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trade

The Brexit Stalemate: What’s In it for the U.S.?

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Listen to “The Brexit Stalemate: What’s In it for the U.S.?” on Spreaker.

British Prime Minister Theresa May is assembling a new plan to pursue the United Kingdom’s exit from the European Union, but this effort is likely doomed as well since no consensus exists to honor the Brexit wishes of the voters.

May’s most recent Brexit plan was crushed in the House of Commons, largely because her own Conservative Party cannot agree on a strategy and opposing parties don’t want to help her either.

“Within the Conservative Party, there’s a huge split between those who see the deal as a repudiation of what the people voted for.  Over 17 million Britons voted to leave the European Union and they don’t see this deal that she put forward to them as actually bringing about a removal of the United Kingdom from the European Union.

“Then you have another element within her party I think that believes that this deal does too much,” said Daniel Kochis, a scholar at the Heritage Foundation’s Margaret Thatcher Center for Freedom.

Kochis agrees with the first argument, that May is trying to force through a plan that will still leave the UK beholden to the European Union, specifically the customs union.

“I don’t think that this withdrawal agreement did enough.  It kept the United Kingdom in this sort of de facto limbo or perpetual limbo, where they were going to have to abide by the same sort of regulations and rules emanating from the EU but they would have lost their seat at the table to vote on those to help shape them,” said Kochis.

“Many members of the British public and of Theresa May’s own party saw this for what it was.  It was a soft way to keep the UK within the European Union,  They rejected that as not something the British people voted for,” he added.

But what is the U.S. interest in all of this British drama?  Kochis says a lot could be at stake and the U.S. stands to benefit from a clean Brexit.

“It’s in our interest to have a United Kingdom that is sovereign, that can dictate it’s own trade policy, that can dictate it’s own border policy and not allowing itself to take in hundreds or thousands of people against the will of their own citizens.”

“It would allow them to be a strong defense partner for the United States.  For instance, [Britain is] one of the key intelligence allies the United States has.  There is some concern that were they to stay in the European Union that that could be damaged,” said Kochis, who also thinks a bilateral trade deal with the British could be a very good thing for our relationship and our economy.

Listen to the full podcast as Kochis explains why the UK leaving the European Union without a deal on March 29 might be the best case scenario.  He also explains why Theresa May keeps hanging on to her job despite repeated failures at getting a Brexit deal approved.

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Ex-Commerce Secretary Assesses New Trade Deal

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Earlier this week, President Trump hailed a new trade agreement with our Canadian and Mexican neighbors, but is the agreement a good one for the U.S. and is it better than the North American Free Trade Agreement, or NAFTA, which Trump has railed against for years.

Barbara Hackman Franklin served as U.S. Secretary of Commerce for President George H.W. Bush and was heavily involved in the original NAFTA negotiations.  She is very pleased to see the three countries reach a deal.

“I’m delighted that this negotiation is now done because I think the process of it was unsettling to investors, businesses, consumers.  Some of the rhetoric surrounding it was not real helpful so I think it’s a good thing that we got this done,” said Franklin, who is now president and CEO of Barbara Franklin Enterprises.

The biggest changes to the deal, known as USMCA, would impact the auto and dairy industries.  Franklin says the agreement could be very good news for American dairy exporters.

“Canada agreed to open its dairy market by eliminating some of the quotas and the pricing system that has been in place and has been problematic our dairy farmer.  Hopefully, our dairy farmers will be able to send more butter, milk, and cheese to Canada under this agreement,” said Franklin.

The changes for the auto industry could be very good for manufacturers and their employees.  Wages would be set at a minimum of $16 per hour and a significant majority of auto parts would be made in North America.  Some economists fear a wage floor would mean higher prices for consumers, but Franklin says it’s too soon to tell.

The major U.S. concession is maintaining the NAFTA provision on dispute resolution.

“Under this mechanism, it means that disputes can be solved by national panels, in other words panels of the two countries together, rather than going through the U.S. judicial process having to do with anti-dumping and countervailing duty,” said Franklin.

Trump badly wanted to change the policy but it appears to have been a deal-killer for Canada.

