Transcripts For CSPAN3 Political And Historical Context Of NAFTA Negotiations 20171113

Good afternoon everyone. Welcome back from the break. We hope you enjoyed some coffee and refreshments. We had a terrific panel this morning and this afternoons panel or earlier this afternoon and this next panel promises to be just as informational and jam packed. So im going to turn things over to my partner and friend former ambassador to canada, currently a member of the u. S. And Global Boards of dentons. And just an all around good guy. Gordon. I hope somebody wrote that down. Welcome. Im biassed but even in the presence of my friend ambassador gary durham will claim this will be the most interesting panel of the day. And we even recruited an american to be on it. You were there playing an american i think, north american. So im honored to be here as the person facilitating this conversation. To my left physically but not idea logically is the former Prime Minister of canada, Steven Harper. To his left which may be true, im not sure, is the former speaker of the house Newt Gingrich and to his left is our former mexican ambassador to the United States. So we have a very interesting and experienced group here. I dont think i will have to be too provocative to get the conversation started. Lets put this in context. The people that think this is the first time free trade discussion in north america has been controversial or difficult havent read history. In 1988 in Canada National election was fought fundamentally over whether or not to have free trade with the United States where the then incumbent progressive conservative Prime Minister was arguing for it and liberal party was arguing against it and we entered into the canada u. S. Free trade agreement which was the precursor to nafta. Of course, speaker gingrich was speaker of the house when nafta was approved by the congress. Known as the whip. Im giving you more prominence than warranted at the time. I suspect he voted for nafta and so the way i would like to at least initiate our conversation is to ask the panel at large and i will start with Prime Minister harper and then ask each in succession to address whether they believe that nafta at the time of its adoption was the correct policy for north america. Secondly, do they believe that our three economies on balance have benefitted from the free trade arrangement that naft structured in north america. And if the answer to each of those is yes then do they believe that it is important that we maintain Going Forward a rulesbased free trade arrangement in north america . Start with me. I think those are pretty easy ones. I should mention just for Historical Context that in the 1988 election way back when we had the canada u. S. Free trade agreement i was a candidate for the reform party. We were supportive of the Free Trade Agreement. We were more nuanced on nafta but still on balance i think supportive in 1993. Look, short answer to all of those questions is i think it was the right policy at the time. I could qualify that by saying that i think what happened after that with canada and American Relations as we saw our broader relationship become trilateralized. I think nafta was the correct trade policy. Look, i think it has been beneficial to all three countries. I think the data kind of indicates that. I will come back to that in a second. I certainly think its always in the interest of particularly smaller players to have a rulesbased system. Now, the one qualification to all of that which will kind of get us started is we may all think it has been broadly good for all three countries. It is very clear that a significant percentage of americans do not think it has been good for them or for their country. It was apparent to me when i was Prime Minister from 2006 on that this was a very deeply rooted view that not that they were against nafta but they believe there was large widespread opization to nafta in the United States. I think if we are going to be smart about this we will have to ask ourselves how we address that and how we adjust to it. Just trying to convince people that they should be happy i dont think is going to be adequate. A couple layers to your question. First of all, reagan proposed this in 1979 as part of his initial kickoff running for president. It had a very long history. It had been negotiated largely by bush. One of the key moments was when jimmy carter went to North Carolina to meet with candidate bill clinton to explain why he thought it was really important that clinton not be against nafta. So there is a long, deep history here. I was actually the republican whip in 1989 and i can tell you not only did i think it was the right thing at the time but i got more republican votes for nafta than clinton and gore got from democrats. We were basically one living out of something advocated and we had less opposition. You cannot analyze what happened to nafta without understanding the degree to which the unions hated it. And by the time we came back later when i was speaker and we tried to give the president extended negotiating authority he couldnt get democrats because the unions made clear that this guaranteed a primary fight in every single district. There was a core base of institutional hostility that was consistently antinafta combined with the ross perot populism which was antinafta. I found myself during the nafta process coaching gore on how to debate perot which is something i would not have imagined in a rational world. One of the keys was gore beat perot badly in a Television Debate and as a result took a lot of steam out of the antinafta forces. I think at the time it was the right decision. It was the right gamble. And i think more so for the u. S. Than for canada. I agree with Prime Minister harper. I get lectured on the importance of free trade and why are you yanks ruining this whole thing . I do think that from a Campaign Perspective probably the optimal moment was a u. S. canada Free Trade Agreement. Not as much as it has been. I think in many ways it was to americas advantage. I think that the longterm strategic goal of helping mexico become an industrialized Productive Society was really an important Strategic Vision which reagan had and which was carried out in the first phase of nafta. And i would talk later on about what changed. I think it is very important and i think i wrote a book called understanding trump but not called predicting trump. I think trump is literally impossible to predict. But my hunch is that in the end he will get to a reformed nafta. We will not get to the end of nafta. And it will probably be a fair amount of very intense negotiating between here and getting to reformed version. I dont think there is an appetite for blowing it all up other than the president s occasional tweets. When you watch the people the president brought on the cabinet these are relatively sophisticated people and inclination is to have tough negotiations aimed at improving the american position in the treaty, not aimed at blowing it up. I would fully agree that in general and without falling into optimism here, nafta has been a very important Success Story for the three north american economies. If you measure it in terms of trade which is what trade agreements are supposed to do, they are not there to mitigate extreme poverty. Its thats an if you look at the trade flows between mexico and the United States and canada the numbers are very compelling. Canadas view as number one trading partner and mexico is Third Largest in the United States, largest buyer of u. S. Goods is canada. Second largest export of u. S. Goods is mexico. Depending on what region of the world you are focussed on let me give you context. Thanks to nafta mexico today is buying more u. S. Goods than all of latin america and caribbean combined or is buying more u. S. Goods than before brazil, russia, india and china or is buying more u. S. Goods than china and japan combined. Or if we assume that britain is gone from the european and brexit is a done deal we buy more u. S. Exports than all combined. 5 million u. S. Jobs in the United States depend directly on trade with mexico. We have 26 states in america that have mexico as their number one trading partner. We trade 1. 