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Opinion

Trump's short-term NAFTA wins are tomorrow's job losses

It comes down to what Trump is choosing to maximize: short-term politics or the longer-term health of the economy. And with each threat of withdrawal or deliberate destabilization, it's becoming clear that Trump's priority lands squarely on the political side.

It's been eight long weeks since the NAFTA renegotiations kicked off. It was an ambitious agenda for a short period of time, from incorporating the energy and e-commerce sectors to pushing for higher labor and environmental protections. Yet, four rounds of negotiations later and the hopes of bringing the 25-year-old agreement into the 21st century are looking increasingly slim.

At this point, successful negotiations may simply mean the North American Free Trade Agreement continues to exist when this all ends, along with fond memories of a missed opportunity to have done more.

To truly understand what's going on, it's worth revisiting how we got here. During the campaign period, then-candidate Donald Trump made countering trade a tenet of his platform. He singled out NAFTA as the "worst deal ever" and accused Mexico of taking advantage of its northern neighbor.

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U.S. Trade Representative Robert Lighthizer (center), Canadian Foreign Minister Chrystia...
U.S. Trade Representative Robert Lighthizer (center), Canadian Foreign Minister Chrystia Freeland and Mexican Secretary of Economy Ildefonso Guajardo Villarreal held a press conference at the conclusion of the fourth round of negotiations for a new North American Free Trade Agreement at the General Services Administration headquarters in Washington, D.C. on Oct. 17, 2017. (ANDREW CABALLERO-REYNOLDS / Getty Images)
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In the Oval Office, his tone remained largely unchanged. Even as Trump's team began establishing the renegotiating framework for NAFTA, the president never seemed to be sold on the idea. In a leaked call between Trump and Mexican President Enrique Peña Nieto, he made it clear that he was coaxed into the negotiations and was by no means convinced of their utility.

For most economists and trade analysts, this lax approach toward scrapping NAFTA appears to verge on the irrational. Most agree the agreement could use an update, but this language is almost always wrapped in a recounting of NAFTA's virtues: the rising U.S. exports, lower prices for consumers, and 14 million jobs that it underpins across the U.S. Industry executives also echo this sentiment, with their supply chains weaving back and forth across the continent. At first glance then, it could feel remarkable that a president would review those same graphs, skim those same articles, and still feel no qualms with withdrawing.

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Except it is rational. (Well, sort of). Ultimately, it comes down to what Trump is choosing to maximize: short-term politics or the longer-term health of the economy. And with each threat of withdrawal or deliberate destabilization, it's becoming clear that Trump's priority lands squarely on the political side.

Attacking NAFTA during negotiations is clearly about short-term politics, fanning the flames of a subset of the population that views trade with Mexico not as a set of neat charts of imports and exports but as intertwined with vaguer concepts of globalization, immigration, and fairness. It's not that Americans dislike trade; in fact, most believe it's a good thing for the country, including more than six out of ten Trump supporters. But each day it's becoming clear that the issue is not always trade itself, but also with whom we trade. And for many, Mexico is the villain.

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For decades, cheap political points have been scored by accusing Mexico of ripping off U.S. workers and stealing their jobs, and images abound of Mexicans getting rich off America's empty factories. It is in this context, where feelings of unfairness and anger loom larger than statistics and models — no matter how accurate — that bilateral trade becomes decoupled from economic reality. This makes economic policy depend more on its political appeal than on the substantive arguments, a confusing balancing game for negotiators and the United States' economic partners.

All this to say that we have two divergent objectives playing out simultaneously. Trump is maximizing short-term politics while NAFTA negotiators are working away (or engaging in tense stalemates) ostensibly to improve the technical side of the agreement, thus improving upon the region's competitiveness and ability to create jobs and prosperity. In the tug of these competing interests, the United States is running the risk of completely pulling apart NAFTA and the economic system that it has fostered, and in the process endangering our ability to lead economically, in the hemisphere and around the world.

With the negotiations stalling, it's time to be honest with ourselves. This is not just a problem of finding a compromise, or doing what's best for our country. This is a story about an administration that sees no political benefit in negotiating NAFTA in good faith, and doesn't value economic reality. As the president might tweet: "So sad. So pathetic."

Antonio Garza is a lawyer with White & Case in Mexico City, a former U.S. ambassador to Mexico and a former Republican chairman of the Texas Railroad Commission. Website: tonygarza.com

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