levinson.

but, you know with nafta we engaged in the negotiations, opposed the ultimate agreement. we used the agreement when i was in place, and in particular we used the labor chapter, the labor side agreement very sig rousely dozens of times over the course of the last to or so years and it was a frustrating experience because i think everybody knows the critique of the nafta side agreement was that it wasn't enforceable, the provisions are weak and it does designed not to be used and never to come to actual dispute settlement. it's fulfilled that promise very well. but we've also criticized the nafta template. that's what i would like to focus on today.

we have one question in front of us, which is -- will nafta be renegotiated if at all, should bit renegotiated, how should it be renegotiated. but what does the nafta agreement immediate for our trade policy and what should be the principles that guide our tried policies going forward. i want to talk about nafta absolutely but i also want to talk about what does it mean for all of us as we think about these important issues. and i do want to say that there has been, for the labor movement, not just the labor movement but a lot of the allies in the globalization debate, the environmental groups, the consumer groups, the women's groups, access to medicines group, immigrant rights groups, these are the groups we're working with not just in the united states but internationally. we believe in international solidarity. we belief in trying to write a set of rules ffr the global economy that's good for workers everywhere.

that's one important difference in the way we approach the issues and the way that the current administration does. we don't say america first. we don't believe that the countries are winners and losers in the trade debate. we want to talk about what type of global economy do we want to live in. what type of protections for the environment, the consumer would be necessary to have trade policy benefit communities and workers and to, certainly in the united states, create good jobs including on the manufacturing sector. that's a different set of questions than how to get more free trade or how can we get the trade barriers down or what kind of protections for investors do we need in trade agreements. and so that goes to the heart of what i want to say. we said a long time ago that nafta was not only about trade. it was about investment and protections for investors whether it was the investor state dispute, the financial services chapter, and that it was also about outsourcing as

much as it was about exports. and at the end of the day if you look at the trade flows, there wasn't really as much of exporting to consumer goods to the 90 million consumers on our southern border as promised. nafta failed to live up to most of the promises made on its behalf during the debate 23 years ago. instead of exporting a lot of consumer goods, a lot of american companies took advantage of nafta to move jobs to mexico. and that's why our small trade turned into a trade deficit quickly. we also said that the investor stake dispute settlement, embedding that into a trade agreement for the first time was a bad idea and that it would be used to challenge environmental and public health regulations in all three countries and i think the record has shown that that has been the case, that nafta was used in a way that wasn't

about trade so much but was also about corporate interests and taking advantage. nafta was supposed to strengthen the competitiveness of the north american continent, vis-a-vis asia and europe. for the united states that didn't work out. so in a lot of ways it failed. but how could nafta be improved? and i do want to lay out the -- we've laid out or nafta bluepri blueprint. it's something we're working with members of congress on. we want to strengthen and enforce the labor and environmental provisions in nafta. these are provisions that have evolved over the years but have never really worked. we've brought a lot of cases, as i said, under the labor chapter and yet there's never been a dispute settlement case, an enforcement mechanism that actually made a difference

there. so that needs to be done. we need to address currency manipulation. having trade agreements that discipline tariffs and subsidies and other trade flows but don't address currency at all is a weakness. we want to upgrade the rules of origin. we have concerns about the procurement chapter and how it prevents the u.s. government from using its purchasing power to achieve its goals. and upgrade the trade enforcement chapter and address some of the concerns around trucking and make sure that safety is paramount. but tpp, let me just be clear here, the idea that tpp is the model for renegotiating nafta i think is delusional. i just think people have to remember that one of the things we learned -- and i think we shouldn't have come through this election without learning something, which is that there was a ground swell of frustration and anger and

opposition to our current trade model. the kinds of changes we need are deep. they're not shallow and tweaking. we need to rethink the basic principles of our trading policy. and in some of those areas, president trump has outlined some top notes that i think we should agree with, that we should be concerned around the trade deficit, concerned about outsource,ing be concerned about how trade affects good jobs in the united states of america. but i think what is missing from the way president trump has outlined his concerns is that we, we are part of a rules based system. we need to continue to be part of a rules based system. i think the labor movement has done this. we will work within the system to convince our government, to convince the congress, to work with unions and environmental groups in other countries, to work with their government to change the rules that we disagree with but not to toss

