>> good afternoon. welcome. thank you for joining us here today i'm a master of arts student here at johns hopkins university them north american freed trade agreement, or nafta, entered into on january, 11994. the agreement was signed by president george bush on december 17 of 1992 and approved by congress november 10 of 1994. excuse me -- 1993. nafta significant is because it was the most comp presentsive free trade agreement negotiated at the time and contained several ground breaking prognoses. the new generation of free trade

agreement and also served as a template for certain provisions in multilateral trade negotiations as part -- this year congress will decide on what legislation to consider and to amend on the current nafta. there the will also consider the ramification offices negotiate organize withdrawing from na to how it will effect in the u.s. economy and foreign relations with mexico and canada. some contend that will draw from the tpp could damage u.s. economic leadership and other say it as a way to prevent potential job losses key provisions from the tpp may be addressed in moderrizing or renegotiating the nafta. which is at this point more than two decades old. some proponents contain that

maintaining nafta or deepening economic relations with canada and mexico with he help promote common trade agenda with shared values and generate economic growth and opponents of the treaty argue the agreement has cost worker displacement. we are luck you have a such a distinguished panel here today. ...

senior fellow at the director of the initiative and the americas program at csi s.. over 20 years of experience and an intelligence officer with the u.s. army for the u.s. embassy, barbados, germany and iraq and also the representative of the united states and the western hemisphere adviser to the under secretary for political affairs. senior research professor keister directed research at the automotive industry and a member of the advisory board of the mcdonald institute and law

institute as well as commentator in regards to bilateral trade issues. to start off today's conversation, would you like to comment on how much congressional oversight there has been so far and whether the role so far in the negotiations? >> thank you for hosting this event it is a great pleasure to be here. the topic being held as congress deal with a lot of the coverage is about executive branch actions.

they start to think about the endgame, the united states federal government has limited and enumerated powers and is in article one of the constitution that can be dealing with congress, so congress has the power to regulate the trade promotion authority but as a delegation of authority from the congress to the executive branch to do the work of negotiating the treaty. it requires a bill passed by both houses of congress so the endgame always deals with congress and because you are considering the congress the

endgame is mostly some form of politics it can garner the support of the members so that is the endgame and it's important to think about. with the promise to renegotiate wasn't a compelling coalition in support of that and so you will recall when the president decided to launch and notify the congress most of the comments everyone was quoting the hippocratic oath please do no

harm so there was a lot of resistance initially. the second element is the republican house, senate and the president there are things they want to do together and things where they disagree into their spin a tendency early on to focus on things that they want to work on together specifically tax reform. it's somewhat controversial. so now you are beginning to see heryou here february, 2018 you e beginning to see the hearings happening this week as the

committee met with the ambassador and members of the republican side they had a meeting in the white house on trade. it's been slow coming for those of us wante who wanted to see it sooner. scott did a great job of the constitutional responsibilities of oversight. it started late and picked up speed in late summer and early fall.

talking about billions of dollars and beat an feet and lof different products if they were to go away. you can connect the dots and have the committee process oversight and state governors

calling the white house or calling congress saying if it goes away if we get into the trade for my state is going to be hurt badly and we will lose the seat in the state and sena senate. until last march when everyone thought the united states was about to end this with drawing and useful connectivity by the chamber of commerce and trade associations and individual states. they got in the act and realiz realized. they visited every state in the union.

they've done a fantastic job. they've played a little bit of catch-up that they have done that as well. >> you were the one who inspired the panel and i think you ask the righaskedthe right question. i want to echo with scott miller and richard said as well for people that remember the trade policy history when they went to congress and asked for trade promotion authority, he was met by some bewilderment.

what they wrote which became the bipartisan trade promotion and accountability act on the administration with so many conditions in strict deadlines that we have seen since 1974 that set up this fast-track process congress gave itself a bigger role because it wasn't sure where the negotiations were going to go in when they became president there was the question and the authority granted to the administration was still available to him and i think he felt he wouldn't get any more leeway than congress have given obama. you might think this is all inside based and it is to a degree.

they've been faithful to their terms had announced things when they were supposed to announce them. i think what that reveals his seriousness about getting a deal and about congress's role. i think a surprise to many of us the issues congress cares about effect a number of states from georgia to washington and oreg oregon. we've seen concerns a little bit about the auto industry.

they've been proactive in trying to engage talking to state statt someone but what's been interesting also is the politics there is always an accusation we have to fix it peace partners of ours are cheating at the beginning. it was going to carry on to the extent that it could. we've seen the case become quite contentious and go to the states some of you will remember the dispute the political dynamic

started to shift into some started to ask why is he just beating us up all the time. they had to push back and they saw this weeks ago which is a challenge to the way the u.s. calculates penalties. specifically it deals with trade remedy practice that goes back to 74 before the united states. this is going to be a tricky aspect going forward but because it is a broader challenge.

