, the concessions and compromises will be possible if the type of approach the u. S. Has brought to the table from jettisoned. Ok. Time has run out. Thank you so much for coming in for our panelists and please im sorry, please give a run of applause. Thank you. [applause] conversation] washingtoncspans journal, live every day with news and all of the issues that impact you. Coming up tomorrow morning, talking about republican tax Reform Efforts and the upcoming fiscal deadline. Latestalking about the in the investigation into whether russia interfered with the 2016 president ial election. Be sure to watch cspans washington journal, live at 7 00 a. M. Eastern tuesday morning. Join the discussion. Hearing on the a permitting process for Energy Infrastructure projects. The Senate Energy and Natural Resources department hears from of thentatives regulatory commission. That is starting at 10 00 a. M. Eastern on cspan3 and you can follow along on cspan. Org and our free cspan radio cap. To the pollss go tuesday in a special election to fill the u. S. Senate seat vacated by an attorney general jeff sessions. As the live coverage results come in starting at nine 30 p. M. Eastern on. You can also follow live on cspan. Org and our free cspan radio app. Landmark cases. A cspan history series about the u. S. Supreme Court Returns and february. Join us as we hear the human stories and constitutional drama behind cases heard by the Supreme Court. Getting cases on cspan in february. Beginning in february. Next, the Supreme Court oral argument in the case of misty versus ncaa. Judges will decide if a federal betting violates the constitution, specifically the 10th amendment which prohibits the government from commandeering states into federal law. Outgoingis with governor Chris Christie who wants to bring legalized betting to his state. Joining the ncaa as respondents to prohibit the uphold the federal law prohibiting gambling. We will hear arguments first this morning christie versus ,caa in the consolidated case the new jersey thoroughbred Horsemens Association versus ncaa. Mr. Olson. Mr. Olson thank you chief theice and may it please court. One of the most important decisions made at the constitutional connt