them out and work in an arbitrary way. but to work in a way that reflects a respect for our trading partners and a sense of the importance of global solidarity. in terms of immigration -- you know, globalization is about trading goods and services but it is also about the movement of money and financial flows across borders and about people. and so, you know, i think one of the biggest concerns the labor movement has expressed around the trump administration is the immigration policies and whether those are demonstrating the kinds of principles that we want to see in terms of our interactions with the rest of the world that we need to be humane, we need to be rational and we need to make sure that those principles are constitutional. so at the end of the day trying to put a lot on the table so we'll have room for a good

lively discussion. i think, you know, we believe in a rules based system. we believe -- i mean, ultimately trading -- trade agreements and trade rules are about addressing the intersectionalty of decision-making with international movements of goods, services, people and money. and we in the labor movement, and i think alo of our allies said that democratic decision-making is more important than that. so we haven't -- maybe we haven't gotten the balance right of whether, you know, we need to have trade agreements that can undermine our domestic regulatory systems, under mine labor rights and consumer protections. particular with ists but also the way we've addressed the regulatory coherence. we have nod done a good job, we have not found the right balance. i would say that a lot of the

people in the d.c. trade community are used to thinking of the critics of nafta or the critics of tpp as the enemy. but i would say to you i think we actually have a lot in common in the sense that we want to figure out how we can fix the trading system and the rules of the trading system. we believe that it is important to take into consideration what the tim pact on jobs is going to be of our trade policy. and it shouldn't be only donald trump who says it. it should be leaders of the democratic and republican party whether they're presidential candidates or in congress. and to the extent that we can build together a progressive internationalist framework for international trade, i think we will be in a stronger position than if we stick our heads in the sand and pretend that nafta has been a tremendous success and that all we need to do is to pick it right back up and move

it forward as it is. we need to recognize the issues and the problems that have been clear over the last couple of decades. >> thank you, thea. you know, shortly after the president's inaugural, he called the labor leaders to the white house and they emerged e roo wreathed in smiles, which is not typical between labor leaders and republican presidents. do you feel like you have a good dialogue with the administration on the trade issues and on -- are you able to offer your input to a process? >> we do have a dialogue and we will continue to use whatever avenues we have. we have formal avenues like we've had through other administrations, through the labor advisory committee that hasn't met yet. our job is to advocate for american workers. we'll do that with this administration. there has been outreach, there have been some conversations.

and as i said, i think we might agree on the top note that our current trade system is broken but we don't necessarily agree on what the narrative is or how to fix it. we want to continue to offer or views. one thing i would say in terms of what's wrong with the u.s. -- why is the rust run a big trade deficit. why are we not as competitive as we would like to have to the extent that the trump administration has said the problem is we're overregulated, that taxes are too high and that worke workers' wages are too hief. w we would have a fun mental disagreement with that. we don't think that's the problem. >> to parra phrase your famous novelist, "poor mexico, so far from god, so close to the united states." you no longer speak for your government but you obviously did for many years and you since this dynamic as well as anyone.

what -- how do you anticipate mexico responding to president trump? >> well, thank you, nelson. and as you say, i no longer speak for the mexican government. so i'm speaking on my own behalf, my own opinion and i'm very glad to speak my mind. i want to give a sense of what i believe is at stake in this nafta renegotiation debate and then give my own views on some different scenarios. first of all, i think that much more than trade is at stake. there are a lot of trade policy wonks and it's all sps and tpc and all of that. that's fine. but what's at stake here is the future of the bilateral relationship, the future of the relationship between mexico and the u.s. and i believe that is the most

important relation for the u.s. on a day-to-day basis. there might be a rogue state here doing crazy stuff, a crisis there. there's always china. but on a day-to-day basis for americans, for their prosperity and security, i believe there's no more important relationship. so when there's talk about the wall and it's not about a great album by pink floyd, it's something different. and when there's talk about who is going to pay for that wall -- >> by the way, some of the younger members in our audience looked up and said what are you talking about? >> i strongly recommend when you think about the wall, yeah, there's a great section about tearing down the wall. ok okay? it really generates a toxic environment. and when there are ingenuous