to try to step forward and defend the u.s. industry it's fascinating to me canada chose to challenge the u.s. trade law at the time that it's so important. it's a challenge to the way they pretend these walls so they are on both sides of this asking congress to do better. it's going to affect the negotiations that are ongoing themselves. anyone? will have to emerge.

some group of industries and parties are going to have to take a look at the negotiations and to decide what they think about them in terms of the effect of their businesses and states and whatever the market may be. they begin to band together to form a set of coalitions that will be actively supportive of the congress. if you want to pass a bill in the house and the senate you have to do this work it off didn't it emerges after the negotiation starts, so the fact it hasn't shown up now is not a surprise.

it supported the trade with korea so what has not emerged yet as a coalition in support of anything in particular in the united states. there is now a coalition to not screw up enough to. for 20 or so years, businesses and groups and firms across north america d-delta with it as a favor complete as they set up rules. nafta wasn't perfect when it started and it isn't today but we thought it was stable enough. usurp the customers based on that set of rules so a friend of

mine works with the farm bureau into those international affairs, very important completion. so i asked what do they think about nafta. there wasn't a tab on the website of the farm bureau federation. now that problem has been solved so we have the coalition that hasn't materialized. they are making their voices known.

there is no idea of what the final product might look like to garner the majority in the congress so that is the mystery why it's been difficult to predict the duration of the talks include the potential andl and the state might look like so we are behind the curve. not really because anybody ever asked for this. when it started last august will the trade representatives do their job and by the time you go to november or early december with three or four rounds by then, the mood in washington was dark and pessimistic because one of them had gone badly.

the senior level peoplat the seh very good access were betting that we were going to walk which is sobering to hear that. i think the feedback has subsided in the past if there'se is now a general consensus that around while it didn't necessarily move the ball forward it also didn't collapse into the expectation they may show a little bit of flexibility on for things like the rule of origin but i'd heard that from a couple of people. the worst case scenario now is the negotiations after the round

baby just go into dormancy until the end of 2018. so in that pessimistic period there is a lot of talk of how congress can block the administration. what was the governing trade a act, what lawsuits could be filed, it would've talked about the mechanisms to stop the administration but you don't hear that anymore and i think that reflects the united states isn't going to walk away from this unilaterally there will be some other solution that kicks in. there is almost no governing l

law. something remarkable to me hearing from both of you. nobody wanted to be out front defending it.

donald trump and his campaign helped to bring the voices of the critics we have been ignoring a lot of people didn't like that for a variety of reasons. but it's not the business community and beneficiaries of nafta back into the public square. so talking about how they affect their job. to have them come forward i think has been a nice side effect having taken this on board has decided they are open to changing it.

donald trump captured the sense of nafta wasn't good but there isn't an agenda and there's a tremendous amount of flexibility. if he can come up with an agreement to satisfy the community and say it's a good deal or it's a better deal, fantastic deal, then i think he will be able to celebrate and if we are able to move forward with a broad base of support in the idea i think there will be a net benefit even if it comes with donald trump driving the car it's good we are engaged on th that.

he saw this on tax reform. i am really working and going back. say we like this deal we are going to invest more it's going to make congress feel much more comfortable in the 2018 which it still could do. >> the issue has been used as an electoral issue and it's very

complex and difficult to understand and summarize. how do you think that the privatization of. trade politics were amazingly stable as an outstanding book. it's called classical for commerce and the history of the policy and one of the points that doug erwin makes is that they are unstable for about a hundred years up until about

1980. if you go back and want to know where the industrial midwest was, in northwest ohio today to make automobiles in marysville big automobiles in marysville up the way from marysville and 18 a.d. it was the producer of steam locomotives much like in the wheat belt people grew crops in the financial services they were very important to trade in the beginning so there was a political geography so every trade agreement was essentially bipartisan and geographically specific so you are a senator from new york it doesn't matter

whether democrats, patrick moynihan or democrat, trade was good for new york likewise south carolina you have strom thurmond and senators from south carolina because of the concentration of the payroll in the state of south carolina. now that all changed in three important ways. what happened is because of the information revolution all of a sudden the communication costs long-distance phone call new york to los angeles a dollar a minute. anybody with a third of the 1990 those that calls wha the calls y for long-distance today at the cost of electricity so this changed the way that you communicate and coordinate attacks and allow international spread so they need to plan transfers so that is a

fundamental change. what that does is cost trade to the benefits and cost to be a oa much more micro level. it is no longer tied to geography is no longer a textile state. at the same time you throw company with headquarters in the south carolina and likewise you also have bmw and volvo in south carolina and now tim scott has a different view of how the politics of trade work in his state and his predecessor strom thurmond because of this change. it's more confusing it harder to figure out so it is a matter of

political competitiveness and they never hold the majority between 1954 and 1994. there was political stability. we don't have that anymore. likewise we have a bunch of leaders didn't like the senate and decided to turn it into the house so we now have these tribal bodies of the legislature which is web-based politics of everything including trade. and this is the one almost nobody mentions where the party bases are in different places for democrats if the labor movement and the environmental movement, democratic voters more urban and they support trade, likewise elicited the chamber of commerce the more rural an and d