The deal is still not done and the clock is ticking.  The leaders of all three nations must sign the USMCA and Congress must ratify it.  Franklin says it is critical for Mexico to approve it before a change in its presidency on December 1.  She also says the midterm elections here could influence the fate of the agreement.

While Franklin is not a fan of Trump’s approach to trade negotiations and the uncertainty it creates, she is still hopeful that the USMCA and negotiations with China and the European Union end up boosting our economy.

“I certainly hope we’re going to end up in a better spot.  With all of these agreements, the proof is in the pudding and how it actually works,” said Franklin.

“My hope, always, is that whatever we do stimulates more trade because I believe that trade does help economic growth,” she added.

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Trump Trade Deal: Stronger Economy, Higher Prices

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The United States and Mexico are on the brink of a new bilateral trade deal that will give a bigger boost to our economy but also leave our wallets a bit emptier, according to a top free market economist.

On Monday, President Trump and Mexican President Enrique Pena Nieto announced they reached a consensus on a new trade agreement that Trump hopes will replace the North American Free Trade Agreement, or NAFTA, but thus far does not have Canada on board.

The agreement still includes many NAFTA provisions but also makes some important changes.

“Many of the agreements that were in NAFTA are actually in place within this bilateral trade deal, when you think about lowering tariffs and having a lot of freer trade in general.  But the auto sector is one key point that there is definitely a difference compared with NAFTA,” said Vance Ginn, director of the Center for Economic Prosperity at the Texas Public Policy Foundation.

The proposed trade agreement requires that 75 of the parts of all automobiles sold in the U.S. and Mexico must be produced in the two countries.  Currently, the mandate is 62 percent.  The deal further requires that 40-45 percent of the workforce making those parts make a minimum of sixteen dollars per hour.

Ginn sees positives and negatives in the proposal.  For example, he likes the fact that American business will have to do less guessing.

“It decreases the foreign trade uncertainty that’s been out there so long.  That’s why we’ve seen the stock market go up a lot and a lot of these entrepreneurs are saying, ‘You know what?  I can start to budget for the future and make some transactions,'” said Ginn.

He’s also glad to see a badly needed update on internet commerce, which is still based on language crafted in 1994.

“When NAFTA was created, e-commerce wasn’t a big deal and now it really is.  So they put some rules in place that seem to be pretty free-market oriented,” said Ginn.

The problem, according to Ginn, is that stronger mandates on domestic production and hourly wages is not going to be pretty for American consumers.

“This will mean higher prices for auto consumers.  As you raise the cost of doing production from a wage standpoint and a parts of origin standpoint, where the production will take place.  Often times you’ll find the best place to do it based on the lowest costs and the highest quality.  And this seems to take that out a little bit,” said Ginn.

The U.S.-Mexico framework is scheduled to last for 16 years and would be up for review every six years.  However, Ginn is hopeful that Canada will be part of the mix before everything is finalized.

“I do think it is very important to make sure that Canada is part of this agreement.  Canada is a large trading partner for us.  If for some reason they don’t join it as well, I do that would be a negative moving forward,” said Ginn.

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Trump Sets Judicial Confirmation Record, Big Business Supporting Dems, Bill Kristol 2020?

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Jim Geraghty of National Review and Chad Benson of Radio America congratulate President Donald Trump for appointing more judges to regional circuit courts than any president has at this point in his term. They also criticize big businesses that are supporting Democrats in 2018 because of Trump’s trade and immigration policies. And they think the only major support for a Bill Kristol 2020 presidential campaign would come from the Kristol household.

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‘Wage the Battle’

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A strong America means secure borders, free trade, and putting American citizens first when focusing on national security and job creation, according to businessman turned congressional candidate Paul Nehlen.

Best known for his high-profile but unsuccessful primary challenge to House Speaker Paul Ryan in 2016, Nehlen is already running against Ryan in 2018 and is author of the brand new book “Wage the Battle: Putting America First in the Fight to Stop Globalist Politicians and Secure the Borders.”

The book focuses on several major goals, including restoring American sovereignty and reinvigorating American economic nationalism and an America-first foreign policy.

Nehlen has Fortune 500 business experience and points to success in bringing companies to the U.S. from all over the world.  He says America need policies that allow our workers to thrive because he knows they are second to none.