proposals about how to fund the wall, will it be a border tax, taxing remittances, will it be taxing real estate transactions by mexicans in the u.s. regardless of whether these initiatives are approved by the congress, regardless of whether they're legal or not -- and i do believe all those to be inconsistent with nafta and wto, they create a life of their own. words matter. and mexico will have a pedestri presidential election next summer. campaigns will start before that. we have a noisy democracy. we also have a congress. and this political environment in the u.s. is making it increasingly difficult for the mexican government to achieve a constructive negotiated solution with the u.s. i believe that as time goes by

the window of acceptable solutions is getting smaller and smaller and smaller. i hear an old book called "distant neighbors" written by alan writing, the mid 1980s being quoted again. if you want to get a context of what's going on, i would recommend that they read or reread "distant neighbors" and then read something for recent, sha nono'neill's book "two nations indivisible." she's got actual factual facts if you want to take a look at that. a lot of it is at stake here. what scenarios do i see. i think that the most likely scenario would be one where there is a nafta upgrade, a modernized nafta.

and for mexico, the starting point should be the state is cool. i don't see why mexico should accept anything less than tariff free, quota free access and then build upon it. maybe include some provisions on energy. you know, there are huge investments in energy, deep water investments. some of them by, you know, exxonmobil corporation. i don't know why the u.s. think it's a bad idea for exxonmobil to produce in deep sea oil in mexico to invest there and have mexican oil shipped to the u.s. a friendly country. energy, telecoms, ecommerce and labor on the environment. there's vocal and vibrant civil society in mexico. i'm sure they would welcome real and serious, sub substantial commitments on labor and environmental issues. perhaps even rules of origin

that could focus on regional production. what i don't see viable is a fuel renegotiation of nafta starting from scratch. having mexico accept less than it already has. if that's the scenario and if negotiations would take a long place, a better alternative could be to say, okay, we'll go down the route. again, recall that there will be presidential elections in mexico. i don't -- next summer. summer 2018. i don't think that negotiations can go on endlessly because of uncertainty for political actors and for political reason. and you've had some very respected mexican leaders, like the former president in an op-ed last weekend in the "washington post", my former post who was trade minister during the nafta

negotiations saying, no agreement and mfm is better than a bad agreement. it's better than managed trade, the quotas. so i think that's something that the u.s. should be very cognizant about. from a more proactive perspective, the u.s. is interested in the big infrastructure program. why not focus on north american infrastructure. if you look at international rankings, roads, railroads, ports, airports, north american does dismally -- not one of the top ten airports or ports are in north america. that's no way to compete as a region. why not focus on a north american infrastructure plan and let the u.s. companies build in mexico and mexican companies in the u.s. and in canada. i mean this could sound like a pipe dream. but we need a reality check.

and lastly, you know, according to pricewaterhousecoopers who has done some estimates about the world in 2050, mexico will be the number six economy by 2050. i do not understand why the u.s. would want to make trade and investment for difficult with a nation that could very well become its main partner, its main destination for u.s. exports, one of its main investors. it just boggles the mind and i think it's important to be very frank and hopefully to have more u.s. companies speak loudly and speak clearly. i know they don't want to be the object of a tweet. but, you know, this is not a zero sum game. and there are specific story to tell about why u.s. investment in mexico benefits, you know, the shareholders of companies that are publicly listed,

benefits workers in the u.s., how the supply chain works and why it makes sense from a u.s. perspective. so i would sort of invite and encourage, otherwise we'll always be playing a defensive and post-factual game and we'll be in deep trouble. >> thank you antonio. we have only 20 minutes left. i want to turn to the audience very quickly. be thinking about any questions that you do have. but i do -- i think we've missed one important thing, topic, each of us in our discussions which is why has president trump, candidate trump, president trump, why has he made trade, why has he made nafta one of the key signature issues in his campaign and of his new administration. i believe it's because we has a deep political project in mind, which is to remake the