are youolder your voters are the skeptical you are of trade so both parties are disconnected and combined first the weaponize politics into second, technology costs globalization to affect firms at a finer level and the party base. i can't really add to what's nafta has done politically. nafta is a greater political symbosymbolpoliticalsymbols in r has been in the united states as a reason for that it was the same year they entered the treaty so this might all of a sudden mexico joined the global

economy and it really started skyrocketing after 1994 and you can see that it's obvious for anyone to new mexico before and after so what that means is it is their ticket into the industrialized world it's not just a trade agreement with political weight and significance of being in the ranks and that's why it's interesting they are in a campaign season and they are very strict so they are not campaigning but it's not a controversial subject used as a weapon and a full.

he's done a favor in terms of its perception in mexico. they would see a gratifying of thit ratified thecountry is qui.

if it hadn't been split between the democratic party and the federal liberals you might well have seen the election go the other way and rejected with so much fear that this agreement was going to transform the economy in a way that was americanized it. the fact that that didn't happen and then everyone was afraid the border was going to be erased and yet they grew more prosperous if the standards of living rose to sew this up for the openness and free trade, he had been a free-trade skeptic

and seemed to be coming around before he retired the only of trade itself and openness also has been talking abou about a progressive agenda to advance inclusion for the indigenous peoples and others so it's changed the politics of trade for canada. i want to pick up something raised which is one of the more interesting stories we haven't begun to debate. that is something that they have shown in the generational gap over trade and many people who were bab baby boomers in their s and 50s when nafta came in they vote thei felt their econoc prospects didn't improve and many of them ended up feeling

this way i and they voted for donald trump. they are much more cosmopolitan lowering the communication was much more fluid so because of that they tend to see openness has a value not only in the classroom but their lives as being a normal thing so the trick is you have a critique that is coming from an older generation but the people that you are building this for is the millennial generation. you need to build an agreement because the personnel losing their 60s and 70s retired they want a better life for

their kids so can we come up with a nafta to plato that goes back to the old debate certainly when you hear the rhetoric that is what you hear is a net positive that sets the table for economic growth to provide opportunities i think if we can get to the latter you will see congress get on board because it not only makes the young voters happy that the older voters. mexico and canada have been trying to ask about the negotiations negotiating security and environmental

issues into the social issues that haven't been negotiated at least not in north america again how do you see this affecting how the u.s. might want to ratify these coming from their trading partners? >> there's three basic areas of work. one that you mentioned is the modernization and certainly if you start the negotiations today you would have chapters on labor and the environment. that's what we do now. with 1994 there was zero commercial use of the internet and today the way that the young entrepreneurs and small

businesses go in to it is electronically. the digital trade services are so powerful for the businesses that it can't be ignored so there are some modernization elements. so you still have that policy that's changed. we have three separate standards

so these are modernization elements of intellectual property in canada and stalinists. and likewise they didn't get done in the original it is a group where things have changed substantially as the art that are the hardest to solve since almost the founding. have you seen the most

improvement negotiated for the first time? >> what amazed me is the degree to which you need restrictions to be creative in the paper a great spur to innovation. the auto sector is very large and politically sensitive that goes back so it's north america the politics have always been big but what amazed me is in the original recall the big three were very much involved in the negotiations of the rules for the automobiles and they were specifically trying to harm their japanese competitors trying to solve the market and build a set of rules to match the supply chain that interfered in their supply chain what happened in the meantime they

looked at the rules and said it's not that we can do that. so more vehicles will be produced by the automakers for the first time in history. everybody thought they were going to disadvantage the auto companies but what's really happened is the rules were stable and predictable enough to build their businesses around it and that has been an immense creativity and nobody really tested and you can't pu can puta piece of paper but that dynamism is the product we have today. he go got credits but i will say

also one of the things that is interesting is to some extent we are being treated to an american way of doing business people preferred not to think about the sausage factory congress is if it happens all the time is when there's something that's popular in the movinand moving through,e wants to hitch a ride whether it is a war funding bill or a big-budget so you take issues that have nothing to do with the main project that you attach them as amendments and it isn't enough to get them through. it's certainly not the common practice and what we have seen in trade is trade support there is a lot of money on the table into the community gets behind it than people with other concerns have tried to define ways to tie their concerns to the trade agenda.

so thanks to the clinton administration there was a feelinfeeling on the part of ord labor and the environmental movement the issues were completely ignored if it went forward without their concerns they would try to block it and find it and that made sense because they were concerned about the labor of growth if it helped nonunion fo firms. they felt like it was a stretch.

