Medical A Special Section of The Washington Diplomat
VOLUME 24, NUMBER 8
This month, the U.S., Canada and Mexico can formally begin to renegotiate NAFTA, the landmark trade pact that President Trump has called a disaster. Despite Trump’s disdain for NAFTA, negotiators are likely to modernize, rather than abandon, a deal that has integrated the North American market. / PAGE 9
Kenya, Rwanda Gear Up for Key Elections There are two elections in August that will decide the next presidents of two critical East African countries — Rwanda and Kenya, whose politics have long been plagued by ethnic rivalry and division. / PAGE 14
U.S., Canada, Mexico Prepare To Update NAFTA
Senator McCain Faces Aggressive The median survival for glioblastoma
Brain Cancer Foe in Glioblastoma
patients is about 15 months,
en. John McCain (R-Ariz.) faces an uphill battle fighting the aggressive cancer discovered in his brain last month, experts say. The cancer, glioblastoma, is the most common malignant tumor that originates in brain cells, as opposed to cancers that spread to the brain from elsewhere in the body, said Dr. Manmeet Ahluwalia, dean of the Cleveland Clinic’s Rose Ella Brain Tumor and Neuro-Oncolog Burkhardt y Center.
Sen. John McCain (R-Ariz.) speaks before re-enlisting them during to a group of soldiers an Independence Day celebration in Kabul, Afghanistan, on July 4, 2013. The longtime senator was recently diagnosed with an aggressive form of brain cancer known as glioblastoma.
tBY DENNIS THOMPSON
But it’s a very tough cancer difficult to surgically remove, to treat. Glioblastoma is eye. The following Wednesday, resists attempts to kill it with radiation and chemotherapy, the blood clot was associated his office reported that with glioblastoma. and nearly always comes back, cancer experts Until last year there was said. no medical evidence that “The tumor many times responds to treatment ini- people older than 70 benefited from the standard tially but it tends to grow back,” said Dr. Kurt Jaeckle, treatment for glioblastoma, said Dr. J. Leonard a neuro-oncologist and Lichtenfeld, deputy chief medical co-director of the Gerald officer for the American Glasser Brain Tumor Center J. Cancer Society. Center’s Atlantic Neuroscience at Overlook Medical But a study presented in Institute in New JerJune 2016 at the Amerisey. “It’s not unusual to have can Society for Clinical to Oncology’s (ASCO) annual It’s the same type of cancer treat it again.” meeting was the first to show that killed Sen. Ted Kennedy at age 77 in 2009. otherwise good health could that people over 70 in McCain, 80, underwent treatment, Lichtenfeld said. benefit from aggressive a remove a blood clot from procedure on July 14 to his brain just above his left SEE CANCER t PAGE 28
2017 | 27
HARD-HITTING MAVERICK Tiny Uruguay, wedged between relative giants Brazil and Argentina, has been punching way above its weight for years. The small country took on big tobacco — and won — while at the same time legalizing marijuana use, same-sex marriage and abortion, firmly establishing itself as a beacon of liberalism on a continent where some countries only recently allowed divorce. PAGE 17
Stirring ‘Revival’ Of Female Art The bold but somewhat unwieldy “REVIVAL” at the National Museum of Women in the Arts stirs a range of emotion. / PAGE 30
People of World Influence
Troubleshooter Reflects On Life of Service
Indian Doctor Straddles Two Worlds
When James Dobbins joined the Foreign Service in 1967, the Vietnam War was in full swing. When he retired in 2014, U.S. troops were bogged down in Afghanistan. In between those two conflicts, Dobbins played a leading if behind-the-scenes role in some of the world’s nastiest trouble spots, from Haiti to Bosnia to Somalia. / PAGE 6
India’s Avina Sarna, who married her husband through an arranged marriage yet whose medical career has tackled progressive issues such as HIV prevention among sex workers, is a fascinating dichotomy of modernity and tradition. / PAGE 31
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2 | THE WASHINGTON DIPLOMAT | AUGUST 2017
CORRECTION The article “New Kids on Block: From Micro Rooms to Trump’s Huge Mark, D.C.’s Hotel Scene Continues to Evolve” in the July 2017 issue incorrectly stated that Lil’ B Coﬀee Bar and Eatery in The Darcy is the kid sister of the former Bayou Bakery. Lil’ B Coﬀee Bar and Eatery is run by chef David Guas, the brainchild behind the flagship Bayou Bakery in Arlington, Va., which remains open. The menu at Lil’ B Coﬀee Bar and Eatery, which opens in early August, will have a Southern focus while Bayou Bakery specializes in New Orleans-inspired dishes.
