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1. Supporting Prosperity and Competitiveness by Approving the New USMCA

Author:
Earl Anthony Wayne
Publication Date:
03-2019
Content Type:
Journal Article
Journal:
The Ambassador's Review
Institution:
Council of American Ambassadors
Abstract:
On November 30, the leaders of the United States, Canada and Mexico signed a new trade agreement to succeed the 1994 North American Free Trade Agreement. The United States-Mexico-Canada Agreement (USMCA) modernizes the 25-year-old NAFTA, but the legislatures in all three countries must still approve it.[1] The new USMCA will preserve the massive trading and shared-production networks that support millions of jobs in the U.S., Mexico and Canada and the ability of North America to compete effectively with China, Europe and other economic powers. Approving USMCA this year is very much in the national interests of all three countries given the $1.3 trillion in trade between them and the many businesses, workers and farmers that depend on the commerce and co-production that interlinks North America. These economic relationships also strengthen the rationale for maintaining strong political relationships among the three neighbors. There was widespread agreement to update NAFTA to reflect the changes in trade practices and in the three economies since 1994.[2] NAFTA does not cover Internet-based commerce, for example. Other areas required modernization, including trade in services, protection of intellectual property rights (IPR), environment and labor, which is a priority for U.S. unions.[3] Mexico, Canada and the U.S. tried to accomplish this NAFTA update with negotiation of the Trans-Pacific Partnership (TPP) agreement, but in January 2017 President Donald Trump pulled out of TPP, preferring to renegotiate NAFTA.[4] Approval of USMCA by the U.S. Congress remains uncertain. A number of Democrats are asking for stronger enforcement commitment particularly regarding labor. Others express concern that USMCA provisions may keep some prescription medical costs high.[5] Business and agricultural associations are urging approval of USMCA because it will provide certainty to continue the cross-continental collaboration that preserves vital intra-North American markets for manufacturing, agriculture and services and helps them out-perform global competitors. In response to democrat and union concerns, USMCA’s advocates argue that it includes significantly stronger labor provisions and enforcement.[6] Before the agreement moves ahead, however, the three countries must also find a solution to the tariffs the U.S. put on steel and aluminum from Canada and Mexico in 2018 for “national security” reasons. In response, those countries imposed equivalent tariffs on a range of U.S. exports, spreading economic pain across all three countries.[7] Mexico and Canada, as well as key members of Congress, want this problem resolved before approving USMCA.[8] The U.S. International Trade Commission must also assess USMCA’s economic impact. This report is due in mid-April. The administration must also propose implementation legislation (and guidelines) before Congress formally considers the agreement. Congress will then have a limited time to act on USMCA under existing legislation, but members of Congress could drag the process out.[9] The political window for U.S. congressional approval will close this year, however, given the 2020 U.S. elections.[10] President Trump, USTR Lighthizer and others have begun lobbying for approval, as have Mexico and Canada more quietly. The months ahead will thus be vital for trade and long-term relationships in North America and for the continent’s ability to weather well future international competition. Given the enormous economic benefits of approving USMCA, the U.S. Congress, the Administration and the non-government stakeholders should engage intensively to find ways to address concerns raised and find a “win-win” way to approval. Fortunately, the United States public increasingly views trade in North America as positive. According to the Chicago Council on Global Affairs, for example, those seeing NAFTA and now USMCA as “good” for the U.S. economy have grown significantly, rising from 53 percent in 2017 to 70 percent seeing USMCA as “good” this year. This is a solid foundation for rapid approval of USMCA.[11]
Topic:
Regional Cooperation, NAFTA, Trade, and USMCA
Political Geography:
United States, Canada, North America, and Mexico

2. The Art of Diplomacy

Author:
Bruce A. Heyman
Publication Date:
03-2019
Content Type:
Journal Article
Journal:
The Ambassador's Review
Institution:
Council of American Ambassadors
Abstract:
Seeing the words “U.S.-Canada Trade War” in headlines is hard to imagine in any year, but to see them in 2018 was jarring. How is it possible that best friends and neighbors who have had the most successful trading relationship in the world now could have an association characterized by the word war? This is hard enough for the average American or Canadian to conceive of, but it was particularly hard for me to do so, as the U.S. Ambassador to Canada until January 20, 2017. When I left Ottawa, I was confident that the U.S.-Canada relationship was strong—indeed, perhaps never stronger. In March 2016, we had a state dinner in Washington for Prime Minister Justin Trudeau, the first in nearly 20 years. Then-President Barack Obama later repaid the favor and addressed the Canadian Parliament for the first time in more than 20 years. Our two-way trading relationship was valued at a huge $670 billion per year, and while no longer our largest, it was the most balanced, with the United States having a slight but rare trade surplus in goods and services. Through an integrated supply chain, our companies and citizens worked together. On average more than 400,000 people legally crossed our 5,525-mile non-militarized border daily for work and tourism. But the U.S.-Canada relationship was and is much larger than trade. Canadian and American troops have fought and died together from the beaches of Normandy to the mountains of Afghanistan, and our countries are founding members of the North Atlantic Treaty Organization (NATO). The North American Aerospace Defense Command (NORAD)—a unique Canadian-American partnership—patrols the skies above our shared continent. Our intelligence and law enforcement agencies constantly exchange information on threats from terrorism, nuclear proliferation, espionage and complex crimes. Our two countries work together to protect the environment and provide stewardship of the magnificent Great Lakes, where cities such as Toronto and my own Chicago are located. This dense web of mutually beneficial cooperation is based on a shared set of values. Both our countries settled the vast North American continent, providing undreamt-of opportunities to millions of immigrants. Both our countries have an abiding commitment to democracy and the rule of law, and when we fall short, we make the needed changes. Beyond our countries’ being next-door neighbors, the largest number of Americans living abroad live in Canada and the largest number of Canadians living abroad live in the U.S. We are best friends, but more important, we are family.
Topic:
Diplomacy, Regional Cooperation, Culture, Trade Wars, and Trade
Political Geography:
United States, Canada, and North America