republican party as a party that will be the party of -- a more populist party and the party of the working man to have strat y strategies that bring them to a new loyalty to the republicans. clearly if you look at how he won ohio, pennsylvania, wisconsin, michigan, the key states that gave him the presidency, it was because of that appeal. as he looks to his reelection, he wants to cement his relationship with those voters even more strongly. and that suggests to me that a, sort of a tepid massaging of nafta and an announcement of victory may not be what he's going for, that he's actually going for something more radical, more dramatic that will speak directly and meaningfully to this constituency he's trying to attract. with that provocative comment,

let's turn to the audience. when you speak, please tell us who you are, what institution you reside, put it in the actual form of a question and remember we do have c-span here. so your mother might see whatever it is that you say at some point. with that we'll turn to you, sir. >> bob, georgetown center for business and public policy. the keystone of this discussion is that nafta is bad. >> not the keystone xl. >> i didn't mention that, sir. i meant the essential element here, the basis of all of this is that nafta has been a failure and is eefl and has to be corrected. i wonder if there's anybody on the platform that who could make the case for nafta. has it not in some aspects been quite beneficial to both sides. >> thanks, bob. that's a great question. >> anybody but me.

>> hello. well, in a nutshell, mexico's economic performance is disappointed, compared to integration of many relatively poor countries into europe, mexico and income terms has been disappointing. a lot of it has very lit toll do with nafta. has more than do with governance issues in mexico, mainly governance. there's also been a sequence of crisis in mexico which has to be taken into account. as far as the united states is concerned, this is a giant economy of which trade is not the biggest part. trade with mexico is significant but it simply will not be found

in terms of the overall statistics with regard to acceleration of growth. anything like that. neverthele nevertheless, there has clearly been an huge increase in trade between the two sides. since we're operating in a free market, i think you can fairly assume that a lot of that trade is beneficial, at least to those who engage in it. okay? final point is that -- and yeah, i should add that without question that trade has enabled some companies in the united states, i would say particularly automotive companies, but several other to become and remain competitive on the global market. finally, i would say that the effect of -- the big effects of nafta unfortunately are

distributive, distributive. we have to look within the countries. and i would argue that there have been significant benefits for both american consumers and mexican consumers. but some have lost out and this is very clear. i agree with thea on this. yeah. >> matt and then antonio. >> when i was the deputy assistant for north america, i used to say the north american free trade agreement that the american people are divided. half of the american people blame nafta when it wasn't rain for five days, the other half of people blame nafta when it rains too much over a five-day period. three things are important. first of all, the agreement, improve the economies of both counties. the second, the majority of the manufacturing jobs we've lost -- and we've lost tens of thousands of manufacturing jobs since we entered into nafta. but the majority of the jobs

were lost to automation, not to trade. and it's because of nafta and the agreements that we were able to bring in a very large number, a larger number of better jobs in other sectors, although quite obviously the individuals who lost jobs in manufacturing were not geographically or otherwise positioned to take the incoming jobs. and certainly there are so many disappointments with nafta, so many things we would like to improve. so many things that could be better. but overall it was truly a great thing for america. and the last point is that if you ask any national security expert who are the four biggest national security agenssets of united states, 100 of 100 experts will tell you the atlantic ocean, the pacific ocean, our relationship with canada and our relationship with mexico. americans do not even begin to comprehend the cost of having a contiguous neighbor that is

hostile or even unstable. in europe they get that. not just because of the world wars but centuries before and in asia they get that too. americans sometimes don't grasp that. i don't want to play down the economic aspects of the agreement. i think it helped both countries. we all know that individual regions and sectors were hit and hurt. we know of things in the agreement that can be improved. but america is much better off with nafta than it is without it. >> yes. i believe that nafta is foreign economic policy. and foreign economic policy is a part of foreign policy. so in terms of mexico-us relations, it is absolutely essential. i believe it to be a fact that mexico and the u.s. sink or swim together, whether they like it or not. maybe at some point, you know, the u.s. or mexico would like to move to a new neighborhood. no can do. you cannot do that.

we're stuck there. you know, again, in the 1980s, our late dear friend wrote a book called "a marriage of inconvenience." this is a marriage where you really can't divorce, where you're stuck in the same house or apartment and you have to engage constructively. there's no way out for both countries. and i think that is good. i would say, you know, so close to the u.s. it's good that we're close to the u.s. but the political environment, to restate this, is so toxic that, you know, the saying is coming to haunt us back again. in terms of just the economics itself, i would say that nafta create, you know, a strong area of rule of law in exmexico. that is good for the u.s. and that is good for mexico. what we need is more rule of law in mexico.