THE WASHINGTON DIPLOMAT | August 2017
22 NEWS 6
People of World Influence James Dobbins reflects on a life of foreign service, from Afghanistan to Vietnam.
NAFTA 2.0 Prodded by Trump, Canada and Mexico gear up to renegotiate the landmark trade pact.
12 Shoring Up Walls Foreigners wonder how extreme Donald Trump’s “extreme vetting” will be.
North Korea and Cuba photographs offer a rare glimpse inside closed societies.
AIS: Ethiopia Today Girma Birru talks about Ethiopia’s state of emergency, economy and U.S. ties.
27 Brain Cancer Sen. John McCain faces a tough foe in glioblastoma, an aggressive brain cancer.
East Africa Votes
Ethnic fault lines simmer below the surface of Rwanda and Kenya’s elections.
17 Cover Profile: Uruguay
Uruguay’s veteran envoy says the progressive pioneer is way ahead of its time..
The National Museum of Women in the Arts evokes a range of emotions in its latest showcase.
The Goldwater Rule has kept psychiatrists from commenting on Trump’s mental fitness.
Global Vantage Point America’s great waterways would become less great under Trump.
From HIV/AIDS research to fiction writing, one Indian couple defies convention.
Inuit Storyteller An indigenous Canadian artist tells traditional tales with a modern twist. Shaping Time
Mexican artists use clay to build bridges between the past and present.
REGULARS 36 Film Listing 38 Events Listing 40 Diplomatic Spotlight 46 Classifieds 47 Real Estate Classifieds
THE WASHINGTON DIPLOMAT | August 2017 | 3
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WD | People of World Influence
Frontlines of Diplomacy James Dobbins Recalls Life of Foreign Service, from Afghanistan to Vietnam by Larry Luxner
hen James Dobbins joined the Foreign Service in 1967, the Vietnam War was already in full swing. When he retired in 2014, nearly half a century later, U.S. troops were bogged down in Afghanistan. In between those two conflicts, Dobbins played a leading, if sometimes behind-the-scenes, role working to advance U.S. interests in some of the world’s nastiest trouble spots — from Haiti and Bosnia to Kosovo and Somalia. Now Ambassador Dobbins has written a book about his fascinating life. “Foreign Service: Five Decades on the Frontlines of American Diplomacy” should be required reading for any aspiring diplomat. On June 26, Dobbins’s publisher, the Brookings Institution, hosted the 75-year-old elder statesman to discuss his 336-page memoir with Peter Baker, White House correspondent for The New York Times. Born in Brooklyn, N.Y., and raised in the Philippines, where his father was a top official with the postwar Veterans Administration, Dobbins spent much of his childhood in Manila in a luxurious house with a swimming pool, a tennis court and five servants. In late 1963, following his return to Washington, the young man became a naval officer. “Back then, the draft was in force, and most people assumed they’d go into the military. So I spent three and a half years in the Navy on an aircraft carrier in the Pacific,” he recalled. “There were two benefits to that: having that experience and bringing it to any number of subsequent diplomatic crises where civilian-military cooperation was important, and learning about the habit of command. I had people working for me when I was a very junior officer, and every one of them knew more about their job than I did.” Besides treating subordinates with respect and getting good performance in return, Dobbins — who later in life served as U.S. ambassador to the European Union — offered three specific tips on how to make Washington work for you: • One of the most important jobs is that of note-taker, but don’t record what was actually said. The joke is that you write a memorandum of a conversation so that it reads the way your boss would have liked it to read. • When traveling with your boss on business, never check your bag, especially if your boss doesn’t.
6 | THE WASHINGTON DIPLOMAT | August 2017
Photo: Larry Luxner
James Dobbins, a former U.S. ambassador who has served in Afghanistan, Haiti, Bosnia, Somalia and other hotspots, talks about his new book, “Foreign Service: Five Decades on the Frontlines of American Diplomacy,” at a Brookings Institution discussion.