3. The United States and the European Union: Essential Partners in a Turbulent World

Author:
Anthony Luzzatto Gardner
Publication Date:
03-2016
Content Type:
Journal Article
Journal:
The Ambassador's Review
Institution:
Council of American Ambassadors
Abstract:
Four years ago the European Union won the Nobel Peace Prize for the “over six decades [in which it has] contributed to the advancement of peace and reconciliation, democracy, and human rights in Europe.” How quickly the mood has changed. While it has become fashionable to charge that the European Union is on the verge of collapse in the face of dire current challenges, rumors of the European Union’s demise would appear premature. The successes achieved in 2015, as well as the potential future areas of good news, are frequently underappreciated. The United States is firmly committed to investing in its relationship with the European Union. This is a partner­ship that delivers, as it will bring dividends to both the United States and the European Union for the long term. The aphorism of Jean Monnet, the key Founding Father of the European Union, that “Europe will be forged in crises, and will be the sum of the solutions adopted for those crises” has proven to be correct. The serious strains put on the European Union during this past year because of multiple terrorist attacks—most recently in Brussels on March 22—and the unprecedented migrant flow is already resulting in significant pooling of sovereignty by member states, like in the fields of law enforcement and border protection. Europe’s unity has countered Russia’s violation of the post-War norm against changing borders by force, and the United States and the European Union are working intensively on many regional and global challenges. First and foremost, the United States and the European Union are focused on creating more economic opportunities on both sides of the Atlantic with a comprehensive trade deal, the Transatlantic Trade and Investment Partnership (TTIP). The United States and the European Union already have a broad and deep economic partnership, the largest trade relationship in the world, accounting for almost one third of global trade and supporting about 14 million jobs. We have invested over $4 trillion in each other’s economies (which combined account for almost half of world GDP). TTIP is an opportunity to fine tune that relationship in a common-sense way to unlock opportunities to support jobs and fuel growth on both sides of the Atlantic, while maintaining our high standards for protection of health, safety, labor conditions, and the environment. Through TTIP, the United States and the European Union can strengthen our respective economies and extend our strategic influence if we choose to lead on global trade rather than be left on the sidelines. There really is no other choice. Since last Fall, we have exchanged second tariff-eliminating market access offers (removing all but three percent of tariffs) and proposals for services market access and government procurement. We have made significant progress in tabling text in almost all chapters and hope to have consolidated text for the entire agreement by July, which would line up the most difficult issues for negotiation and decision through the Fall. Despite some of the more pessimistic predictions, it remains an achievable goal to reach a high standard comprehensive agreement under the Obama administration (although ratification in Europe and passage into law in the United States would take place under the next US President). Working with member states, the European Commission has also made significant contributions to the creation of an integrated energy market—a requirement for healthy economies—in which gas and electricity flow more freely among the member states. The European Commission has also tabled its first proposals to deepen and broaden Europe’s capital markets and to stimulate investment in critical infrastructure. To address one of the Eurozone’s fundamental structural weaknesses, the Commission has nearly completed the creation of a banking union. And looking to the future, the European Commission has launched an ambitious Digital Single Market strategy aimed at reducing national barriers to the creation of a true single market for the delivery of digital services. We are supportive of all of these critical initiatives because they enhance European security and growth potential, as well as provide opportunities for transatlantic investment and collaboration. At the same time, we have made great strides to modernize and reform our relationship in other areas related to data, the most recent example being the conclusion of the US-EU Privacy Shield, which replaces the fifteen-year-old Safe Harbor framework with a new set of robust and enforceable protections for the personal data of EU individuals. The Privacy Shield provides transparency regarding how participating com­panies use personal data, strong US government oversight, and increased cooperation with EU data protection authorities (DPAs). While the United States and the European Union are working closely together to reinforce economic and commercial ties, coordination on political efforts is as robust—and as necessary—as ever. For example, the European Union played a vital role in close collaboration with US leaders to produce the historic agreement limiting Iran’s nuclear ambitions and the historic agreement in Paris on climate change. Moreover, the European Union quickly announced and repeatedly renewed, in close partnership with the United States, a set of extensive sanctions against Russia in response to Russia’s occupation and attempted illegal annexation of Crimea and aggression in the Donbas region of Eastern Ukraine. Even