“Hands down, America is number one.  We have got just a fabulous workforce,” said Nehlen.  “There are pockets of great work forces out there.  I worked in Poland a lot.  They’re great.  But there’s nothing the American work forces can’t do, unless they are hamstrung by our government.”

He says convoluted government policies that play favorites in the economy is hurting our competitiveness.

“If, like Speaker Ryan, you try to give certain corporations a leg up on other small and mid-size businesses, you’re really undermining America.  We can’t have a strong military, we can’t have a strong nation unless we have strong trade,” said Nehlen.

Nehlen contends the current structure of our economy is a far cry from what it was intended to be.

“This country wasn’t founded on free trade deals.  This country was founded on protecting our manufacturing base, protecting our natural resources, and tilting the playing field in the favor of our manufacturers.  That’s not what’s happening now,” he said.

Instead, Nehlen says our current course has actually landed us in the midst of economic hostilities with multiple nations.

“We are literally at economic war with countries like China and South Korea and Taiwan, many of whom are manipulating their currency to undermine our ability to do business in the global marketplace.  That has to stop,” said Nehlen.

According to Nehlen, even the recent history of American trade agreements shows the government is choking the freedom out of our trade relationships.

“Back in 1985, we negotiated a free trade agreement with Israel and it was 13 pages long,” said Nehlen.  “Fast forward about 10 years, they passed NAFTA.  It’s 1,700 pages long.  Fast forward another couple decades, the Trans-Pacific Partnership comes along, 5,500 pages.  There is nothing free about trade that is described in 5,500 pages.  It just doesn’t happen.”

Nehlen is thrilled that Trump is more than making good on his pledge to eliminate two regulations for new one placed on the books, operating at a clip of scrapping approximately 16 regulations for every new one.  But he says that success has a lot of people wanting to share the credit, including the Speaker of the House.

“We see Speaker Ryan trying to take credit for that now.  He’s had 18 years in Congress and he’s abdicated his role to the executive branch.  Now he’s trying to take credit for what the executive branch is doing,” said Nehlen.

Congress has yet to approve funds for the construction of a border wall, which was one of President Trump’s most common promises on the campaign trail.  Democrats threatened to shut down the government when a spending bill was approved in April.  Now, reports suggest Republicans are still reluctant to approve the funds.

Nehlen is appalled.

“I’m disgusted with this Congress not voting on the wall and essentially just attaching some spending which will get us about 60 miles of new border fence,” said Nehlen.

“It’s ridiculous.  I’ve been to the border and there are areas of the border where there is – they call it Jurassic Park – the fencing looks like enormous spikes coming up out of concrete.  Adjacent to it is your normal, run of the mill barbed wire, put up by ranchers to keep their steer from going into Mexico because the water is inches deep.  To suggest we’ve got the border secured is absurd,” he said.

 

Getting the wall done is right at the top of an ambitious laundry list that Nehlen hopes to accomplish if elected to Congress.

“One would be to advocate for this wall.  Another would be to advocate for national reciprocity for anybody who has concealed carry.  If you leave your state and go to another state, you shouldn’t have to relinquish the ability to protect yourself,” said Nehlen.

He would also slam on the brakes when it comes to refugee resettlement.

“Nine voluntary organizations – they’re not really voluntary – are getting paid by U.S. taxpayers to move people, predominantly Muslim – 99-plus percent I might add – to the United States.  We are funding our own demise right now.  It has got to stop,” said Nehlen, who also wants Congress to declare the Muslim Brotherhood a terrorist organization.

“We have got to get the Muslim Brotherhood out of the United States.  We have got to root them out.  That will roll back 60 years of their efforts to undermine the United States from within,” said Nehlen.

One reviewer declared Nehlen’s book a plan of action for Trump-like candidates.  It’s a label Nehlen welcomes.

“I am very flattered by that.  That is exactly why I wrote the book, because we need hundreds of good, righteous candidates who believe in securing the border and putting American workers, American retirees, and American children first,” said Nehlen.

