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The Art of the Unfinished Deal

Monday’s news was  full of the usual ominous legal developments regarding the “Russia thing,” as well the continuing fallout from President Donald Trump’s petty ongoing feud with the late Arizona Sen. John McCain, but there was also a rare story about actual policy matters. Trump has made some progress in his trade negotiations with Mexico, and naturally he was eager to overstate the accomplishment.
The White House press corps was invited to listen in on a congratulatory phone call between Trump and Mexican President Enrique Pena Nieto, and although there were a few embarrassing moments of silence while the staff scrambled to get the line working, both presidents praised what they’ve agreed to thus far and lavishly praised one another. Nieto also said three times in the brief call that he was hopeful Canada will also join in the agreement, which seemed to annoy Trump, and by the end it was clear that a deal had yet to be sealed.
The good news that a more cautious president would have modestly touted is that Mexico has agreed to new trade rules for automobiles, intellectual property rights and labor regulations. Such tweaks to current North American Free Trade Agreement are likely to keep some car-making jobs in the United States and Mexico rather than Asia, make it harder for foreign competitors to steal corporate America’s innovations, although Trump didn’t make a big deal of it many Mexican workers will get a big raise and safer working conditions.
The bad news that a more honest president would have admitted is that the new rules will likely make your next new car more expensive, China and the rest of the worst thieves of America’s inventions aren’t involved in the deal at all, and that the vast non-automotive sectors of the Mexican economy might take a hard hit that sends more Mexicans heading to the cross the border in search of work. Trump didn’t get the concessions he wanted on various tariffs, and he made concessions to Mexico about the length of time before he could renege on the whole deal and start all over again, but he could have made a case that incremental progress had nonetheless been made.
Trump has an unfortunate tendency to spike the football and do his end zone dance just short of the goal line, however, and on Monday he was boasting a great that’s far from done. As much as Trump hates it, NAFTA is still a ratified-by-the-Senate and backed by the full faith of the American government treaty, and Canada is a signatory to that treaty, and given the current state of relations with both trading partners since Trump’s election working out all the details is bound to be tricky. On December 1 Nieto will turn power over to President-elect Andres Manuel Lopez Obrador, and although Obrador was consulted in the negotiations he won office on a promise to take a harder stand against Trump, so things need to be wrapped up quickly. Canadian Prime Minister Justin Trudeau will also have something to say about it, and so far he’s taken a hard stand in the trade war Trump initiated.
Whatever deal Trump eventually gets will also have to be ratified by the Senate, and the mid-term elections in November could well further complicate that always complicated process.
Still, incremental progress in a long, hard process is an achievement worth noting, and we note that the stock markets were pleased to see a slight lessening of the trade war tensions. It’s not enough to crowed out all the rest of the news, though, and Trump isn’t the sort to make such modest boasts.

— Bud Norman

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