We’re in this situation where we now have two centers of foreign policy: President Trump and everybody else. Talk about polarization in Washington. James Dobbins
author of ‘Foreign Service: Five Decades on the Frontlines of American Diplomacy’
• Always accept diplomatic invitations, because if you don’t go, they’ll notice you weren’t there. “Partly there’s a degree of luck involved — being in the right place at the right time, and being noticed. My first assignment was Paris. This was just luck,” he said. “If you’re lucky and you’re good, you get noticed. As a junior officer, you’re largely an observer, a gopher and a facilitator, but you do have to demonstrate a command of the topics.” Dobbins’s career spanned 10 presidencies, from John F. Kennedy to Barack Obama, though he noted that, “the day I was sworn in as an officer in the Navy, Kennedy was assassinated, so our association was very brief. But as I progressed, I had more of an opportunity to size up these individuals” — as well as their secretaries of state. While the “most consequential” secretary of state he served under was James Baker, whom Dobbins called “ex-
traordinarily competent,” the most colorful was Henry Kissinger, the architect of foreign policy during the Nixon and Ford administrations. “Kissinger was and remains a fascinating character. He was a bit of a monster and flew into rages, but he could also be very funny,” Dobbins recalled. “When I worked for him, Kissinger was both secretary of state and national security advisor. We had two forms of stationery, and they were always at loggerheads with each other.” George Shultz, on the other hand, “kept his cards most closely to his chest. He was impressive, impassive and Buddha-like — and took a slight pleasure in discomforting briefers when they didn’t know their stuff.” Baker, the journalist, asked Dobbins which president was best suited to foreign policy. “George H.W. Bush was certainly the most prepared,” he replied, in a nod to the president who named him ambassador to the European Union (he served
in Brussels from 1991 to 1993 in that capacity). “Bush had been director of the CIA, ambassador to China and vice president for eight years, and he was a warrior. This was a resume nobody else matched. He brought those talents to the presidency and the results are manifest. He’s the one I admire most.” Yet the easiest, most pleasant president to work for was definitely Bill Clinton. “Bill Clinton was so talented, he could take a speech and really make it sing. He listened to advice. There was a feeling that what you were doing was meaningful, because the president was actually listening and responding.” Dobbins added: “Although he could be short-tempered with his immediate staff, he treated the rest of us as if we were major donors and he was running for a third term. He would always compliment me on my ties.” Yet his favorite secretary of state wasn’t Hillary Clinton but Madeleine Albright, for having given Dobbins the most opportunities. “Some secretaries of state want to leave behind a better State Department. She wanted to leave behind a better world — and the State Department would pretty much take care of itself,” Dobbins said of Albright, who oversaw NATO’s 1999 bombardment of Yugoslavia and stood up for Kosovo. “She herself told me at one point that she
hadn’t connected as much as she wanted with the Foreign Service. I admire the tenacity with which she followed the Balkans. She was a woman in a man’s world. But instead of trying to act like a man, she used her femininity in an amusing and affectionate way to work with all of her male colleagues. She turned them into suitors.” Yet by the end of the Cold War, Dobbins lamented that, “nation-building and peacekeeping had become a growth industry,” citing the Clinton-led invasion of Haiti and Bushled invasions of Iraq and Afghanistan. “And by flooding Bosnia and Kosovo with international manpower and assistance, we turned these two countries into permanent wards of the international community.” Dobbins witnessed many of these conflicts firsthand — and managed the reconstruction efforts once the fighting stopped. He served as a troubleshooting envoy to Bosnia, Kosovo, Haiti and Somalia, where he oversaw the withdrawal of U.S. troops following the 1993 Battle of Mogadishu. After the Sept. 11, 2001, terrorist attacks, Bush appointed Dobbins the administration’s representative to the opposition in Afghanistan, where he participated in the Bonn conference that saw the emergence of a new post-Taliban government. Dobbins went to work for RAND Corp., but in May 2013, just as he was about to retire from the Foreign Service, Obama named him as his third special representative for Afghanistan and Pakistan, having succeeded Richard Holbrooke and Marc Grossman in that position. Dobbins knew John Kerry as a U.S. senator from Massachusetts and even testified before him several times. “I was completely surprised when he called one morning and asked me to do the Af-Pak job,” Dobbins said. “He decided that the president was going to run foreign policy in Wash-