4 billion a day of goods across the mexico u. S. Border. And north american trade is now around the 1 trillion figure. It is a very compelling story but one that has become extremely sophisticated over the last decade as joint supply chains and production platforms have changed the way north america competes tlmpt has been a lot of talk about the deficits and china. What is happening in north america has nothing to do with intranorth american trade but has to do with china plugging into the Global Economy as a result and one of the reasons why north america remains competitive is because of the joint supply and production chains. It was the right political decision at the time. True the Global Economy was very different back in 1993 than it is today. There were no amazons and e bays. No such thing as ecommerce. So one of the challenges that we have faced since then and which im sure we will be addressing here is the perils of mummifying agreements. Not trying to tweak and modernize the treaties. Started framing the edges and Global Economy changes and chinas role and role of automation all started taking bites of this very important edifice. In many ways when you think of it nafta was a 1. 0 of Free Trade Agreements. Where we left off with my dear friend were ambassador when we were lobbying to get into the tpp, the tpp was the 3. 0 of Free Trade Agreements. There was a gap with the ratification of nafta. No doubt on a trade front on a geostrategic front that what we started to see what the development of a true common north american foot print. This doesnt me everything has been rosy and peachy. There have been relerant trade disputes. Canada had its trade disputes with the United States. Based on the rulesbased trading system that we developed i think the three countries have benefitted. Were there issues we should have thought of and addressed . Of course. Some of the very profound political debates we see in north american heartland today come from that era because the u. S. Wanted to put energy on the table as part of the negotiation with mexico and mexico wanted Labor Mobility and the u. S. Government said no can do. What we built in 1983 was not only responding to changes happening as a result of the cold war, the unification of europe but how to compete and be successful in the last stages of the 20th century. Thank you for those insights. When i think about it in terms of World Leaders over the course of the last years you stand out as a certainly g 8 leader who advanced Free Trade Agreements on behalf of their country probably more than anyone else on the world stage. I know numerous canada bilateral agreements. When i think about you concluded the negotiations with the eu for a canada eu agreement you were Prime Minister during the tpp negotiations to significant i guess i think of it as being multi lateral. On the other side of the equation. So you probably got more experience. You definitely got more experience as country chief executive officer on advancing these kinds of rulesbased agreements to advance economic goals. So from your perspective do you have any thoughts about how to be a catalyst, for example, if canada was undertaking to be a catalyst for a successful outcome of the nafta negotiations how that might be constructed . And by successful i dont mean where canada wins everything but where there is an agreement where we have the euphemistic win win win because the three parties all have to see something in it. Look, i have a few thoughts. Just to give the audience a background, when i took office in 2006 canada Free Trade Agreements with five countries. That was just Free Trade Agreements and then other commercial agreements that we did. And i need to say the more important thing is all were well accepted by the public in this kind of antifreetrade era. Why was that . Harper protected this and protected that and he is not a free trader. I wasnt negotiating Free Trade Agreements. They were called Free Trade Agreements. I was negotiating agreements in the best economic interest of canada which is not necessarily always the same as a textbook definition of free trade. That is always something to keep in mind. And that wasnt just rhetoric. The reason the agreements were ultimately so widely accepted is first of all it had ministers who understood the details. We also did comprehensive Political Consultations with virtually every effected sector throughout the negotiation. We understood where the pain points would be. We did our best to avoid them. We understood what the reactions would be. We understood who the winners would be. We understood who the losers would be and we understood who would be in between and we could help. And when we announced the trade agreement immediately there would be communications expressing support, opposition or something in between. We did not have a single surprise. We knew exactly where everybody would stand so we knew the agreement from our point of view is the best interest of canada but that it could carry overall judgment of the population. As you said, we were in different i think we were in three different settings. Im going to try not to comment too much on the current governments handling of these negotiations. We were in three different settings. One was we did a series of bilaterals mostly with smaller players. We had the tpp negotiations where we were Third Largest. And then we had the European Union which as you say is partly bilateral and partly multi lateral. We were the small player. The one thing i would say about that scenario that i think is very important is the reason we got to the table and we got the deal done was that as a small player we made at our business to understand what a win would be for the other side. If you are a small player you are not going to get anywhere unless you figure that out. That is a lesson that can be applied here. Mr. Speaker, during the president ial campaign president then candidate trump said nafta was the worst agreement ever entered into by a man. As recently as an interview released this week he indicated that there was a high probability that the United States would have to withdraw. In light of those indications from the gentleman who heads the government do you think that is negotiating posturing . Do you think it is his current thinking . And or do you believe its strategy to both deal with ouring partners and potentially with congress . First of all, i think that the iranian agreement may have passed nafta as the worst deal ever done. But trump has a sliding scale of worst deals and you can work your way into it depending on what his focus is. Second, i think this is part of what makes maybe the American Perspective different. I dont know if it is worth getting into in depth, but i think you is to see are trade politics as part of general identity crisis in the country. And there is really a very profound this is part of why the split between right and left is so deep right now. So from the standpoint of the coalition that elected trump and the coalition which enabled trump to beat 16 other republicans for the nomination nafta was in fact a symbolic issue. Wasnt a question of did it help or not help economically. It became part of general symbolism of an american crisis that was partly about the identity its the nfl problem and the whole question do you stand for the national anthem. All of these things are wrapped together and trump had figured out one of the if you see his rally technique part is the largest focus group system in the world. Tries out lots of lines and keeps the ones that work and was clear very early on in the summer of 2015 invalue that attacking nafta worked. Trump is a guy who likes to win and is not too fussy about the details. You can complain all you want to but you are not winning he is winning. That literally is sort of the logic train that leads to a lot of what he does. So part of that is all involved in that. I think part of it also is a very profound shift that i dont know anybody has written about in an intellectual level. We had two key premise s to economic policy. One was we were so big that we didnt have to negotiate very hard for advantages because we just drown people. Partly because everybody else had been bombed and probably the most effective