Politico

White House prepares sweeping review of trade deals

Written by Lisa

The White House is preparing to order a review of all U.S. trade deals, senior administration officials say, as they seek better terms and aim to fulfill a campaign promise from President Donald Trump.

Trump is expected to sign an executive order on reviewing all trade deals, formalizing an administration pledge to reexamine all agreements between the United States and its trading partners. White House press secretary Sean Spicer said in late January that would be the administration’s “No. 1” trade priority, adding the goal would be to “figure out if we can improve them.”

“NAFTA is going to be at the top of the list,” one senior administration official said.

An administration official said the White House is seeking to talk more about trade amid other damaging story lines. “We think it’s a place where the president can really shine.” The executive order is largely symbolic for now, one official cautioned, but puts in place the movement to change the deals.

That means a close examination of 14 agreements that are currently in place: two regional deals, one with North American countries and another with Central American countries plus the Dominican Republic; and a dozen bilateral deals with countries across Asia, South America, the Middle East and Australia.

The senior administration official said the administration’s goal is to review how the internet has changed the terms of agreements, and how the countries have changed their production in recent years, while examining the country’s imports and exports. “We think we have the leverage to make these deals better,” one administration official said.

But it will be difficult to change terms and agreements with countries in deals that have already been struck, experts say, and the administration could face backlash.

Inside the administration, officials have been split on trade, with some officials like Steve Bannon, the president’s chief strategist, and other officials like Gary Cohn, one of the president’s top economic advisers.

The administration is also planning to push Trump’s “Buy American, Hire American” initiative, which aims to limit the purchase of goods manufactured abroad and the use of foreign workers. The goal of a separate executive order, which is also expected to be signed in the next few weeks, per administration officials, is to review procurement processes in a bid to change them.

The new executive order could win him some unlikely allies: progressive Democrats on Capitol Hill, who have been pushing Trump to suspend and renegotiate the procurement provisions of trade deals, which allow foreign companies to bid on U.S. government contracts. Sens. Tammy Baldwin and Jeff Merkley, for example, just last week wrote to the president to argue that without action on procurement “every government contract [the] administration signs risks sending hardworking Americans’ tax dollars abroad.”

“Removing such terms from agreements such as [NAFTA] is an important step to trying to reverse our large trade deficits and provide more demand for U.S. made manufactured goods,” they wrote.

Such a move would also come as welcome news for labor groups like the AFL-CIO, which recommended in December that any renegotiation of NAFTA should include the wholesale deletion of the pact’s procurement chapter.

But the tighter restrictions are likely to anger U.S. trading partners, who say dictating procurement decisions for private companies violates international obligations under NAFTA and the WTO. Government procurement comprises between 10 and 15 percent of a country’s GDP, according to an estimate from the Office of the U.S. Trade Representative, creating a sizable industry that nations are eager to tap into abroad and protect at home.

The conflict at issue was on display last week when Canada’s ambassador to the United States, David MacNaughton, wrote to a group of senators including Baldwin and Merkley to defend Canada’s open procurement system, arguing it represents principles “that Canada and the United States have together championed for decades.”

“Imposing local content requirements on the purchasing decisions of private companies is unprecedented and would have potentially severe and wide-ranging consequences, including vis-a-vis international trade obligations,” MacNaughton wrote. “Open procurement markets create jobs in both of our economies, opportunities for our businesses and value for our government agencies.”

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