it was built through to the core of the agreement, but what happened is more and more those sort of issues you wouldn't think are primarily related to trade at a seat at the table not necessarily because they are intricately involved in the north american trade but they realize this is it important ist enough maybe they can hitch a ride so for example the first nation communities which is what we would call aboriginal communities elsewhere, mostly remote and often not in the mainstream. they try to reconcile with the communities with years of dispute and so on so they added to whaadd upto what they would k about here. it is a practical matter when

you talk about the politicization and how it's affected things and people realize it. a lot of forward. the shift people are expecting that the more people will say wait a minute and i think that is going to make what we think under the trade issue a piece of legislation to become more complicated. if i could add one thing from mexico's prospective and one thing that's nafta did it made them feel a lot safer. it was probably in the north where you had certain assembly factories and felt 20 years later they opened up the energy sector and the development in

the last five or six years has been significant. most of it is natural gas through pipelines and liquid natural gas. they had a signing bonus. i don't think they would be thinking of that if they had achieved a level of investor security competence so that is one of the biggest side effects is increasing the confidence. they have some oriented leaders

said they had no way to deliver the reform and they were not engaged in the world and nafta brought about not just free trade but there was no such thing as a notice and comment rulemaking. but in the administrative procedures act all of a sudden keep in mind that is not only valuable to the forerunner forey have to respond to the comment but what's important for the domestic purpose we had no idea whether they would be prior to this . .

. . . has done for raising the living standards of mexico but it's a habit of forgetting how things might have been at this point. >> one of th >> one of the things the u.s. does we are willing to be the bad guy to put enough political pressure to encourage our partners to make different political positions to use good reform and i think one of the most contentious issues is canadian dairy. the idea to the limited supplies isn't particularly efficient that it is posted.

it adds up to the canadians but with mexico leaves office we were willing to be a source of pressure to help reformers do something that might not be possible. it would be a place about how much support there is today because all sides of the political spectrum recognize that mexico is a different and probably a better place as a result of those forms. the pastor came out and said he would paper and i quote no nafta over a bad nafta. what do you think that he meant by that?

>> his remarks go to a couple of things. if you like we will leave it alone going back to the do no harm. but if nafta disappeared we could go back to the trade agreement it would have to revise. they have a way to survive even this. it's to signal he isn't going to cave on the canadian interest, this whole dynamic they've been

trying to engage with trump administration and put a lot of political pressure. they have a series about the deal and i think all of the pressure he needs to stand up to that criticism. candidate should have an election this year. they will be harbingers of what happened. he has to play politics and i

think that he's recognized he may have been too friendly for too long and he needs to also suggest he has the ability to walk away is the u.s. congress concerned in the next year and should they be concerned next year? mexico is a transit point. to their credit they have been cooperative in trying to shoot that down in the u.s. security agencies and also very

cooperative trying to stem the flow of central america in migrants. last year or the year before there were more detained. there is a feeling by some in mexico that they are doing the dirty work. potentially it would be at risk. he might say why are we doing this? so there's going to be a level of concern given some of his past statements and positions. but at the same time, i think there is a surprising amount of acceptance that that wouldn't necessarily be a disaster for the united states.

they may try to overturn them. they could slow the process down so there is some concern. on the security cooperation that could be an issue problem if there's a different philosophy about going after the cartels that everything else they don't see this as an in-depth world scenario cyberpolicy community would deal with it. >> if you think of it in its simplest terms, we had elections in november and at least a third of the senate and every house member are concerned about and i also think it's one of the reasons the talks are more constructive than they were six

months ago. so when they lost the most i think that there were serious consideration but lots of people involved he loses the ability to confirm judges and all sorts of officials. if you look at some of the states where they are facing the voters in november and trump when the state, north dakota would be the prime example. 78% of agricultural exports go to canada and mexico so nafta is

pretty important and that may have a constructive effect on things as they go forward. the way the government is perceived in canada and mexico is this group in congress. they bring up the disputes that the voters care about. they say they are great friends and allies and we saw that under obama and george w. bush and so on and now it's unusual now that he is a combat and in the arena so there is no one in the politics profile to say the kind

of things that and/or because they are missing something they usually get. if they are communicating with their colleagues. one of the interesting things they are doing a lot to talk to congress. i think in its own little way.

they are a little bit domestic and foreign and i think that brings us something different than in the relations with almost any other part of the world. >> i would agree the canadian embassy in washington probably has more facts into things at their disposal than the relationship with canada than anybody in the u.s.. they can sit down in terms of the relations to the members of congress. it is impressive when you look at considering the concept. what they've done in the past

ten or 15 years as a standard for how to do this job. >> i think that definitely plays a role if we have a fair number of congress staffers for the communications between the two bodies and even that the executive branch level is supposedly very good. the one statement if you think about it a couple of days ago were a week ago when the secretary of state was in mexico city at the end of their press conference the mexican foreign minister got a question about relations in the united states and he said, paraphrasing, but relationships are better now than in the previous administrations which is stunning if you think about they

didn't have to say that so that comports with things i've heard behind the scenes for the mexican foreign ministry and national security council's. .. >> belowthis is legislators get to know each other. below that, there are through the council of state