ington, and that his best option was to be away as much as possible and be the principal face of foreign policy abroad. But he knew the brief better than I did, so it was hard to brief him. He was impatient. He already knew whatever I was trying to tell him. We never really had detailed, substantive conversations about where we were going, partially because he had already been on the trail for a long time.” Reflecting on Obama’s determination to wind down the wars in Afghanistan and Iraq, Dobbins pointed out that Donald Trump is certainly not the first president who wanted to adopt an isolationist foreign policy, although he’s no fan of Trump cozying up to Saudi Arabia, Turkey, Egypt and other questionable allies. “In the ’70s, just as Nixon was beginning to withdraw from Vietnam, he declared what
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he called the ‘Nixon Doctrine.’ Jimmy Carter came into office as a pacifist, and Obama came into office promising to end the wars in Iraq and Afghanistan and pivot to Asia, which was the most peaceful area of the world. None of that worked out,” he said. “Obama learned that the Americans wanted a cheaper foreign policy, but didn’t like the reduced influence that resulted. So he was criticized when that influence was reduced. I don’t think Americans will be long content to see our country leading a coalition of oil-state monarchies and Third World bad guys, while the rest of the democratized, industrialized world marches to a different tune.” During the Q&A, one member of the audience asked what insights President Trump might learn from his memoirs.
“If he read the book, maybe he’d relent on cutting the State Department’s budget by 30 percent,” Dobbins replied. “I think he’s so completely off the charts in terms of what has become acceptable, normal behavior by an American president. This is quite extraordinary. We’re in this situation where we now have two centers of foreign policy: President Trump and everybody else. Talk about polarization in Washington.” It’s evident that Dobbins isn’t exactly a Trump fan. Asked to name the 45th president’s best decision since taking office, the retired statesman hesitated awhile. “Allowing [Defense Secretary James] Mattis to set troop levels in Afghanistan was a little odd, but probably was a good decision. I don’t think Mattis is going to flood the country with U.S. troops. “Also, his decision to give China another chance to change behavior on North Korea was the right one,” he added. “The president clearly has a different view, but he’s also rather careful on national security. He does tend to listen to advisors, and only goes off the charts occasionally. Mostly, the tweets are about domestic issues and trade. By and large, he’s approached national security issues more cautiously than other issues.” Naming Trump’s worst decisions was much easier. “The worst decision was abandoning the Trans-Pacific Partnership, which would have been good for the U.S. economically, and solidified America’s role in Asia,” he said. “But Hillary would have done that too, so I’d say leaving the Paris agreement [on climate change] was the worst decision.” But foreign policy is full of bad decisions. Looking even further back, Dobbins said one of the biggest mistakes the United States made See Dobbin s • page 8
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Dobbins Continued â€˘ page 7
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following the collapse of the Soviet Union was to allow the three Baltic states â€” Estonia, Latvia and Lithuania â€” to become full-fledged members of NATO. Taking a hard-nosed, realist view of the Balticsâ€™ inclusion in the security bloc, Dobbins said the move, which infuriated Russia, has had serious repercussions that continue to plague the 29-member alliance to this day. â€œThe only country that was a serious threat to the U.S. was Russia,â€? said Dobbins. â€œSweden, Austria and Finland had gotten through the Cold War just fine. Unfortunately, the price of bringing in countries that were in conflict was that you had to get the Baltic states in, too. And that was a bridge too far, because they werenâ€™t part of the Warsaw Pact but part of the Soviet Union. Iâ€™m not suggesting we should have sold them down the river, but they could have persisted like Finland as independent, democratic states.â€? The purpose for Washington to have allies is to make the United States safer, but geography prevents Estonia, Latvia and Lithuania from contributing to U.S. security. â€œThe fact they are effectively surrounded by Russia makes them effectively indefensible. Almost no amount of force could prevent the Russians from taking them, if they were foolish enough to try,â€? he said, adding that, â€œbringing them into the alliance and formally moving the alliance onto the border of the former Soviet Union was almost necessarily going to be provocative and costly as a result.â€? But that doesnâ€™t mean Washington should go easy on Moscowâ€™s own various provocations. Dobbins urged Trump to confront Rus-
Photo: Larry Luxner
Former U.S. Ambassador James Dobbins, right, told Peter Baker of The New York Times during a discussion at the Brookings Institution that he thought George H.W. Bush â€” a former CIA director â€” was the U.S. president who was best suited to foreign policy. â€œHeâ€™s the one I admire most.â€?