and nafta represents rule of law and transparency and accountability. in terms of u.s. interests, in the next panel there's someone speaking from the dairy association. i'm sure that corn producers, pork, beef, chicken, poultry, just the ag which is complicated, they rely on mexico. >> we'll be hearing from them. >> we eat their beef. >> thea lee rising in defense of nafta? >> well, bob, i know you didn't expect me to answer this question. >> it's okay. >> it's okay. thank you. i appreciate that. and i appreciate the deference of the chair. i want to say that i think we need to separate out some things. for one thing, i want to stipulate that the value of the relationship with mexico and canada is paramount. we need to value that, treasure it and take care of it. i also agree two-way trade has gone up between u.s., mexico and canada. is that the right smesh sure,

the right benchmark. we need to look at what's in nafta, not the or aura that we' given to nafta. if you look at the components of it, the tariff is sometimes the least economically part of it. what happened to price. but also we talk about the rule of law. let's talk about labor law. you know, one of the most important things we could have done if we really wanted to tie our economy to mexicos would have been to protect mexico workers' rights to organize a union. we didn't do that under nafta and that was a failure. that's one of the reasons why if we look at the benchmarks -- the benchmarks, not about the volume of trade. nobody cares. they wake up thinks about their jobs, wages, the living conditions, the cleanliness of the air and the safety of their consumer products.

on that part nafta did not, nafta did not fulfill the right rule of law of making sure that workers could exercise their fundamental human rights at the workplace without fear of arrest or violence or being fired. and so that's the failure of nafta that it was the wrong rule of law. >> we've got about seven minutes left, which is nothing. but what other questions do we have out in the room? what i'd like to do is take two questions and we'll do them at once. this gentleman here in the front and then the gentleman here. >> hi, dan newman. mr. gold, very interested in your analysis of how withdrawal may or may not occur by executive action. it seems to sort of run counter to conventional wisdom on the hill these days. they may not realize they would have a role to play in withdrawing these duties. i know that in subsequent

agreements like the korea agreement there's section 107 actually says if the president withdraws implementing legislation goes away. and there's also language in the original fast track of '74 saying that easy executive agreements and the president has the authority to enter into them or withdraw. let's imagine an example where this administration plays it fast and loose -- >> your question is? >> -- issues a executive order to do a pull out. does that lead to a court challenge? do we need congressional fortitude to step up to this? how does that work out. >> let's go ahead and answer that one now and then we'll go to the second question here. >> i can make that quick. i'm not sure. you know, as i said, that topic is actually far more complex than we have the time to wrestle with here. we can talk about it later if you want.

>> ken, you maybe have a top ing for your next event, the president's legal authority as it exists and the role of congress. go, matt. >> that's the answer to the question. i'm not 100% sure and to go through the possibilities is far beyond what we have time for right here. it's an excellent question that you're raising an it's an issue. >> right over here. >> great to have thea back in washington. we need her more. we need her voice. thank you. two short questions. one, economists -- >> remind us who you are. >> steve landy, manchester trade, the longest experience. i did mexico end adid britain. we go back years. two quick questions. one, question one the economist had mr. trump said i always ask for the extreme but imunbelievable when i actually agree to at the end how much i

compromise. where do you think trump will have a compromise in nafta. and secondly there was a glib this week about how well the extremists have done in european politics, their percentage have gone up. but they also pointed to mexico where the leftist candidate went up 7% or 8% and of course the current president is very low. do you think that if this continues we're going to see a much higher percentage among the mexicans. thank you very much. >> thank you, steve. antonio, why don't you start with that one. >> right now the president has low levels of popularity. some people estimate 12% approval rates. but high levels of political support. i haven't seen mexicans united to such a degree since maybe the nationalization of the oil industry in 1938. of course i wasn't there. i'm using that as a precedent.