anticompetition technique available. We are just an enormous country. We could afford the margins to lose for a long time and not pay attention. The second was he had a very specific equation which was particularly important for the elite class and the intelligence which was we were going to give you a lot lower price. So, for example, it was terrific to have agreements with china because the shirt you were going to buy at walmart was so much cheaper. For about 25 years that formula worked. Then one morning people began to say if i dont have a job i cant pay for the cheap shirt. And then china was really what changed everything. Mexico is bearing some of the brunt of the anger. The real change effect is china. So what you have seen grow at a pretty sophisticated level if you look at the people that Trump Associated these are not trivial people. They are not isolationists and not people who arent aware of the world market. Most made a lot of money in the world market. I thought the wilber ross example was ironic that at one point they were going after paul manafort. They collectively agree that we have gotten very sloppy and that we had tolerated agreements, the best example being the scale of the chinese theft of intellectual property with no american response. We can go down a whole series of these things. What you have is an attitude that every single morning this collective group wakes up with which they love bilaterals because they figure out as big as china is as a market we are still bigger and therefore because chinese gdp is divided. Because they figure out as big as china is as a market we are still bigger and therefore because chinese gdp is divided. By 300 million people. Therefore, theyre very happy to prefer bilaterals over large complex negotiations because our Net Advantage is so huge which means across every other country in the world if its rational wants to avoid bilaterals. You will see this pattern build as a team pattern, not just trump personality. In terms of the specific question i think there are at least three things going on. One i think trump wants to continually send a signal that says if canada and mexico cant find a way to get to a deal with us im perfectly prepared to walk out. Not im going to walk out. Im prepared to walk out. It doesnt frighten me to walk out. Two, im a fairly impatient guy and i thought we would get all this done by now and i dont have a wall and a new trade agreement and the combination of not having either one makes me unhappy. And three, i was sort of bored this morning and i thought this would start a new argument. You have to see those three things and how they weave together to understand how the Trump Presidency operates. Im not trying to defend him or attack him, im just suggesting that you really have to look at the american tradition, Andrew Jackson and Theodore Roosevelt to have personalities as volatile. And as aggressive as trump. And if you go back and read how they were covered in their time, not written by historians later, but covered in their time, they were very much like trump in that they were aggressive, willing to fight, and those characteristics are at the heart of how he approaches everything. Nafta is one of 20 things he is approaching. Look at iran and north korea, nato. Hes a very enthusiastic guy at picking fights. I thought that would slow you down. It did. I told the speaker last night i was in my hotel room and i didnt know what the channels were on the television because i wouldnt ordinarily voluntarily choose fox news but it happened to appear on my television and there was speaker gingrich who i watched for 15 minutes. If yall havent watched the Gingrich Hannity routine, its worth the price of admission. And i took notes and learned a lot. Ambassador, to the speakers point he mentioned the wall and it is sort of like beyonce, it only needs one name. We dont have to say the wall between. We just say the wall and we have had some rhetoric around over the last 18 months or so the characteristics of migration between United States and mexico. But a lot of political rhetoric. From a mexican perspective, does that in any way limit the flexibility of the government of mexico to negotiate meaning do they have to demonstrate that they are strong and can stand up to the american rhetoric . Number one. And number two, is there a reason to be concerned about the dynamic of the nafta negotiations as it might affect the president ial elections in mexico next year . One of the beauties of no longer being, and im sure gary is the same, that i am a recovering diplomat that we can say stuff that we couldnt when we were in office. Look, there is no issue out there that has grated mexican Public Opinion such as the whole wall issue. It has irritated profoundly. You dont have to be a Rocket Scientist to figure out why a search that came out in july and then there was an update in september looking at positive perceptions of the u. S. Around the world. The country where positive perceptions of the u. S. Has formed most is mexico. And its nose dived. Negatives are in the 90 . The personal negatives regarding the current president of the United States have completely collapsed, too. This is not a minor issue because one of the things that happened in parallel to nafta in these 20 plus years of very different engagement with the United States is that it started to create a sense of societal holdship between mexicans and americans. One of mexicos noble one of the historical reasons why mexico and the United States have never been able to get along was that mexicans didnt know how to speak up and americans didnt know how to listen. One of the things that changed with nafta is americans started to listening to the partners in the south and mexicans, simply because of the nature of the game having to come up to capitol hill that we were able to squeak by at the end in 1993 to get nafta over the finish line, mexico had to understand how to play the game in washington, d. C. Which had never done in the past. And that started to change the way mexicans and americans looked at the relationship and understood the relationship. To that you add that mexico has the Largest Community living abroad in the United States and the largest u. S. Community living in mexico. There has been a very profound Seismic Shift happening in the past years. Where i think the 2016 campaign in particular has been extremely poison nous poisonous regardless of rapists, the wall, and nafta is the worst deal ever is that it has wound back public narratives of why these two countries are uniquely important to each others security, prosperity and wellbeing. And with the president ial electoral process on its way in july of 2018 with these numbers that ive shaved with you as to favorable perceptions of the United States and with mexican president with his own challenges regarding popularity the margins of maneuverability for Mexican Government when we reach the crunch time of having to strike a deal given the timing of when that may end up happening because despite best wishes of three governments it is clear we wont be wrapping up nafta by december of 2017, this will be in full blown president ial Campaign Mode in mexico. And this could have an impact on what Mexican Government is able or willing to accept or not in the negotiations. I have always believed you should never let a good crisis go to waste. And the crisis that donald trump has detonated in the u. S. mexico bilateral relationship and the crises we are now facing in round four of negotiations has kicked off here is that we do have an opportunity to modernize and upgrade nafta. And to improve it and to bring in some of the disciplines that donald trump on day one when he kicked tpp out the door. And pulling up and turning it into an agreement where we have better rules of engagement, where we have disciplines that we didnt have in 1993. Those do profoundly impact labor in the u. S. Because despite what the president says, manufacturing jobs have been dropping for the past 20 years in the United States and it is a Service Sector which has been improving. The service es services, the u. S. Has a huge surplus with mexico. And so how you bring in things like ecommerce and digital trade into the nafta of the 