sian President Vladimir Putin on his countryâ€™s meddling in the 2016 U.S. elections. â€œUntil Trump establishes his credibility on that issue, heâ€™s going to be completely impotent in regards to Russia policy, as indicated by the 98-2 vote on sanctions,â€? Dobbins warned, referring to the Senate bill to impose additional sanctions on Russia and handcuff the presidentâ€™s ability to curtail those sanctions without congressional approval. â€œThis is the first time almost ever that sanctions have been passed in a way that the president canâ€™t waive them. Itâ€™s unprecedented in the degree to which it limits the presidentâ€™s capacity to use and manipulate sanctions in a way to achieve objectives.â€?
Before the Brookings event wrapped up, it was almost inevitable that someone in the audience would ask Dobbins the proverbial question: What keeps you up at night? â€œNorth Korea,â€? he replied without hesitation. â€œIt has nuclear weapons and is develÂÂopÂ ing ICBMs [intercontinental ballistic missiles]. The Trump administration has said itâ€™ll take military action to prevent that if necessary. At best, such military action against North Korea would involve several million South Koreans getting killed â€” and it could be worse than that.â€? WD Larry Luxner is the Tel Aviv-based news editor of The Washington Diplomat.
5/22/2006 4:48:43 PM
8 | THE WASHINGTON DIPLOMAT | August 2017
North America | WD
NAFTA 2.0 Prodded by Trump, U.S., Canada and Mexico Prepare to Renegotiate Trade Deal by Aileen Torres-Bennett
he North American Free Trade Agreement (NAFTA) came into force in January 1994. It was an unprecedented symbol of cooperation between the U.S., Canada and Mexico and has since set the tone for the amicable relationship between the three neighboring countries, even with lingering, and new, disputes. Among President Donald Trump’s endless stream of sound bites, he has deemed NAFTA a “disaster” and counts it among the trade agreements he threatened to “rip up.” Alarmed at his rhetoric, Mexican President Enrique Peña Nieto and Canadian Prime Minister Justin Trudeau called Trump to roll him back from threats that he was going to pull out of the accord, and Trump decided to renegotiate NAFTA instead. On May 18, U.S. Trade Representative Robert Lighthizer sent a letter to Congress stating that Trump intends to initiate negotiations with Canada and Mexico to modernize NAFTA. Now that the letter has been sent, Congress has 90 days to review the president’s memo and formal negotiations can legally begin after Aug. 16. On July 17, the administration released a broad outline of U.S. negotiating objectives for NAFTA. Among them: reduce trade deficits with Mexico and Canada; maintain existing duty-free access for agricultural, industrial and other goods; eliminate “non-tariff ” barriers to U.S. agricultural exports such as price undercutting; establish new rules to govern the trade of services, including telecommunications, financial services and digital goods like e-books; reduce barriers to U.S. investment; promote intellectual property rights; add enforceable labor and environmental provisions; restrict the amount of imported material in goods that qualify under the pact; address the issue of state-owned enterprises; and scrap a dispute settlement mechanism that gives appeals power to a special NAFTA panel. Canada and Mexico will likely object to some of America’s demands — and come to the table with their own — when negotiations begin after Aug. 16. The intricate deal-making could take months or even years, after which time any revised agreement would be put up for a vote in each country’s respective legislatures. Negotiations could, of course, fall apart, in which case Trump is only legally required to notify the other two parties six months in advance if he is withdrawing from the accord. The president may dislike NAFTA, but it is unlikely the U.S. will completely abandon or remake a landmark agree-
Photo: By Guldhammer - Own work, Public Domain
After NAFTA was enacted in 1994, maquiladoras sprung up throughout Mexico. The factories import certain materials on a tariff-free basis for assembly, processing or manufacturing and then export the completed product as part of the supply-chain process.