this is something pretty unique. but that support comes with a cost. as i mentioned during my remarks, the wind set of politically acceptable solutions for the mexican president is getting fairly slow. and you rightly point out that a leading opposition candidate is doing very well in the polls. and you know, relations could be much more complex and problematic between mexico and the u.s. should that person be elected. just one quick remark. i hope that the u.s. -- u.s. decision makers do not take mexico for granted. when i was working for the mexican embassy, we tried for years, for years to reach a negotiated settlement over a cross border trucking dispute. when we exhausted all options,

we imposed trade sanctions on the u.s. which were validatedly a nafta panel. suddenly members of congress discovered that motion cowas vital for their exports of agricultural goods, manufacturing. sometimes people appreciate something when they lose it. i hope we don't wait until that. >> and the other part of steve's question. yeah, where is trump going to compromise, or does we -- will he go for the doom's day scenario or will he massage and declare victory? >> i don't think there's an absolute answer to that question. this is a game. it's a very complicated game. and it will depend critically on the willingness and ability of your trading partner to retaliate. and to make clear that they will retaliate. and second, it will depend

critically on the ability of those in the united states who clearly are going to lose out from a collapse of nafta to make their voices heard. so there's no absolute answer. a lot of it -- unfortunately i'm an economist but vi to reduce it to. this. you have to have guts. that's what it's about. >> one. of the things that donald trump and pet. er navarro have been clear on is that they hate multilateral agreements and they want bilateral agreements. that rar ro said last night tpp is not dead. it's dead as a multilateral agreement. we're going to have bilateral agreements with the countries over there. think about that in the nafta context. it would be very easy for trump and trudeau to sit down and have a bilateral cabinet agreement. would we ever solved soft wood

lumb lumber, salmon, maybe not but be u you could see the two of them reach an agreement because the trade between the two countries are balanced and from steve bann bannon's perspective, canada looks a lot like us. and on the mexico side, i think maybe no relationship, maybe no nafta with mexico, no agreement with mexico. we might wind up with a true two speed north meerk with a u.s.-canada trade agreement and with mexico nafta, zero. >> i think if president trump wants to end nafta one way or another he'll eventually get there. i think if he wants to renegotiate it, the biggest mistake you can make trying to predict what will happen is to forget that canada and mexico have equal voices in that conversation and he won't be making that decision by himself. >> anyone else want to comment?

thea. >> i'm just commenting to say i don't know, you know, what ends up happening or where the fault line is. but i think it would be a mistake not to take this conversation sr. seriously. there's a lot at stake here. the labor movement is going to weigh in, we're going to outline the issues that we've had, particularly with the labor and environmental side agreements with the investor state, with procurement. i don't know where it ends up. you see deliberately within the trump administration that there are conflicting voices in there that represent the different polls of the republican party, the goldman sachs and the chamber of commerce and the economic nationalists populist voices. at the moment everybody is jockeying for position and maybe in six months from now it will be a lot clearer which voices will dominate. >> and i believe that motion coc mexico is taking the u.s.

conversation very seriously and the challenges very seriously. they're trying to come up with solutions for that. there is a win-win solution. i believe something very rare and that trade is a positive sum game. we're trying to find solutions for real problems. where mexico is not the problem is the solution. that i know. but i also know that mexico will not accept a bad agreement. and i don't think the u.s. should be thinks along those lines. those are real discussions. >> thank you, nelson, thank you to the panel. we are not having a formal break, everybody. we're going to swap out the panels. it's going to take us about a minute and a half. thanks, everybody. [ applause ]

can everybody please take your seats? we're going to get started in about 30 seconds.

can everybody please take your seats? we're going to be getting restarted.

thank you all for joining us again today. our second panel is going to have a more specific industry takes on different sectors of the economy and their thoughts about nafta. pleased to have a couple of my board members, ralph carter and doug gauty. thank you all again. with that i'll turn i it over to doug from pfizer. >> thank you for being here this morning. the problem is leading the second panel is no matter how many profound and insightful thoughts you've had in the shower this morning, they've all been said. and there's nothing to do but tell a story about i found myself waking up in tijuana at spring break. i'm not going to tell that story. i have a better one about running the quebec marathon.