21st century is a very important opportunity for the three countries. How do we bring labor and Environmental Issues that were agreed to as you remember this very well, mr. Speaker, side agreements because some in the u. S. Government and some in the Mexican Government, some in the canadian government didnt them in the core treaty itself. We have the opportunity of bringing some of the issues into the treaty itself. How do we continue to build on these extremely successful supply production chains that have made the Automotive Industry in america so competitive . How do we prevent a frankly doctrine of my way or the highway approach to the negotiations in nafta from scuffering a deal that could be important for the Economic Future of the three countries . I think a lot of this is going to be playing out not only in terms of the next rounds of negotiations. We are now reaching the fourth round which will be complex because rules of origin is the 800 pound gorilla in the room. In the u. S. Does insist on issues like sunset clause and u. S. Specific content. That is a big fat red line for both canada and mexico. So all of this is going to have in the same way that this debate has had political roots in what is happening in this country. Over the last 18 or 20 months, it will have a profound political bearing on what happens in mexico as we head to the polls on july 1, 2018 and also here in the u. S. When members of congress start campaigning for reelection in the u. S. Mid terms of november 2018. Prime minister harper, from a canadian perspective, a successful negotiation meaning one where there is an agreement at the end which suggests that all three parties sign it and say this is constructive, so a success results in the American Government declaring that as compared to the worst agreement ever they have just negotiated the most pro american trade agreement in the history of the planet so that canadian government will if there is a success confront the americans saying they took canada and mexico to the cleaners. A failure would be no agreement and we revert to the status quo which presumably for some period of time is the canada u. S. Free trade agreement people will have to dust that off and figure out what that means for the time being at least. So success is an argument that in canada will be heard was the americans winning. Failure is nobody winning. From the canadian publics perspective, how do those two options play out . Look, thats a tough situation. I agree with that. If i just maybe get to it in a second and maybe go off of what newt said about trump obviously, if hes unpredigable to you, hes unpredictable to me. Whether he says its the worst deal or second worst deal ever, i am not sure because he is unpredictable means his behavior has no consequences. I dont know how you go from categorizing nafta the way he has done it and so comprehensively and coming out a year from now with modernized agreement with a couple of digital chapters and say look its now a great deal. I dont know how you get from here to there. The other thing i just would put in everybodys head back to what i said at the beginning. When i took office in 2006 the then Republican Administration said to us in categorical terms in our judgment nafta could not be passed in the u. S. Congress today on either side of the aisle. That is in 2006. In 2008 some of you forget barack obama campaigned against nafta in 2008 and didnt two actually do anything. In fact, we actually beyond the border Regulatory Council we had initiatives. He said he would renegotiate nafta. Right. But he didnt support it. Thats the important thing. So i guess my concern is the following. Weve got to figure out a way that this thing isnt going to keep being a problem. You know, trump may fail as a president. I am not convinced that the things that propelled trump to office are going to go away anytime soon. Even if donald trump were to go away. So, you know, weve got a serious problem with widespread perception in parts of the American Public that these relationships are not in their interests. And we either have to do a better job a combination of a better job of convincing them it is in their interest but also of addressing whatever their real concerns are. So now what i would you know, i should say what i would or wouldnt be doing. Id look at the situation. Id say to myself what would success be an americanize on this agreement. In the case of canada, i mean, at the present time, we have a current account deficit with the United States. So i dont know that theres, you know i guess by the standards of deficits and surpluses, we should be the ones complaining. I dont see an issue to fix. We can talk about dairy and poultry coming up and they are so small in the terms of the number of american producers who would be assisting. Its trivial. So what is it where i think thats really the question that we ask ourselves as canadians. What is it were supposed to do that would make this an american success . What is the american problem with this . I dont really know. Ive been told this for years. Look, i have one piece of insight. I think the automobile sector is part of it. And just to put back my experience, i remember sitting around on my 50th birthday signing the biggest or concluding, putting through treasury board the biggest sub sud sid subsidy package ever by canada to help gm and chrysler with the United States. These companies had done a terrible job of running their business. Suddenly they were in deep trouble. Bush and obama administrations both felt they had to intervene to bail them out. As a consequence, we felt in canada we had no choice but to participate and we put a lot of money on the table. No sooner had covenants expired in a couple years and they were figuring out how to move the plants to mexico. Look, im not your average Assembly Line worker and i was pretty irritated about that. So i would be thinking on Something Like that, canada and america having jointly bailed out this industry would have some interest in finding a joint solution to rec si rectify this kind of problem. Im not suggesting i know what that is, but theres at least a serious issue where were on the same side of the table and id figure out how to make that work for both of us. Well, your u. S. Lawyer at the time is not taking any responsibility for failing to cover that in the deal documents. The question, mr. Speaker, i have for you, you alluded to the fact that in large measure it was the republicans in the house of representatives in particular that carried nafta over the line. I think i can also argue that it took a democratic president to drag enough democrats to the party to be able to pass it. So it would have been hard for a republican president to pass it. Today it seems to me that theres a large segment of the Republican Party who has become antitrade agreements. And that that calls into question whether even if the administration was able to conclude an agreement in these dynamics, whether or not its dead on arrival as far as the congress is concerned. In canada theyve got a much more efficient system of government if the Prime Minister of the day has a majority. Its not too difficult to get it through the house of commons. They have a process, or there its a process. And so they can get it through. But even if theres a successfully negotiated agreement, can it get through this congress . I think it would be very hard. I think it will depend on what the agreement is. It will depend on how its portrayed in public and it will depend on what the Interest Groups do. I mean, if you have enough different people who think its an improvement and all of them work on it together, you can probably do it. But the decay and the belief that large trade agreements are good for america has been very, very clear since 1993. It was already clear by 1997, 98, i think it was late 97, we tried to give the president , we the republicans were trying to give president clinton extended trade negotiating ability and he was begging us not to bring it up because they couldnt deliver any votes. Even then on our side there was a growing number, there was a block of people who thought it was a bad deal. We could have delivered our share but we couldnt have carried a majority. I