Stateline: Governors hope for tweaks, not overhaul of NAFTA

President Donald Trump says the North American Free Trade Agreement has been a disaster. "It's been very, very bad for our companies and for our workers," he said at the Wisconsin headquarters of an automotive manufacturer last spring. "We're going to make some very big changes or we are going to get rid of NAFTA for once and for all."

But as the Trump administration sits down to renegotiate the 23-year-old free trade deal with Canada and Mexico, governors will be hoping for minor adjustments rather than the "very big changes" Trump has promised.

"There's never anything wrong with taking a look. But I hope it doesn't just go away," Ohio Gov. John Kasich, a Republican, told "PBS NewsHour" earlier this year. "The idea they want to tweak it, look at it, talk, I'm all in favor of that."

Trump's tough talk wins him applause from voters who blame trade deals for shutting down factories and reducing blue-collar jobs in their neighborhoods. But most economists say that NAFTA had a small part to play in the long-term trends of globalization and automation that changed the kinds of jobs available in the U.S.

And today, trade with Canada and Mexico is important to every state's economy. It's boosted business for farmers in the Great Plains who export commodities such as corn, and allowed U.S. manufacturers to source parts from all over North America.


Some U.S. industries have trade disagreements with the neighboring countries to the north and south. They want those addressed in the renegotiations, but they generally don't want the deal to be scrapped.

Governors tend to focus on how trade agreements such as NAFTA help — or hurt — specific industries in their state, says Matt Gold, a former U.S. trade negotiator who is now an adjunct professor at Fordham University. He said that focus on the nitty-gritty tends to moderate their stance.

The Trump administration's point-by-point objectives for renegotiating NAFTA don't go as far as the president's rhetoric. But that hasn't stopped businesses and foreign countries from worrying that major changes to trade policy could be pending, complicating the efforts cities and states make to recruit foreign investors and connect with international companies.

Trade boomed between the U.S., Canada and Mexico after the trade agreement took effect, in 1994, eliminating almost all tariffs on goods produced by the three nations.

Last year Canada and Mexico were the top two markets for U.S. exports, combining for a third of all exports, according to the Congressional Research Service, a nonpartisan agency that advises Congress. They also comprised more than a quarter of U.S. imports.

Some sectors rely heavily on the trade deal. Take the auto industry. Today a component made in central Mexico may become part of a car assembled in South Carolina, and vice versa. And U.S. manufacturers get to export their product duty free to buyers across North America.

Farmers who export commodities such as corn and wheat also want to preserve the agreement. Canada, China and Mexico are the top three markets for U.S. agricultural exports, according to federal statistics.

When governors criticize the trade agreement, it's typically because they feel a regional industry is getting a raw deal. Idaho Gov. Butch Otter, for instance, told the Idaho Statesman earlier this year that NAFTA "is a good idea, but we don't enforce it."


The trade agreement uses tariffs to limit sugar imports into the U.S. but Canadian sugar-rich syrups are slipping through a loophole, the Republican governor said, hurting the Idaho sugar beet industry. He also said that Canada timber policy gives its lumber companies an unfair advantage over U.S. competitors.

Democratic Govs. Tom Wolf of Pennsylvania and Andrew Cuomo of New York have sent letters to Canadian Prime Minister Justin Trudeau asking him to stop a policy U.S. dairy producers say is hurting their ability to sell a type of skim milk in Canada. Cuomo and Republican Gov. Scott Walker of Wisconsin have also written to Trump and asked him to press Canada on the issue.

Governors are also trying to address the uncertainty Trump's rhetoric on trade has caused by reassuring their foreign companies and investors — in North America and across the world — that they still want to work with them.

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