when i worked at the im i had a wise boss when i gave a particularly negative view on something, he said you need to be resolutely in search of optimism. you need to find something to optimistic. that may have been difficult in the last couple of months and weeks as we've watched trump. at the same time there is some positive things to look at if you look at nafta and nafta 2.0 -- if we have this panel next year, i hope we're not using negative intergers. if nafta were an appliance, it would be a 25-year-old harvest gold refrigerator, right? i don't want that anymore. what i want is one of the cool knew whirlpool refrigerators

that has internet access and gets delivered to my door in less than a day and a half. that's what we want from nafta. there are a lot of opportunities here with canada and mexico together or separately to try and sort of improve areas that either weren't imagined 24 or 25 years ago, like the internet, or at least wasn't widely available. or supply chains that have changed because of technology, productivity, efficiency, overall rising in economic growth in all three countries. so, you know, i don't think we want to get into either a mexican standoff or its canada equivalent which is of course two people holding the door for each other. i'm half canadian so i can say this. the reason they have round abouts in canada instead of four-way stop signs because traffic would gridlock. sorry. i'm not here to do standup. i'm just a moderator. with that i'm going to introduce

my panelists and let me talk instead of me. first up will be ari from the sbr naeshl association, ralph carter from fed dex, the dairy food association. their full bios are in the handouts. these are all very smart, very experienced people with government and private sector experience and they're going to tell us what's going on. >> great, thanks, doug and thanks ken and weda for putting this on. as we can see, it's clear folks working on trade are going to have no lack of work in the upcoming year in this new administration. so it's really good to see a lot of friendly faces here. so real quick on the internationinternashl soe international soesh -- internet association. we represent 40 leading internet companies.

we are across the board. we represent a really wide number of internet companies that are all over the world. and who are really working to advocate for policies to enable a free and open internet globally. so with that on the topic that we're speaking on today, nafta, when it was negotiated 25 years ago, that was before the advent of the commercial internet. this was at a time where mozilla was in the first stages of development. the world wide web was still a thought over in geneva. there's a lot that has happened since nafta was negotiated. and this was long before digital trade was actually an area of focus in our trade negotiations. so you know, back then we didn't have online marketplaces. we didn't have the cloud, the

app economy was nothing anybody had thought of. smart manufacturing, internet of things, precision agricultural, machine learning, these are all science fiction at the point that nafta was negotiated. so since those days the internet economy has grown into the largest and fastest growing sector in our u.s. economy today. this is directly employing nearly 3 million americans. it's obviously related to many many other jobs that are, that are related. and it's actually a really strong point and a point of strength in our u.s. economy because we have a massive surplus in digitally delivered services. and that's $159 billion when it was last looked at in 2014. so not only is the internet transforming the u.s. economy, but it's transforming trade in a

fundamentally positive way. you know, when nafta was negotiated, it took massive capital and resources to participate directly in trade. and today hundreds of thousands of u.s. small businesses that are internet enabled are able to access customers in mexico and canada with the click of a button or the swipe of an app. so at the same time this is -- you know, there's a lot of good stories on small business. but this is also a traditional industry story from financial services to flat rolled steel to dairy to appliances. everybody is relying on the internet today. and the tools that the internet enables are helping further global competitiveness for these industries. there's a statistic, 75% of the

internet's benefits are actually -- they actually go to more traditional industries. so with that we really think that it's not only about internet companies, not only ab businesses, developers, entrepreneurs, content creators, but it is really about almost every sector in the u.s. economy. so shifting to nafta, nafta, when it was negotiated, if you do a search of the text, it doesn't say the word internet in -- anywhere within the agreement. so it has little on information flows, the intellectual property chapter has some detailed rules, but overall doesn't have the provisions that are critical to the internet economy, and to be honest, those provisions of u.s. law hadn't even been put in place. those weren't in place until the late '90s.

so nafta clearly has some places that not only is our public policy developed quickly that we could really look at updating, so one other piece to this puzzle on the internet economy and the digital trade is that in -- without tpp, we have no global standard that has been agreed upon widely on digital trade. so i believe that it is essential for the u.s. to really see this as a huge strength of our economy, and move very quickly to complete rules in this area, globally, that will allow our companies to function in the future and not be blocked as a -- just because they're u.s. companies. so i really think that whether it is nafta or some other

bilaterals being discussed, we need to move quickly to crystallize the rules in the digital trade space, so that we're the ones around the world leading -- leading. so just -- i'll go quick, but in terms of nafta, we see some pretty important updates in the e-commerce space on data flows and digital services. so this would be the free flow of information, data localization restrictions. we also see an issue of intermediary liability that here in the united states has been a principle in our communications and decency act since 1996 that allows individuals to post content on any number of services, this could be a review on an e-commerce website, this could be a -- a cloud-based service that is hosting content for one of their customers.