think all thats gotten much worse since then. I think on the republican side bannon and the forces that he represent are going to be bitterly opposed to any agreement. Theres no agreement that trump could make that you wouldnt have the bannon forces out there trying to defeat on our side. I suspect on the left theres almost no agreement that wouldnt end up with sanders and warren and booker and harris deeply opposed. Of course, if it was a trump agreement, it would be close to unanimous. So i think phase two of our system gets to be really hard. I would say if they did get to an agreement, whatever it was, that they concluded was acceptable, that it would be described by trump as an extraordinary win, exactly what we needed as a country. Fabulous breakthrough. It would be huge in its impact and that he would be very aggressive in trying to get it through. I think then it gets to be a question of are there enough interests that can help find. We convinced all the Major Business elements to quit sending ceos to washington and instead send their local factory managers to local meetings and that turned the tied. If i get enough different groups to come to the conclusion that this is the future. For example, north dakota wheat farmers decide that this is the essence of their world, at some point heitkamp may decide running for reelection that shes always been in favor. I dont know what the term will be, but it will probably be Something Like the modernized dramatically improved 21st century trumpized nafta. Now, somewhere in that list theres going to be enough Different Things people can cling to that they can say oh, yeah, i was against that other stuff, but this is really good. And then well see. I think it will be a brawl. So, ambassador, you referred to the gorilla in the room. There are i mean, when you think about, rules of orange and dispute mechanism, government procurement, sunset clause, investor state, you get down into the weeds and there are a lot of individual components of the discussion that could be somewhere between a speed bump and a barrier. In your mind, the first in this case Mexican Government have to conclude that there is an imperative to get this done. And i dont mean ill do a bad deal just to do a deal, but i worry that were letting the trees take over the forest here. That we really do have to see the forest and the forest is a north American Trading block and that if we somehow rejuvenate it and get confidence in it again that with respect to the rest of the world we can do an awful lot of good for our respective population. So i worry that we spend all our time talking about the trees and theres not a recognition of the importance of the bigger concept. So is that a conversation that occurs in mexico, or is it hard to have there . I think certainly mexico understands the big picture. This is why i think, ill say it very bluntly mexico has been behaving like the adult between the mexico and the United States over these past months. Symmetry of power also has to do with it. We are not as big an economy as the United States and therefore weve got more to lose if this were to unravel. I think that big picture of a competitive interconnected strong resilient economy is what the three countries need to be seeking to achieve as a result of the negotiations. But it also is clear that i think the negotiations right now are on the knifes edge. Well see what happens in round four. But i think mexico for the First Time Since this started has started to articulate that it wont walk away and it shouldnt walk away from the negotiating table. It should stick to what its been doing, which is patient ly focusing on getting this done. But i think it is now clear in mexico that both the private sector and the government believe that a bad deal is worse than no deal at all. So thats also changing the political dynamics and the conversation in mexico. And the added problem to your trees and forest dynamic here is that at the end of the day we basically know that regardless of ipr and ecommerce and state owned enterprises and chapter 19, at the end of the day, this administration is going to measure the success of nafta on two things and two things alone. On the trade deficit which is the case of mexico is a red herring because the u. S. s trade deficit with mexico represents 8 of the total trade deficit in the world. The second benchmark is the issue of how do you bring manufacturing jobs back to the u. S. Thats why the rules of origin and in particular the automotive sector is now one of the big food fights is now going to start developing as we head into the negotiations. Thats a problem, because i think and this is one of the reasons why i think uftr announced we had closed another chapter in the negotiations, a dynamic that would be important especially with the u. S. President that has a very short fuse in terms of patience, if hes going to be impatient with the government negotiations, wait until this hits capitol hill and the dynamics kick in and Congress Starts debating what the free governments have negotiated. The problem here is that how do we create an Early Harvest of Success Stories and other chapters of negotiation that, a, send a message to state holders and Public Opinion, the members of congress that stuff is getting done and we are concluding important chapters of the negotiation. So then we can focus all our attention into cutting from those that we know will be the deal breakers at the end of the day. So this dynamic between looking at the forest but then scratching in the trees is going to be very complex, particularly if we cant speed up more Early Harvest Success Stories. Okay, we completed 17 of the 30 chapters that we agreed to negotiate as part of nafta. The faster that we can create those dynamic of saying all these issues have now been agreed to, theyre done, weve wrapped them up, weve done it successfully, we think its good and now we can focus on the two, three hard nuts that we will need to crack, that would be a good dynamic. My concern is that you have an administration which is obsessed with these two issues in which basically at the end of the day will measure whether its happy with the outcome or not based on those two issues. So im going to ask one more question and feel free to go beyond my question if youve got any other points you want to make. Then im going to see if there are any questions from the audience before we wrap up. Last week in a discussion president clinton said that one of the things that he thinks he could have done better or the United States government i guess could have done better with respect to nafta is put on the front end of the process trade adjustment assistance. In other words, what programs would be put in place to directly assist those segments or sectors of our society that would be adversely affected by the agreement. Everybody i think understands that quote unquote that are winners and losers in a trade agreement. And we all have our different theories of what happened in the u. S. National election last year, but at least one of the things that seemed to have affected it was a belief by a substantial segment of the American Population that they were being left behind. And so in order to try and set the stage for a successful conclusion of negotiations and perhaps approval by our congress but also acceptance by canadians, mexicans, canadian government and the Mexican Government, should we be doing collectively more thought about what is addressing those who may be inadvertently or knowingly adversely affected by the agreement and explicitly talking about it and what were going to do about that . Because if we just leave the opponents out there or those who felt ignored ignored again, it seems like a pointless exercise. So thats my question. Feel free to add any other thoughts you would like beyond the question. And then each of you i want a declarative prediction on whether or not there will be a finally negotiated agreement. Prime minister, youre first. Boy, a lot of questions in there, gordon. On the first as i think i said earlier, we paid a lot of attention when we did trade agreements to what the d distributional impacts would be. And you used the phrase, and i know you probably didnt mean literally what you