Business Group Calls Trump Nafta Proposals 'Dangerous'-- 2nd Update

By Jacob M. Schlesinger Features Dow Jones Newswires

A war of words broke out Friday between the White House and U.S. Chamber of Commerce over the Trump administration's proposals for rewriting the North American Free Trade Agreement, after the business group called the president's agenda "highly dangerous" and vowed a corporate lobbying blitz to try to force him to drop proposals to significantly change the 23-year-old pact.

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The administration fired back, issuing a statement branding the chamber as pushing the agenda of "entrenched Washington lobbyists and trade associations" and saying the group was resisting Donald Trump's efforts at "draining the swamp."

And in a sign Mr. Trump's proposals for overhauling the agreement with Canada and Mexico may be scrambling Washington's trade politics, labor unions and key Democrats rushed to defend the Republican White House against the business attacks.

"The U.S. Chamber's negative reaction to even discussing creative trade solutions reveals a lot about how much corporate CEOs benefit under the Nafta status quo," said Richard Trumka, president of the AFL-CIO, the nation's largest labor coalition. While stopping short of endorsing the administration's full Nafta plan, he praised Trump officials for having "engaged with labor and listened to our ideas."

"Any trade proposal that makes multinational corporations nervous is a good sign that's in moving in the right direction for workers," Ohio Sen. Sherrod Brown, a leading Democrat in the trade debate, said.

The Senate Republican who chairs the panel overseeing trade, Orrin Hatch of Utah, released a statement of support for the chamber's position.

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Friday's rhetorical volleys marked the end of what had been a kind of cold peace between business groups and the administration over the trade agreement, as the chamber and other organizations have said they had been hoping that persistent, private conversations with administration officials had persuaded them to avoid major changes to a trade agreement that the chamber views as a success but that Mr. Trump has branded "a disaster."

The feud suggests new uncertainty about Nafta's future, as big business backing has been vital for the success of every major trade negotiation and its approval by Congress. The fight also raises the prospect of Mr. Trump -- America's first businessman president -- in open confrontation with the country's largest business organization, as he tries to follow through on promises made to his blue-collar supporters.

The Chamber and other business groups have said that they have grown increasingly alarmed over the past week, as Mr. Trump's top trade negotiator, U.S. Trade Representative Robert Lighthizer, and his aides have held a series of briefings on Capitol Hill, and for various stakeholders, laid out what they plan to propose during the next round of talks with the two trading partners -- the fourth since mid-August -- that starts Wednesday in Washington.

Trade agency officials described a series of proposals that would alter the workings of Nafta in fundamental ways objectionable to business groups, John Murphy, the chamber's top trade official, told reporters at a press briefing Friday morning.

These include proposals to impose new requirements for U.S. content in all Nafta cars qualifying for the pact's special treatment; to weaken or scrap provisions for arbitrating disputes among governments and companies in the three countries; to create new limits on Canadian and Mexican access to U.S. government procurement; and to create a new "sunset" clause in the pact that would make it expire unless the countries regularly agree to renew it.

"Even one of them could be sufficient to move the business and agriculture communities to oppose an agreement that included them," Mr. Murphy said.

He said that the chamber and other business groups have repeatedly voiced their objections to emerging Trump Nafta proposals but "the expert analysis and the views of industry have too often been brushed aside."

People familiar with the congressional briefings said both Republican and Democratic leaders and their aides also protested the administration's proposals, though they have chosen not to speak out yet in hopes that Mr. Lighthizer may listen to their concerns and soften or pull back his proposals before talks resume with Canada and Mexico.

The Senate's top trade Republican did, however, issue a warning to the White House on Friday that it risked losing key congressional support if it ignored business group complaints.

"If the administration wants to get a deal that improves Nafta and will get through Congress, it needs to be working toward a unified U.S. position," said Sen. Hatch, chairman of the Senate Finance Committee, in a statement Friday.

Administration officials have said their proposals are designed to address the major complaints that Messrs. Trump and Lighthizer and organized labor have raised about Nafta, a pact that they believe has created the U.S. goods trade deficit with Mexico -- which hit $63.2 billion last year -- and encouraged U.S. companies to move factories south of the border.

Mr. Trump's Nafta renegotiation goals are to bring jobs back and "reduce an unconscionable trade deficit," Mr. Lighthizer's spokeswoman, Emily Davis, said in a statement. "Achieving his objectives requires substantial change," she said, adding that "we have always understood that draining the swamp would be controversial in Washington."

This week's public and private battles in Washington have also sowed new uncertainty and concern about where the Nafta negotiations are heading.

Negotiators for both Canada and Mexico have publicly said that some of the proposals that Trump officials have floated would be unacceptable to them. A large group of Mexican senators said Thursday that new rules requiring U.S. content was one of the "red lines" they wouldn't agree to cross.

Mr. Trump has repeatedly threatened to pull out of Nafta altogether unless it undergoes a major overhaul, and he and his aides appear to be using that threat as a negotiating tool -- with Congress, the business community and the trading partners -- to force through some of their desired changes. People familiar with the this week's briefings said that trade agency officials frequently responded to objections raised by saying such big shifts were the only way to keep Mr. Trump from pulling the plug on the pact.

"The business interests that the like status quo have been feeling that their choice is between a different approach to Nafta, or the same Nafta, " said Lori Wallach, senior trade expert at the consumer watchdog organization Public Citizen, a longtime leading critic of Nafta and other trade deals. She said the administration, through its proposals and public feuds with business and Republicans, is trying to break that assumption.

"It's not a choice between the status quo and something different; it's between a different Nafta and nothing," Ms. Wallach said. "The chamber is going to have to make a call about which one of those makes them happiest."

Write to Jacob M. Schlesinger at jacob.schlesinger@wsj.com

(END) Dow Jones Newswires

October 06, 2017 19:03 ET (23:03 GMT)