governments, governors and premieres in the canadian case, premieres and governors in the mex cocase. so that the political class or the active politicians regardless of party have opportunities to interact with one another on a personal level. there's something about petition politicians talking to politicians which is like two people in any common business, doctors and doctors, lawyers and lawyers, that builds a kind of trust. they understand each other. things air little different but they know what the other person's about and i think that has built a real thickening of the trust that's so necessary. some of you will remember frank puck keyiama's book trust is the foundation of economic integration and everything pels at that's grown in america on a perchl level. if nafta hasn't gone off the rails now we may be able to credit some of those interactions for kind of keeping everybody at the table and feel confident at the end of the day we like each other enough do the

right thing in the end. we'll see. >> thank you. i'd like to open up the floor for any questions. if you have any questions, do you mind going over to the mike in the back. thank you. >> hi, governor of quebec. question regarding canada's called the poison pills, which are not poison pills for canada but many people in the united states find them poisonious in america as well. supply management, others, is there any coalition in congress that you see supporting any of the poison pills? >> poison pills. well so far no. it's been one of the more disruptive elements of this negotiation. because usually -- usually administrations are pretty so he lis t lissa tus in seeking views of the congress and building support early on. early on in negotiations our

trade representative is an astonishing professional, but said to the house ways and means committee, i have an audience of one. so there was some tension in the early days. and particularly most of what the u.s. administration, what the trump administration tabled as their headline demands, in in case a sunset clause which everybody thought was nuts, you already have a withdraw clause, article 205 says a party may withdraw with six months notice. but they were talking about essentially if the numbers hadn't changed in five years that it would terminate, which seemed insane. and totally opposed by anybody who values predict ability, which is everybody who has a balance sheet to worry about. that was insane. the idea of eliminating dispute settlement made no sense. why would you negotiate an agreement and not be able to set will disputes on anything? that was bizarre. the auto rules of origin there are created a spectacle i had

never seen, which is the u.s. decided to propose rules of origin on automobiles which first they could not explain the benefits to the united states of these when asked by our trading partners. and second, generated the fly-in from executives from the motor and equipment manufacturers of america, which is the association representing auto parts supplier. you have executives flying into washington to tell their elected leaders that they hate these rules and they can't live with them and they'll hurt their companies. so it just -- so they were poison for everybody. there was one more i'm missing which is government procurement. the government procurement proposal by the trump administration was we're going to buy america and so are canada and mexico. that would be the headline for that. and why canada would accept a proposition where they have a smaller share of u.s. government procurement than qatar escapes me. but those were the proposal. so nobody really liked them or agreed with them or supported them, i've run into, at least

nobody's done it publicly. i interpreted them and i thought they were creating a narrative for withdrawal. the string of tweets announcing our withdraw would say the canadians refuse those totally reasonable proposals and so we're withdrawing. but apparently things have changed that hasn't happened. we're talking less about them. at the same time, the word poison pill was used in the last round by none other than robert lighthizer with regard to a canadian proposal. so who knows. for me, as somebody who views trade agreements as coalition politics at the end of the day, i couldn't see how any of those added to the coalition. and so they mist phis ta phied . >> we often talked about how nafta was negotiated there wasn't an internet, an ooesh ecommerce economy. but when nafta was negotiated

there wasn't social media. one of things that's made this fascinating is that i think trade negotiators always have outrageous proposals, they go back and forth, they probably call things poison pills all the time. but we've all had ring side seats on this. >> that's true. >> when the americans characterize the canadians shock and awe as poison pills, i think a lot of people were concerned about nafta when the canadians intended, which are these things are designed to force canada and mexico to walk away from the table. they're designed to blow up nafta and lead to withdraw. that got a lot of people quite concerned that the administration was bound for destruction. i suspect they thought themselves that they were making it an outrageous offer and hoping for middle ground. but the way that played out in the wider world was not what they expected. and now they've started using this rhetoric against some of the canadian ideas. i think poison pill probably is an unconstructive way of referring to these things

because it does get people alarmed. on those issues, so on sunset, we also, in addition to the withdraw clause were we have regular meeting of the northern american trade commission or free trade commission which are the three trade commissioners talk about what do we node to do in updates. we've done a number of updates to nafta without reopening the agreement on customs rules and minor things over the years. we had the security and prosperity partnership which dealt with some things. we had nafta work group structure for a while and we had both the beyond the border and regulatory corporation council with mexico as well as u.s./canada 21st century board commission. you had structure and things going on, and yet we took this sort of negativity in with the idea of those things. we could basically beef up those ongoing negotiations and not have this predisposition to kill

nost and we'd be all right. similarly on automotive rule of origin, it laid out some moveable parts. i think what we've seen since round four is auto company suppliers, because nobody understands the math of all of this, going in and saying if the goal is to raise the rule of origin higher than 6.25%, which is what it is in nafta, the only rule that's higher than 50% in naftanda the highest rule of nafta in the world. >> in the world. >> if we're going higher and mexico suggested maybe 70% is tolerable, how dwou it? what are the key parts of the math? that's whew hope for because it's going to come out of the industry that knows how the pieces move. on government procurement, i don't think that's been a constructive talk. but on dispute settlement, i