said. Those who perceive who have perceived they have been left behind in the United States. I look at the data and these people are not perceived theyve been left behind. They actually have been left behind. There are large segments of americans by region, by income, by sector that have been badly hurt by economic developments over the past 20, 25 years t. May not be because of nafta or it may not be because of trade. But we should at least recognize that this is not a perception on their part. It is actually a reality that they and wider communities are dealing with and weve got to address those things. To the extent that trade is relevant in them, weve got to address it there. Look, to your question on will we or will we not succeed, i am you know, im not sure about this. Newt is the one who has more of the insight and he appears more confident than i am. As i say, i dont think that its going to be adequate for President Trump to have an agreement that he cannot in some concrete way say is going to improve the lives of some of these masses of people who voted for him. So i think its got to be a lot more than some kind of technical revamp. I think thats going to be tough to get to. Look, i tell business the following. Is it conceivable or is it just not conceivable that the administration could cancel nafta . I believe it is conceivable. I think donald trump would be willing to take the economic and political risks of that under some circumstances. Partly as you say because he can then punt the whole issue to the congress anyway. Secondly, as i said, i dont think a Technical Agreement is good enough. Can we just kind of talk of the clock and hope that the president loses interest, which is a strategy that some have. I kind of think thats not the case either because even for a guy whose priorities changes as kwek as quick as mr. Trump, this is pretty high up and pretty high up for the people who voted for him. So look, if i were a business on this, i would be trying to understand what the consequences would be for my business in the event of cancellation. What mitigation measures i could take. What my supply chain effects would be. And what additional work i would have to do with congress and others to try and protect my interest as we move forward. I would not want simply that this is all going to work out. I think whats driving this are some very powerful political currents. That frankly nobody, including mr. Trump, is actually really figured out how to address. And theyre going to keep coming at us. First lesson is dont ask an economist a question about the economy without expecting that hell parse what you had to say. I meant perceive that nafta was responsible for being left behind. I know what you meant, but youre a democrat and i had to take a shot at you. Just to be clear, and i do this pretty regularly, the right honorable Steven Harper and i graduated from the same high school. So whatever my disabilities are, we got it at the same place. He masquerades as a western canadian, but he actually went to high school in toronto. Mr. Speaker, i dont know if after all of this you recall the question, but answer whatever comes to your mind. I was going to say im actually in toronto tomorrow doing the monk debates and being with you two sort of reassures me it will be a total mess. I debated last year defending trump and we started out at i think it was 8416 for hillary over trump and after an hour and a half of brilliant debating it went to 8020 hillary over trump and my host all thought it was a magnificent achievement to have moved four points in that particular audience. With this conversation im really looking forward to tomorrow nights opportunity to try to explain trump again. I want to conceptualize this in a couple ways. First of all, if the diplomats, if the negotiators can find a way to get to a plausible agreement that the Trump Administration would agree was victory, that was also accepted by mexico and canada, then you could probably get it done relatively quickly which i suspect means next spring. I doubt very much if you can get it done this year. However, if, in fact, the things that have to happen are larger than that, then i think there are three factors that you need to take into account that may actually the first of which may surprise you. I actually think it may be better to take much longer to finish the negotiation because i think, and im going to tell you why. I think there are two circumstances that may change. I got to this in part thinking about how do you sell this to the congress and how do you think about this. And some things that gordon said that i thought were actually very, very helpful in framing whats really at stake here. You said some similar things that if you think of this as a World Economy in which there is a substantial advantage to having our three countries collectively developing supply chains and other capabilities as opposed to measuring it within the three countries, you get a totally different conversation. So i want to put it two ways to think about it. And this is part of why my instinct is trump will now withdraw. The number one measure of the Trump Administration other than avoiding a major strategic disaster with iran or north korea or terrorists, the number one goal has to be job creation. There is no other long term justification for trump. He cannot if he does not get substantial job creation, he cannot run for reelection. And if they dont get substantial job creation, the Republican Party is just going to get killed at the polls next year. So they really do have a deep internal commitment to getting the job creation. And their interest in getting a better nafta agreement is directly tied to their interpretation of how to get the job creation whereas blowing up and a half that guarantees chaos and guarantees you actually lose jobs and potentially in some parts of the country create recessions. So theres a really practical larger Political Economic concern here. And the more you can tie an effective north american, and im trying to think of the language because you guys now have me thinking about this differently. If you think of this as and i dont know to what extent this will drive the mexican and canadian governments crazy. Ultimately the thing i want to mention is our competitor is china. This is an american view. Not necessarily mexican or canadian. Ultimately were going to want to figure out how do you maximize our capacity as an economy to get back to growing faster than china, to be guaranteeing that we are bigger than china and frankly to bringing back various National Security capabilities that we have very sloppily over the last 20 years allowed the chinese to get by clever medicaling or by pure theft. I think youre going to see this administration become dramatically more aggressive about china. If youre an american, if youre in washington, d. C. And youre thinking through a grand strategy as it relates to china, all of a sudden having canadian and mexican allies economically is creating a better supply chain, creating a larger market, suddenly becomes dramatically more desirable than if youre simply looking at china looking at mexico and canada within an american context. I think both at a job creation level and in terms of our geopolitical capacity to deal over the next 40 or 50 years with china, you may see a shift in how the administration gradually comes to see this whole conversation. That isnt going to occur between now and christmas. But it probably is going to occur over the next year. Because i can just tell you the things i hear internally, the briefings im getting, they are startled by how many Different Things the chinese are doing that are clearly in effect waging war on us in ways that are totally shocking. And therefore theyre starting the process of saying all right, if this is a reality, then whats the longterm american strategy . Well, it is an irrational american strategy to decide to break with its northern and southern neighbors. If its in a situation where it thinks its major competitor is to the east. And i think that will begin to infiltrate and change the conversation in the white house over the next six months to a year. So in my mind, you actually have a greater advantage with a somewhat slower process unless you can find an easy agreement. And my hunch is from this conversation there aint going to be an easy agreement. This is probably i dont want to dump on your previous questions, but this is probably the most important question of the whole panel because it entails its still my question. It entails a lot of very challenging paradox and tensions and some of them have been addressed by the Prime Minister and by the speaker. One of those is do we tweak or do we truly rebuild . I dont think we can get anything approved on capitol hill if we just retweak because there wont be an incentive to vote for or marshall the votes or get the private sector to mobilize and support something which is just finetuning. Second, i dont think President Trump will accept anything that is finetuning. So we go ambitious. We go for that big 3. 