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Three Martini Lunch 2/23/17

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Greg Corombos of Radio America and David French of National Review applaud the Trump administration for rescinding Pres. Obama’s demand that all public schools embrace transgender accommodation and leaving the issue to states or local school districts.  They also slam the Fourth U.S. Circuit Court of Appeals for ruling that any gun can be banned if it’s “useful for military service.”  And David vents about the one of the worst trades in NBA history.

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Border Tax or Border Adjustability?

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President Trump has floated the idea of a border tax or border “adjustability” with Mexico to raise the revenues needed to fund construction of a border wall along America’s southern border, but the leader of the nation’s largest grassroots taxpayers group says the president must be careful not to punish American consumers.

“This is a very confusing and intricate issue, probably the most complex aspect of the tax reform discussion right now,” said National Taxpayers Union President Peter Sepp.

Among his first actions as president, Trump authorized construction of the border wall and once again vowed that Mexico would pay for it.  After the Mexican president dismissed the idea, Trump and White House Press Secretary Sean Spicer have both discussed the idea of a border tax on Mexican imports as high as 20 percent.

But Sepp says it is unclear whether they are referring to an actual border tax or a concept known as border adjustability.

“What we’re really doing here is reading tea leaves.  This is a tea cup that goes very deep.  We’re having a difficult time telling exactly what the administration wants to do here,” said Sepp.

The answer it critical because Sepp says the difference between a straight tax and border adjustability is significant.  He says an actual border tax would not be good news for working Americans, since Mexico can simply pass along their higher costs to the people who buy its products.

“Taken in isolation, a border tax, where you have a trade deficit with a given country, you slap a tax on its goods coming into the country that’s aimed specifically at them, that could result in consumers having to pay more out of their own pockets here in the United States,” said Sepp.

Border adjustability is different.

“What (adjustability) tries to achieve is if you send something out of the United States for export and sell it abroad, it is not subject to U.S. tax.  If you are bringing in goods, either finely finished goods or raw materials, to make something in the United States, you’re not allowed to deduct it anymore under border adjustability.  It’s supposed to be a border-neutral way of handling economic activities,” said Sepp.

Sepp says that concept along with fundamental tax reform involving lower tax rates, full expensing of investments and allowing companies to be taxes only by the countries where they earn their money, could have some benefit.

“If you take an entire reformed system like that with border adjustability in it, you might be able to minimize some of the impacts on consumers,” said Sepp.

Trump critics allege that any such move to draw more money out of Mexico could trigger a trade war with one of our top trading partners.  Sepp says that is unlikely unless Trump goes ever further and slaps new tariffs on Mexican goods.

“Those kinds of things always tend to invite some kind of retaliatory action.  We need to be careful about how these kinds of policies are pursued.  Sometimes a tariff might be justified if another country initiates a tariff against us.  But for us to do that unilaterally from the start can complicate matters to a great degree,” said Sepp.

Trump’s first executive action on trade was the formal withdrawal of the U.S. from the Trans-Pacific Partnership, or TPP.  Sepp says that decision is understandable.

“That treaty did have its flaws, a multi-lateral agreement involving something like a dozen nations, is going to be pretty complex by its very nature,” said Sepp.

But Sepp says existing and prospective trade partners would have a better idea of where Trump wants to lead on TPP if he listed reasons for the U.S. withdrawal.

“The problem is, by simply walking away from the Trans-Pacific Partnership and saying, ‘Well, we’ll try bilateral approaches,’ that creates a great deal of uncertainty about U.S. trade policy going forward,” said Sepp.

“To be more specific about the flaws in TPP would have been helpful in sending signals around the world that the U.S. is still committed to free trade, but these are the particular problems that we have with an agreement like TPP,” said Sepp.

While Sepp says border adjustability is the thorniest issue, he wants to see Congress get moving on substantive tax reform while the opportunity is available.

“I think the momentum is still there.  What needs to happen going forward is the tax writing committees – House Ways & Means and Senate Finance – need to have hearings on these specific aspects of tax reform.  Answer some of the questions are causing a lot of fear and speculation, and then start to build a legislative consensus around a particular bill,” said Sepp.

“Right now, we have a blueprint for tax reform.  That is not legislation.  We need to get to the legislative part as quickly as possible,” said Sepp.

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