don't know where we'll go. the u.s. seems to think that you can resolve these things in domestic trade courts. it's interesting because i think canada and mexico courts do tend to favor the government. so if you had to go in front of the canadian international trade tribunal criticizing the wait canadian government applied the law, you usually expect them to side with the federal government in most cases. what's interesting about the u.s. international trade tribunal is our judges tend to be skeptical of the government case usually. >> the court of claims you don't lose that often. >> exactly. i think in that case maybe the americans were more confident this would sell because they were used to their own loaning with. poison pill language was unhelpful. the bold and outrageous demands might have been helpful in that they started a conversation. and we'll come to a point where we can hopefully have a deal that at least contains some elements. but i think the idea that those were going to be the outlines of an agreement, that was never

going to happen. >> no. >> i can just speak from here since that's not work? >> i think it's working now. try it. you have a larger audience outside the room. >> yes. >> i'm chris, i'm the current psych student. to your point about some of the security concerns and kind of looking more broadly at congress, do you think that some of the debates about immigration, probably not daca, the wall could be used to gum up the works at some point? we've talked about how trade agreements are becoming more progressive. could some members of congress try to sneak something in in nancy pelosi just the other day spoke for eight hours. could something like that happen within the rules of trade promotion authority or is that not really realistic? thanks. >> well, you know, anything is possible. so you can't rule out what a member had congress will or won't do or propose. i think it's very unlikely because i think to try to deal

with something as politically sensitive and contentious as immigration within the context of a trade agreement, this trade agreement, i think you'd have a chorus of various folks rising up and saying that's not going to happen. you've got, again, the hard core faction of the republican party is not -- now not just against illegal immigration, they're against legal immigration which say huge sea change in public thinking. it still doesn't address the problem of immigrants who are already here, undocumented immigrants to the try to fold that into nafta negotiation, i just think it's completely undoable. i can't see anybody seriously proposing that thinking that will stand. will someone make a speech proposing that like nancy pelosi? maybe. i don't think that will go anywhere. >> the original nafta did have an immigration section and it had a special visa class available to mexicans and

canadian nationals for work in the u.s. it's there, okay. and not an insubstantial numbers. i read this week that the administration has discovered this provision, okay. so what i watch is to see whether nafta 2.0 retains that provision. look, we can talk about sort of movement of people for business reasons being different than immigration. but if there's an official issuing a visa, it's immigration and it gets caught up in that net. so for some reason probably the lack of social media and the way negotiations happened in the '90s, nafta did contain the provision and said i think it's our only free-trade agreement that contains a provision where there's a special visa class. i don't know how it survives, but maybe we'll just forget about it again, who knows. >> it survives but it was interesting, the obama administration made a change to the procedures through rule making. it used to be a one-year visa and it took a while to get approved. so you'd go in and have to apply

for your next year six months into your first visa. had that this is what we call the tn visa. >> right. >> and the obama administration extended the term of a tn visa to three years in response to business community concerns. and also did something quite surprising. they exteblded the benefits. if you have a tn visa, your spouse, domestic partner, also has the right to look for work, had not true for h1b or or a number of categories. and your working-age children have a right to look for work. so that makes a big difference. it's one of the most generous visa categories because it was intended for professionals and other people going back and forth. i'll give you almost a kaernt argument. if -- counterargument. i would like to see us having a debate about mobility. i think economy requires noncitizenship changing individuals crossing the board doer business, whether to fix a machine or talk to partners about some sort of collaborative

innovation, anything. and we have unlike europe, other places, even the pacific alliance, we don't have a particularly good labor mobility system in north america. we could be talking about that now but i'll give you hope because i hate to send people out to press. if we've achieved nothing else, the idea that there can be a nafta 2.0 opens up the ability there could be a 3.0 and 4.0. one of the weaknesses of nafta was it was an agreement that was meant ton last for the ages but certainly wasn't written in a way that evolved or could be updated well about the we did as best we could on the margins, what we always said, especially acc dem mictions, great ideas are out there but we can't reopen nafta because if we did the whole thing would blow up. if we get through 2.0 there's the potential we could come back in the few you're and have a discussion about how do we meet the labor points. i'd love to see it, i don't think we'll do it this round

though. >> good afternoon, gentlemen. my name is chris as well. i'm a psych student here. gentleman, gentleman, i think you've answered this question. you explained how nafta institutional liesed many regulations that benefited, states i mean countries, personal businesses and their interests. positive circumvention of political considerations, if you will, within their respective states. if nafta were to dissolve and states resorted to i'll just throw out there for an instance, wto terms of trade or other instances, is there a danger that states would not remain adherent to the previous nafta inspired regulations so long as they didn't violate other organization's terms of trade? or another way to put this, how would industries respond? do you believe that dust stri powerful enough to sel regulate and maintain global value change absence the government and these inspired trade terms?