0, 4. 0 Free Trade Agreement which really changes and enhances our competitiveness and job creation and the industrial and services resilience of our economies. But the problem is to achieve that, a, youve got to get rid of that original calendar that you had that we have to do this quickly because of midterms in the u. S. And the president ial election in mexico. So theres another tension there between a short timeline and a much longer as the speaker has said, timeline which allows a geostrategic argument to build. And then there are those other pieces of the equation that have nothing to do with nafta but have such a profound bearing on the north american on everything from security to how canada and mexico after 9 11 have developed a growing common domain awareness where we share information on everyone whos flying into mexico or canada with our american friends to ensure someone who was on a wanted list or a watch list does not shop for a visa or does not come into our countries to then try to undermine the National Security of our neighbor. Gary and i when we were on the road i would always joke that mexico and canada live next to an elephant but it was better to be on top of the elephant than underneath the elephant. Some of the dynamics at play in this have to do with how weve been working together to enhance security in north america since 9 11. But all of this is going to take more than eight, six, seven months to build. And to get a new administration and new cabinet players to fully comprehend and fully understand what weve been building with republican and democratic administrations in the past. So then theres another issue at play here which the Prime Minister knows very well which is that some of us in mexico think that on several occasions our canadian friends are being close to throwing mexico under the bus in the pursuit of strength and resilience of the canadian u. S. Bilateral agenda. So how do we mexicans ensure that our canadian friends stay focused on a trilateral approach in our engagement with the United States . So a lot of these pieces which are incredibly important for what ends up happening with nafta are going to have to be playing out over a calendar which is much longer and much more complex than what we just set out to do six, eight months ago when they said we have no other option than to renegotiate nafta because the president said if we dont hes going to push the button and denounce the treaty. There is a decision at play here regardless of what happens in the next negotiating rounds between our three negotiating teams from here to at least december. So you didnt answer the question. I am increasingly concerned that we wont get to the finish line. So we have an unlikely, an increasing i learn increasingly concerned and a probably well get there. Is that fair . I didnt say that. I said that if we get there, weve gotten there and if we dont get there, it may be better not to have gotten there. I think that the current track record would indicate we have at least as good a chance of getting this negotiated as we do of passing the repeal of obamacare. What did he say . Somehow obamacare got in there. It had to get in there at some point. Let me just say i think the question technically, the failure on the health thing was really a technical problem. They couldnt figure out how to do it. And i think theres some danger that you could end up in negotiation where they just cant figure out how to do it. And i think thats a real danger. Honestly, i think it could go either way. But look, i actually want to agree with what newt said earlier. I think thats really important. You know, im trying obviously i kind of represent canada, but im trying to look at the facts here as an economist. I dont know, really know what the case is that the canada u. S. Trade relationship has been detrimental to the United States. I just dont understand it. I look at the u. S. mexico relationship and i think you can point out a few things, but i think its pretty hard to make that case too. However, i look at the chinese American Relationship and i think you can make a pretty compelling case that it has been really problematic for the United States. By the way, problematic for canada. I dont know mexico as well, but mexico as frankly a huge current account deficit with the world. I suspect china is driving those numbers. I havent looked at them. This is a common problem that we could be addressing. But in the campaign, President Trump equated china and mexico and somehow that has turned into mexico and canada. Thats where we are today. So what im going to do, if there are some questions in the audience, if you would identify yourself and ask the question. No questions from the press, please. Just from members of the audience. And i reserve the right as the moderator to amend or reject the question. I wish i had seen the gary arturo traveling road show. That i can imagine. Assuming that there is a nafta agreement, it was reported earlier this week that in the event of a no deal brexit from the British Government theyd in fact have a plan b which was in fact to approach nafta as an option. Would the panel please comment on that assuming on the basis, of course, this is not purely posturing on negotiations. We did have a tea party over dealings with Great Britain a few years ago, but we didnt consider that. So is there i dont think it would necessarily be approaching nafta. I think there would be real interest in a u. S. british free trade zone but i dont know whether that would expand to nafta is so complicated, if theyre throwing the brits in on that. But i do think the administration would have an emotional interest at least in exploring a u. S. british free trade zone. Assuming the british can get through this. Its quite a mess from what i see from this side of the ocean. I dont know if they have a plan for nafta. I know they certainly have a desire to sign at least the current conservative government, assuming its not mr. Corbin running the government, the current conservative government would have a lot of interest in signing trade deals with canada and the United States and it would be in our interest to do one as well. One could be done expeditiously. I lost my microphone. Mexico has already had an initial conversation with the uk because we have a Free Trade Agreement with the European Union which was negotiated in 2000 which is being modernized by mexico and the European Union. As a result of that, one of the first conversations that we had after the vote on brexit was between the uk and mexico to start a bilateral Free Trade Agreement deal because of the exit of the uk from the European Union deal that were now negotiating to upgrade. So Everything Else being equal, this is something that mexico would look at favorably. I certainly think we want to deal with this piece of the equation first before we bring in a very complex issue like uk accession into an upgrade of north american Free Trade Agreement. Today were obviously talking about the nafta issues. Theres many in this world that are watching the nafta issues that are concerned about their own trade agreements with the three countries. So how much should these other countries be focussing and relying on the issues debated in nafta 2. 