you're able to post that content freely and at the end of the day, the internet service is not liable for what that content is. so we actually in the u.s. section 230 of the cda as a critical component of our apparatus for the digital economy, we see that as a place that should really be included in future trade negotiations including a potential nafta rewrite or renegotiation. i think that there is also some other places open digital markets, nafta allows for some broad cultural carveouts that limit the distribution of u.s. content through internet services. we see areas like encryption and source code that would be really critical to get some enforceable rules in, and then we also would push for no customs duties on

digital transmissions and also look at some unnecessary regulation of online services that we're starting to see pop up in many countries around the world. so shifting to intellectual property, real quick, for, again, as i touched on section 230 of the cda, in the intellectual property space we also see safe harbors to posting online content as critical for the growth of the digital economy. so two places that i would hope that negotiators would start looking quickly on fair use, which is a limitation and exception to copy right, this essentially without it, the internet economy doesn't exist, u.s. innovation leadership doesn't exist. these provisions allow web searches, machine learning, text

and data mining, gives cloud-based technology, the ability to copy content without the explicit permission of the copy righted material. and then share it. obviously there is mechanisms in place that protect against theft and illicit activity and we fully support those, but for the online ecosystem to work and function appropriately, we need to see some limitations and exceptions in the space. again, back to safe harbors and this is also critical for the copy right space as well, so this is portions of our digital millennium copy right act, and many of these provisions were negotiated in tpp, but we don't see tpp as, you know, starting place, finishing place, et

cetera, we see it as a good reference point, but there could be other areas that we want to move forward as well. lastly, i want to mention and ralph will probably jump in here as well, but customs and trade facilitation are critical for internet enabled businesses and what we call microbusinesses, which is often just the one person et sy seller in middle america that is shipping all over the world. we're seeing barriers on the customs side that, you know, duplicative paper work and really difficult procedures to get packages, small packages really -- very small low cost packages in. and that's another place that i think that we would look to see some work done is on thresholds for small packages which i think

is, again, a place that really affects the small online sellers, so with that, i think we see a nafta renegotiation as a great opportunity for our industries. and look forward to continuing the conversation. >> thanks, ari. thanks, doug. hard to follow doug. i'm not going to try. ari, it warms my heart to hear you mention diminimus. i'm glad to see people are seeing the importance of it. i'll get to it a little bit later on. and antonio, we're a company that is proud to stand up and say we support nafta and it has been good for fedex and for our employees. and for our customers. we're moving 12 million packages a day and a lot of those are around north america, of all of our customers shipping goods back and forth across the

border. mexico and canada are second and third largest trading partners. a lot was said on the other panel about the importance of this, but i think it is important to kind of lay out some of the facts. you know, we do make things together, the u.s., mexico and canada. and that is a great strength for all three economies. the fact that we have access to the unique value added and competitive contribution of mexico and canada makes the united states that much more competitive. so it works for all three of us. it is a win-win-win. and it especially works for the united states. there are 14 million jobs in the united states that depend on trade with nafta or with canada and mexico. and trade among the three countries has quadrupled over the 20 years since it was signed. as was said earlier, 40% of mexican exports to the united states are american content, peterson institute has a study

out that says nafta makes americans or the united states $127 billion richer every year. so -- >> we'll leave this discussion at this point to go live now to the federal reserve chair janet yellen. she begins her semiannual testimony to congress beginning today. this morning she'll be answering questions before the senate banking committee, outlining how the economy is expected to perform in the coming months. and whether the fed will change interest rate policy. lawmakers are expected to ask her how the fed board of dwof governors is expected to react to trump's program which should be released in the coming days.

committee will come to order. today we will receive testimony from federal reserve chair janet yellen, regarding the fed's semiannual report to