>> very interesting question. so, you know, i think that what's interesting is -- i'm going to unpack a little bit. the way that the u.s. does trade agreements, you think about nafta, you think must be a treaty. it's not i treaty, it's an agreement negotiated by the executive which the legislature translates into statutes. those statutes grant authority to agencies, to go about rule making with the normal notes in common. customs does a rule and says if your product meets this rufl origin then you're eligible to not have a tariff on your good. so that's the mechanics of how this unpacked. regulation as an area of government is fascinating and very complicated. many of the regulations that we have on the books in the united states and canada and mexico too, are written the way they're written because an industry really wanted to do what we were talking about with the auto industry before, write rules that fafrt way they do business and maybe give them a leg up on

competition from someplace else. and that's the way in which we get a very complicated, often counterproductive and economically inefficient set of regulations in our society which become hard to change. now, nafta inspired a lot of people to see the benefits of harmonizing their approach, so it made sense for them to get rid of barriers that got in the way of their businesses doing well. so we had a little bit of liberal liezation. one of the things that's funny about canada, i love the canadians have that they don't have the same internal market structure that the u.s. does with the commerce clause that eliminates interprovincial trade barriers. so they have rules that make it difficult for workers in new finland to work in alberta or vice-versa. it's been a story for canada going back to 1867 how can they knit together a national

economy? and canada's free trade in nafta gave them incentive because they would say we don't want to concede to the way mania tova does something but we'll do. way americans do it because that's good for our business and if that makes us line up to quebec, we're still doing that's beneficial to them but we're doing something that's more efficient. there has been some improvement in terms of nafta. i don't think industry would self-regulate in this sense. nobody really wants to pollute like mad. i don't think we're worried about that. but i don't think at the same time businesses feel that regulation is their job. they'll behave themselves but they're always worried about that other business down the street that might cheat and give them a disadvantage. if you think about the rhetoric that donald trump has used with regard to trade, one of the things that an matta mates his is that they cheat, they don't follow the rules. there's a concern about that with china.

he uses that language. in terms of international regulation, for informanta wef o fall apart, we have to make sure that we don't have cheating. but my hope is it didn't come to that. >> i think one to add wrour have april expectations game going on ha if nafta, to go away, even if for instance the mexicans did nothing, change nod law, no investigation, they would assume that it's now possible in a way it wasn't before so they might curtail or totally forgo a new investment, particularly if it's a very expensive infrastructure investment thinking, gosh, gloves are off now who knows what's going to happen. mexicans wouldn't have to do a thing but the expectations of what they could do might change and that could be very damaging. >> at a practice tick cam level, yes where are developing nafta would increase contributions.

just tariffs along that would increase cost and frictions. but there are a lot of frictions that exist, gravity's a friction, it's not just a good idea it's the law. and the further away from something, the heavier you're moving the more expensive it is. courier rates fluctuate all the time and become barriers. for me, i think there's a worse option than terminating nafta in terms of the commercial environment, which would be a zombie nafta, one that's neither dead nor alive, okay, because we're not committed to the existing nafta 1.0 and we're not all the way to nafta 2.0 and because the risk there is it deters decision making. if you eliminated nafta, companies would still be able to make decisions. you would know what your commercial environment is. you may not like it, but you'd know it. in the world of zombie nafta, you don't know. so friends at toyota tell me

that tacoma pickup is this awesomely successful, that it's a product that they are basically at 100% capacity, they're selling every truck they can make. it's a great product, but they need to expand a facility. they have two production facilities, one in mexico and one in the united states? what do you do some zombie nafta makes that problem really hard to solve, so. >> just give you another example, which i remember from after nafta, one of the things that a lot of environmental groups were concerned about actually took place that after nafta, there were some mexican plants that were -- that got into the business of automotive paint. automotive paint you can probably imagine is very metallic so it has a lot of toxins in it. you don't want that into the water, the atmosphere, they use a magnetic process to get the paint on the car. if you do that in canada and the u.s. you had this sophisticated rules and regulations that you had to close the facility so that there's nothing that gets

into the air, nothing that would harm the environment. mexico had not been a place where automotive paint was done, it just hasn't been a big part of mexico's contribution to the northwestern auto industry. and some suppliers moved in and started moving this direction. and the mexican government enkrathd by nafta reached out to canada and the u.s. and said we're starting to see this activity, we don't want to be the bad actor, but we have never seen this before. what's the standard? and the conversations between regulators straightforward said this is what you need to ensure. these are the minimums, this is what we found in our experience in the u.s. and canada where we've seen it before. and mexico went ahead and brought toes standarhose standa we didn't have a cheating experience. if we didn't have nafta, if we ended up with bad will between america, canada, and mexico, you don't have the opportunity to try to learn from each other and make sure that you set good standards that protect everyone. one of the things weapon never

acknowledge about nafta, it encourages us to talk to each other, cooperate and learn from each other at a government level. nobody writes about that, but that's one of the benefits we would lose if we lost nafta. >> hi, i'm david with counsel of state governments. sort of a two parter. scott, you started talking about the congress and then we kind of got off into this big basically administration talking about nafta and sort of my one question is, does the administration -- well, you mentioned the gsr has an audience of one. >> [ inaudible ]. >> right. but does the americans know what they want? it sounds like we want a better nafta and the things keep changing and the canadians and mexicans are like what the hell, where are we today?