0 and how much do you think canada, the United States and mexico are considering their other existing trade agreements when youre discussing this among yourselves . Do you happen to have south korea in mind . Im an american. Let me take a stab at that. One of the side effects of nafta is that mexico along with chile are the two countries on the face of the earth that have developed the largest and deepest network of Free Trade Agreements. Were now in the process of modernizing those that like nafta were negotiated when the Global Economy looked very different than what it was today. Mexico is actively looking at that Free Trade Network that it has to develop its own plan b for a rainy day if nafta does go down the drain as to how we leverage those Free Trade Agreements that we have. In fact, mexico has been actively exploring whether we substitute ag imports into mexico of american beef and of american grains from brazil, argentina and our canadian partners. This is something that i dont think that if we were to reach a point where nafta implodes, i think mexico has clearly stated that it will continue to aggressively pursue free trade as a fundamental vehicle for its development and of its geopolitical footprint. Were already doing at a sub regional level with chile, colombia and peru. I think if we were to reach that scenario which would certainly be a bad day for north america, i dont think that will hamper mexicos willingness to continue looking at free trade as a key instrument for its growth and development. Ill approach from a different angle and just say i think every country that has an opportunity to study how the nafta negotiations go will learn things about the Trump Administration that will be ut useful in their relationship. In that sense i think virtually every country has an interest. How does this play out . What does it really mean . And theres probably a pretty useful course on the negotiations that could eventually be offered that could probably have 70 or 80 countries interested in what are the lessons to be learned when they negotiate with this administration. I would say that, and im not privy to this, i can only imagine that the uncertainty around nafta, both in terms of canadian investment from abroad and potential trade negotiations or actual trade negotiations with other countries, this uncertainty around nafta cant be doing anything but hurting canada in that regard. The one country that under the circumstances will want to have a trade negotiation with canada is china. Okay. Well take one last question. Weve got one over here. Mr. Speaker, if theres anyone out there that wants to get any counseling on how the negotiations have gone, im familiar with a Global Law Firm that will be pleased to help them understand. Im setting you up for that. Congratulations to the four of you. Its been very interesting and very insightful. Typically speaking, at least i heard from an economist, they said that the u. S. Is over full employment. Where is that need that you need to create jobs on the one hand . Thats going to be a very difficult thing for President Trump to do. The other is you talk a lot about the china things, that really thats where the problem is. Is there a why is the reason that he immediately went after tpp when that was supposed to be the vehicle president obama had signed which i think was through. I will never forget the words that he said this is because we want to be the ones to call the shots in the region and the area. That will mean eventually and they have said that china has gotten all that benefit for becoming a member of the wto. So is he going to be ready to withdraw also from wto and just create a trade war . Working backwards maybe. Is it likely hed withdraw from wto . No. Is it conceivable . Sure. I think you have to start with the idea virtually anything is conceivable. This is a very different personality and we dont have any boundaries to understand him with. And he has certain very deeply held beliefs. And the idea that hes going to be trapped by a bureaucratic system that is very slow and very insisht inefficient and routine ly exploited by the chinese and hell be told hes helpless, this is guy, he understand thoroughly the concept of alexander the great cutting the knot rather than trying to untie it. He sort of thinks of that. Im not sure he knows the analogy, but he lives that analogy every day. And hes quite cheerful about cutting knots. Second. Remember this is an administration which includes a lot of us right wingers which if you said to them here is this great agreement that barack obama and john kerry negotiated. We all go got it. Kill that. We dont need to know the details. Just kill that. That was in a sense the side casualty of the nature of the campaign. I dont think they even thought about it. That was an automatic you walk in and show me what these guys have been doing, i guarantee you its not good for the United States. Im just saying i think that was a bias. I think you have to approach it from that standpoint. Your first question. Look, i dont want to be too harsh but im going to be. Any idiot who looks at the american society, skips past the study that there are ten million males who have dropped out of the work force, skips past the effect of the opioid crisis, skips past all of appalachia and explains to you that were full employment is a person who is over shade, should not have tenure, and you shouldnt read their garbage. I mean, the fact is only academics who are tenured can afford to be that far from reality. This is an economy which can grow dramatically faster. We can go dramatically faster. But it requires profound change. When maine shifted and put a work requirement on having a snap cart for able bodied adults without children, 13,000 of the 14,000 people on snap quit and went to work. So you have a society which is encouraged dependency, has encouraged people to borrow so much money on their Student Loan Program that theyre trapped because when they get out they owe so much they cant make decisions. Has tolerated males just leaving the work force in huge numbers. Has an educational system thats dysfunctional and has a totally inadequate adult retraining program. Thats the scale of what trump wants to change. If you change it, you could easily get radically higher growth. If you dont change it, were trapped in the continuing decay. Weve been at 1. 9 for a decade. 1. 9 growth. The average since 1946 is 3. 3 . To suggest to us we should relapse and accept performing at a sub optimal level for the next 20 years because were not smart enough to solve these problems i think is infuriating and i deeply dislike the academics who sit in their plush jobs sitting on a campus writing about the rest of america as though they actually knew something. Does anyone else have a concluding comment . I will point out that was a response just given by a former college professor. But not tenured. Listen, i want to thank all three of you. You have added both insight, important experience judgment and some levity to our examination of a very serious subject and i hope you will all three of you continue to be involved in the dialogue as we try and advance our north American Combined economic interest. Ambassador, do you have something . May i just, to the speaker and our american friends, commiserate with the fact that mexico was not able to return the favor by getting you into the world cup. By beating on dudas and we couldnt reciprocate what you do for us allowing us to go for the Brazil World Cup the last time you beat someone who we needed you to beat. So im really sorry. But i have no bitterness about that failure. If we cant beat trinidad and tobago, we dont deserve to go. Do you have anything . Thank you very much. [ applause ] cspan where history unfolds dai daily. Cspan is brought to you today by your cable or satellite provider. And live next on cspan 3, well take you to the Senate Finance committee where the senate will be going through the tax reform bill. House members went through the legislation section bicicey sec. The republican chair, or en hatch, will be going through the bill. Its the chairmans amendment which is expected to require several tax cuts to sun set or expire, so that the bill complies with the senate rule barring the bill increasing budget deficits for the first ten years. Senate should be coming into the hearing room shortly, this is live coverage