a few years ago, few would have considered that possible because of the radically different historical perspectives and economic ties that the 28 member states have with Russia. Despite occasional talk of engaging Russia with conciliatory gestures, Europe has thus far resisted the Kremlin’s efforts to divide the member states or to split Europe from the United States. Like the United States, the European Union continues to support reformists in the Government of Ukraine and Ukrainian civil society. Our diplomatic missions in Kyiv and in Brussels cooperate closely on providing financial support, in-kind assistance and training, and exposing and countering disinformation. The United States and the European Union both support independent media and nongovernmental organizations; both support the aspiration of the Ukrainian people to live free in a stable, prosperous, and independent state governed by the rule of law rather than by lawless oligarchs. For over a year, challenges in developing a comprehensive European response to unprecedented, irregular refugee and migration flows have been the European Union’s most serious concern. The European Union is well aware that it must manage this issue in order to demonstrate its effectiveness and relevance. As a country of immigrants that has also taken in many refugees, the United States is supporting the European Union’s efforts by providing humanitarian assistance and sharing its experience in areas such as border control and the identification, resettlement, and integration of refugees. If Europe manages to support the integration of refugees and open its labor markets, the positive economic impact could prove substantial. The European Commission estimates that overall migrant inflows will add additional regional growth of 0.2 to 0.3 percent of GDP by 2020. According to the estimates, Germany could see an increase of GDP of about 0.4 percent in 2016 and 0.7 percent by 2020. Many economists believe that, if assimilated well, the refugee and migrant inflow could be a critical antidote to Europe’s looming demographic time bomb—a rapid inversion of the age pyramid whereby working age people are supporting greater numbers of retirees on pensions. By mid-century the ratio will have shrunk by half to 2:1, endangering the stability of social security systems. We are also collaborating closely on terrorism and countering violent extremism (CVE), including the fight against Daesh and the threat posed by foreign fighters who travel to and from Syria and Iraq. The United States welcomes the European Union’s development of a common EU Passenger Name Record system and looks forward to its approval in the European Parliament soon. The United States has engaged the European Union in helping border security officials get access to the information they need to prevent acts of terrorism by foreign terrorist fighters. As the United States has introduced new security enhancements in its Visa Waiver Program (VWP), a key counterterrorism tool, we are working closely with both the European Union and member states partici­pating in VWP to insure that our travelers and citizens are safe from terrorist threats. Similarly, we have increased law enforcement cooperation with the European Union to enhance security and decrease crime for our citizens on both sides of the Atlantic. Far from weakening the European Union or transatlantic cooperation, the threat of terrorism has encouraged stepped-up joint CVE efforts. The March 22 attacks on the Brussels Airport and metro and the November 2015 attacks in Paris struck not only the residents of those cities, but also international victims and were carried out by multinational terrorists. Along with attacks in Denmark, Turkey, and other parts of Europe, they prompted greater intra-European and transatlantic law enforcement and security cooperation, and demonstrated starkly why such cooperation is essential. Whether sharing infor­mation on the movement and activities of suspected terrorists or combating illicit financial transactions by these and other criminals, we have a shared desire to protect our citizens and strengthen key institutions like Europol. In cases like rescuing children from child sexual exploitation rings, where it’s important to seek the shortest possible interval between discovering the crime and putting an end to it, we have seen good results. Operations that once took years to organize can now take mere months or less through the working relationship US law enforcement has developed with European authorities. After being forced by the Inquisition to recant his view that the earth rotates around the sun, Galileo Galilei allegedly whispered: “Eppur si muove” (and yet it moves). To many observers the European Union may appear immobile; and yet it moves. If it struggles to meet some of the challenges it currently faces, this is a reflection of the scope and number of those challenges, not the resilience of the Union. The United States stands shoulder to shoulder with the European Union as a partner, ready to face together the many regional and global challenges that we share. In preparing for future challenges, we continue to work together to ensure a better future for people on both continents (and elsewhere), whether in pursuing nuclear nonproliferation, combating climate change, terrorism, and military aggression, or in furthering trade rules that set high standards and rule of law for all. This is a partnership that delivers on a number of fronts; the European Union will continue to be an essential partner for the United States in an increasingly turbulent world.
Topic:
Diplomacy, International Cooperation, European Union, and Trade
Political Geography:
United States, Europe, and North America