so that's part one. and the other one is to yank this conversation back to the title, congress, maybe that would be a good way to end it. when it comes back to congress, where are we? >> great questions and, look, i think that is one of the mysteries of the current nafta negotiations is no one that i talked to, i talk to a lot of people both in the government and advocates on really all sides of this in the united states, nobody has a clear idea what the end game is yet. and it's as if, you know, look, and nafta's complex, okay, as you point out. it's as if we're going up to say a very complex advanced military helicopter and you have technicians working on the helicopter. and a politician arrives and says make it fly faster. and they're like to do we know what we're doing here? in some ways our politics are

disconnected from the commercial braition operation of the agreement. because commercially nafta operates as a set of rules which has this incredibly rich texture of a commercial and ecosystem that's a lot like what goes on in an advanced helicopter. and it's too complex to understand. if you even know enough to work on the helicopter you certainly can't explain to the politician how you can't make it go fast pert so we do have that disconnect that seems to persist. but i do think that we got into this -- we got into this because the president promised to do it. he wasn't the first candidate to ever promise to renegotiate nafta, in fact, i remember the ohio pryimary in 2008 where senator hillary clinton and snore barack obama both promised to renegotiate nafta. so the promise has been around. but to actually do it absent a coalition that understood what -- where there's a general agreement about what needed to be fixed and what a potential

solution might be, that's never happened. okay. and because of that we have this -- we have this mess that we're in now. now, where does that end? it probably nenends in failure. one of the easiest things to happen is for congress to ignore an implementing bill or for it to fail. this is the story of tpb. the reason trump administration on their second or third day in office could kill the transpacific partnership is because the obama administration was unable to get it through the congress. that's the fact. there are a lot of reasons for that and there's always reasons, but it's actually quite hard to get that coalition built. and you have to clear -- you have to be able to state clearly what it is that this does and why that's good and make the political case for it. we're nowhere near that. i'm mista phied and what i really feel is the zombie outcome. chris, richard, what i do miss? >> no, i think that we had a couple of models. you're right, sometimes you

bring something very complex in front of the public. my guess is most of the american public will sit back, watch nervously, and pass judgment once they see the final result. we had two i think examples in 2017 that went two different ways. one was the congress's attempt to follow up on another of the president's promises to get rid of the affordable care act, repeal and replace obamacare. this is a very complex area but it affects a lot of people's daily lives and a lot of people either directly or through their family. all though the politicians went back and forth and came up with various solution, none of them proved passable and ultimately the public kept scoring on the attempt because it looked reckless, it looked like it was going to hurt people. they weren't talking about replace it with something that the numbpublic could say you cap with a good substitute.

if we go down this road to replace nafta and it may not be very good, they could say how could you talk about pulling the rug out from under us and not giving us something better in return. the bother possibility is flows a bit like the tax reform bill put get in the weeds of how does this provision go? as the president propose today it wasn't what happened, the congress had to make changes, they didn't do as far on some rates, changes on other rates just to get that coalition together to get. through. when it passed, opponents were very critical, the public seemed very dubious about this. wait a little bit and it seems, we'll see, it seems that a lot of people have come around and said, well, you know, it's not perfect but we can live with it and maybe some people become more enthusiastic, some don't, but life goes on and we go forward. so the question is does the complex nafta 2 point on look like a reckless obamacare repeal and replates or does it look

like a compensated but ultimately survivable okay piece of legislation like the tax reform? my guess is that for most congressman they prefer the ladder because they won't to be winners and they want to look like they did something good. and they're all thinking about re-election the next time around so they're going to want to try to make it something like that. whether this administration and process could produce that, i don't know, but i'm hopeful. >> when candidate donald trump wanted to give examples of why nafta was a terrible deal, time and time again he stood in front of factories that had been shuders or about to shudder who had lost jobs to mexico in particular. it could be that congress through passing the tax reform which is partly responsible for some of those jobs coming back, whether that's real or sustainable, i don't know, may actually address the one thing that trump kept coming back to again and again which he types on in all caps in his twitter,

jobs, jobs, jobs. so if the form has that effect of pull jobs back to the united states, it could be that's good enough for trump. >> thank you. and that is all the time we have. thank you so much for coming today and if you have anymore questions, feel free to come and approach us afterwards but thank you so much for coming. [ applause ] and our live coverage of the

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