NAFTA Talks: Pena Nieto On Speaker, Trudeau On Blast

NAFTA Talks: Pena Nieto On Speaker, Trudeau On Blast

After months of deadlock over the future of NAFTA, President Trump yesterday went on TV, patched in Mexican President Enrique Peña Nieto by speakerphone, and announced a breakthrough. The two sides have agreed to revisions that would concentrate more auto production in North America, boost minimum wage requirements for some automobile sector workers, and extend NAFTA for 16 years with a formal review after six. The agreement, Trump said, would be renamed as a US-Mexico pact.


So far so good, or… wait, what? Conspicuously absent from the press conference, and from the new agreement altogether, is Canada – the third party to NAFTA, and the US’ second largest trade partner. And that’s where things get tricky.

While Mexico seems to see the new agreement with Trump as a basis for Canadian inclusion in a final pact, Trump has suggested that if Canada doesn’t like what it sees, the US will go ahead with a US-Mexico bilateral agreement. The Mexican government is keen to get all of this done before leftist president-elect Andrés Manuel López Obrador takes office in December. The White House, for its part, plans to send notification of the new pact up to Capitol Hill as soon as this week to begin the clock on a 90-day notification period before final approval can take place, Canada or not.

Canadian Prime Minister Justin Trudeau is now in a tough spot. On the one hand, he knows that exclusion from a deal could inflict huge economic pain on his country. On the other, he wants to make sure that any revisions to the deal preserve strong mechanisms for bringing trade cases against a tariff-happy US, maintain protections for Canada’s politically important dairy industry, and eliminate any mandatory expiration of the pact. What’s more, he wants to avoid the appearance of caving to Trump, whom most Canadians deeply dislike.

For Trump, who relishes raising the stakes in order to force concessions, the optimal outcome is that Canada reluctantly climbs aboard the new pact, Congress approves it as an update to NAFTA (ideally renaming it something like the Tremendous and Recently Updated Manufacturing Pact Agreement), and the President sails towards 2020 with a nice feather in his cap.

One big risk for Trump, though, is that failure to get a deal with Canada forces him to withdraw from NAFTA in order to implement a new bilateral deal with Mexico. This could get legally and politically messy. First, there’s legal ambiguity about the process for removing the US from NAFTA, meaning a protracted and economically-damaging legal battle could arise. Second, Congress doesn’t want this: withdrawing from NAFTA is unpopular politically – more than two-thirds of Americans still support the deal, and while GOP voters narrowly oppose it, many GOP donors are in favor. Canada, of course, is the top trade partner for a majority of US states.

As he often loves to do, Trump is raising the stakes stratospherically high in order to try to pressure his opponents (if one can call Canada that) into concessions. But he is also taking a sizable political risk if things don’t work out. Keep an eye on Ottawa and on Capitol Hill in the coming days.

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Ian Bremmer shares his insights on global politics this week with a look at the deteriorating human rights situation in Belarus, Delta variant woes, and Lebanon one year after the Beirut blast.

An Olympian refuses to return home to Belarus and an anti-Lukashenko activist has been found dead in Ukraine. What's going on?

Yeah. That anti-Lukashenko activist was found hanged in a park in Kiev. Once again, not exactly likely a suicide. These anti-Lukashenko activists have a way of turning up injured or dead. It's a horrible regime. Their friends are limited largely to the Russians. That's about it. The economic pressure is growing from Europe, from the United States, very coordinated. But the problem is a very hard to do much to Lukashenko when he has not only support of his military, but also the support of most of the workers in the country who aren't prepared to strike because they want to ensure they still have jobs. I expect this is going to continue, but human rights abuses are stacking up. It is nice to see that the Americans and the Europeans are coordinating policy as well as they have been.

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It's been 365 days since twin blasts at a Beirut port decimated Lebanon's capital. More than 200 people were killed and some 7,000 were injured, yet accountability has been scarce. There is ample evidence that multiple Lebanese officials knew that ammonium nitrate was being improperly stored at the port. Four high-ranking politicians, including former PM Hassan Diab, have been charged by a Lebanese judge, but they all refuse to cooperate with the ongoing investigation.

Since then, Lebanon's already-dire economic and financial crises have only intensified. The Lebanese pound, the national currency, has plummeted, losing 90 percent of its value since 2019, when the country's economic crisis erupted. And more than 50 percent of the population is now living below the poverty line.

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The Biden administration is finally devoting more attention to Southeast Asia. Last week US Secretary of Defense Lloyd Austin traveled to Singapore, Vietnam, and the Philippines, marking the first regional visit by a Biden cabinet official. A trip by Vice President Kamala Harris is already in the works as well, and this week Secretary of State Tony Blinken will meet (virtually) with ASEAN counterparts.

The flurry of activity comes after earlier concerns that President Joe Biden was neglecting Southeast Asia, the region where US-China rivalry is the most intense. To understand better what Austin's visit meant, and what comes next, Eurasia Group's lead Southeast Asia analyst Peter Mumford spoke to us from Singapore.

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Raisi won't have it easy: The newly "elected" president of Iran, Ibrahim Raisi, was officially endorsed by Supreme Leader Ali Khamenei on Tuesday. In his inaugural address, the 60-year-old hardliner pledged to get US sanctions removed and to respond to rising socioeconomic grievances within Iran, but he warned that he wouldn't lash Iran's prosperity or survival to "the will of foreigners." In Iran, the president's role focuses mainly on domestic policy, but with the economy reeling one of Raisi's big early challenges will be to continue complicated talks with the Biden administration to renegotiate the 2015 nuclear deal, which would lead to the US lifting some of the harshest sanctions. Both sides say they want a new deal, and have gone through half a dozen rounds of negotiations already, but they remain at odds over who should make what concessions first. Raisi also pledged to restore Iranians' flagging trust in their government and to improve the economic situation, but in ways that are in line with "revolutionary principles." He'll have his hands full with that. And don't forget that the likely imminent (re)takeover of neighboring Afghanistan by the Taliban — whom Tehran don't like at all — will also occur on Raisi's watch. Good luck, Mr. President, you'll need it.

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158: To boost vaccination rates, New York City will soon require proof of COVID vaccination or a negative test to enter gyms and restaurants, as daily new infections in the Big Apple have jumped 158 percent over the past two weeks due to the more contagious delta variant. New York is the first major US city to take this step, following similar schemes already in place in France and Italy.

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