Trade Current Deals For Better Ones
Now that Ambassador Robert Lighthizer has taken office as United States Trade Representatives he can get business helping Donald Trump fulfill his campaign promise to renegotiate all those bad trade deals that have been costing America jobs.
Like it or not, the promise to pull out of the Trans-Pacific Partnership and to renegotiate the North American Free Trade Agreement helped Trump carry the states that put him over the top last November. He’s not likely to forget that, meaning we now have a president whose chief concern about free trade is whether or not it kills jobs.
Free traders understand it’s not a zero-sum gain and that there are winners and losers but that’s little comfort to people whose jobs have disappeared to locations south of the border. Despite its benefits, and there are benefits, too many American workers have suffered because policymakers employed rosy assumptions and naïve expectations instead of common sense.
Trump has brought Canada and Mexico back to the bargaining table where, hopefully, they’ll reach a new agreement that is a net positive for each country. Remember NAFTA was originally about including Mexico in a trade relationship the U.S. and Canada had had for years – and you hear a lot less about Canadians taking American jobs. Cross-border trade and investment has created highly-integrated supply chains that produce mutual benefits for workers in both countries.
Renegotiation is not an unpopular position, even among those regarded as free traders. “I welcome the administration’s effort to improve and update NAFTA for the 21st century economy. The United States values its strong economic ties with Mexico and Canada, and these negotiations should work to enhance our trilateral trading relationship. Congress looks forward to working hand-in-hand with the Trump administration to achieve the best deal possible for American workers and our economy,” House Speaker Paul Ryan said Thursday.
Still, it’s not all perfect. Late last month when Trump slapped a 20 percent duty on softwood lumber coming from the north Canadian officials quickly warned of retaliation. Within days of the lumber entanglement Boeing pounced on what it must think is an opening to get the U.S. government’s help strengthening its market position proving once the door is open it’s hard to close it.
The U.S. aerospace giant filed a complaint with the Commerce Department it had been injured by Bombardier, a Canadian firm, that recently sold several CS100 aircraft to Delta Airlines at well below cost, a transaction Boeing alleges amounts to “dumping.”
In response the Commerce Department scheduled a hearing to determine if the International Trade Commission should initiate a formal investigation. On the face of it, it looks as though Bombardier’s position is strong. It makes an aircraft analysts praise as being configured for passenger comfort, engineered to make less noise, and operate with better fuel efficiency.
The fact the CS100 is regarded in some circles as state-of-the-art in engineering and design may have been reason enough for Delta to have made its purchase. It was a business decision and, as industry analysts quoted in trade publications have observed, Boeing does not even compete directly with Bombardier in these particular C Series aircraft. So what is this all about?
It could be Boeing, one of a handful of players in an international market known for high-stakes and bitter competition wants to keep a new participant from entering the U.S. market for the broader class of C Series planes. Boeing and Airbus, the European concern, have battled for years before the World Trade Organization about government subsides but appear to be of one mind when it comes to maintaining the advantages they have now against anyone who might someday take market share.
Commerce generally signs off on having the International Trade Commission, an independent quasi-judicial government agency, gathers more facts so it can determine if unfair trade practices have caused injury. It will be hard for Boeing to argue it’s been injured by Bombardier or that taking the Canadian firm down a peg in order to an American company will be good for workers in the U.S. Bombardier has invested $1.6 billion here over the last five years and employs some 7,000 Americans in facilities spread out across 17 states. Many of these are high-skill, high-wage jobs – precisely the kind of jobs the U.S. needs to retain and attract with direct foreign investment.
The integration of the economies of the United States and Canada is something Bombardier’s cross-border supply highlight. When we talk about U.S. firms being injured the real question should be if U.S. workers have been injured. Boeing’s misuse of trade remedies now could have unintended consequences later.
No one wants a trade war. Boeing’s complaint against Bombardier could be a test case for the direction of U.S. policy in a Trump Administration. If Boeing hasn’t been harmed but is trying to use the president’s tough talk on trade to gain a competitive advantage, no remedy is in order. The president is not inviting companies to seek the government’s protection; he’s insisting trade deals unfair to U.S. companies and U.S. workers come under review and be renegotiated.
An America-first trade policy does not rest on the U.S. abandoning the principle of fair competition. Beating up on companies the employ thousands of Americans should not be the foundation of American trade policy. Making sure foreign countries and foreign companies play by the rules so American workers can win fair and square should be. It’s at the heart of Trump’s policy and it’s not inherently in conflict with the idea of free trade either.
Peter Roff is a former senior political writer for United Press International and commentator on the One America News network.