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.