This is an opportunity to modernize the agreement, and if the three sides approach the agreement with a constructive mindset, this could improve regional competitiveness. Cathleen Cimino-Isaacs
research associate at the Peterson Institute for International Economics
ment that has integrated the North American market. Most likely, what has already been agreed upon will stay in place, and negotiations will focus on bringing NAFTA in line with today’s economy, where digital trade has become a major force. “This is an opportunity to modernize the agreement, and if the three sides approach the agreement with a constructive mindset, this could improve regional competitiveness,” Cathleen Cimino-Isaacs, a research associate at the Peterson Institute for International Economics, told The Diplomat.
The Purpose of NAFTA When NAFTA was set up, the objective was to integrate the U.S., Mexico and Canada into one giant market to create a competitive regional economic bloc. In
the early ’90s, when NAFTA was being negotiated, globalization was starting to become a grand idea on the world’s stage. In 1993, the European Union was established and the post-Cold War era had begun. “The U.S. had to become part of these broad globalization efforts,” Peter Hakim, president emeritus and a senior fellow at the Inter-American Dialogue, said to The Diplomat. “What was more natural than to take two of its bordering countries, Canada and Mexico, and join together in representing 20 percent of the world’s economy?” NAFTA was essentially “an attempt by the U.S. to establish a paradigm for how to organize the global economy in the post-Cold War period,” Matthew Rooney, economic growth director at the George W. Bush Institute, told The Diplomat.
A free trade agreement between the U.S. and Canada already existed, and NAFTA built on that by adding Mexico to the deal. NAFTA sought to lower trade and investment barriers, and it achieved that by eliminating tariffs on the majority of goods produced by the three parties. As a result, U.S. trade with its neighbors more than tripled, growing more rapidly than U.S. trade with the rest of the world, according to a Jan. 24 backgrounder by the Council on Foreign Relations (CFR). In 1993, regional trade amounted to $290 billion. The latest numbers show NAFTA involves over $1 trillion in trilateral trade, according to the Americas Society/Council of the Americas (AS/ COA). Twenty-six U.S. states, including eight of the 10 largest state economies, rely on Canada and Mexico as their top two export destinations, and 14 million U.S. jobs depend on NAFTA trade. Today, Canada is the leading market for U.S. exports, while Mexico ranks second.
Mixed Bag Based on numbers alone, NAFTA is a big success. But economists caution that “it has proven difficult to tease out See n afta • page 10 THE WASHINGTON DIPLOMAT | August 2017 | 9
NAFTA Continued • page 9
the deal’s direct effects from other factors, including rapid technological change, expanded trade with other countries such as China, and unrelated domestic developments in each of the countries,” wrote CFR’s James McBride and Mohammed Aly Sergie in their backgrounder. Determining whether the deal was a net gain or net loss for workers is even more difficult, the authors argue. “Debate persists regarding NAFTA’s legacy on employment and wages, with some workers and industries facing painful disruptions as they lose market share due to increased competition, and others gaining from the new market opportunities that were created.” The debate is hardly new, mirroring disagreements that surfaced when the idea was first proposed over 25 years ago. “NAFTA was controversial when first proposed, mostly because it was the first FTA involving two wealthy, developed countries and a developing country,” said a May 24 Congressional Research Service report, noting that proponents of the deal said it would generate thousands of jobs and reduce income disparity, while opponents warned it would result in enormous American job losses as production shifted to lower-cost Mexican factories. “NAFTA did not cause the huge job losses feared by the critics or the large economic gains predicted by supporters,” the report concluded. What it did do was usher in a new global trading paradigm. “NAFTA initiated a new generation of trade agreements in the Western Hemisphere and other parts of the world, influencing negotiations in areas such as market access, rules of origin, intellectual property rights, foreign investment, dispute resolution, worker rights, and environmental protection,” the CRS report said, noting that the U.S. now has 14 free trade agreements with 20 countries. “As with NAFTA, these trade agreements have often been supported or criticized on similar arguments related to jobs.”
Photo: Official White House Photo by Shealah Craighead
Above, Canadian Prime Minister Justin Trudeau and President Donald Trump shake hands during a joint press conference in the White House on Feb. 13. Below, the Peterson Institute for International Economics lists key facts on NAFTA as part of its guide to renegotiating the trade accord.
The Biggest Winner NAFTA has yielded undeniable benefits for all three parties, but Mexico has emerged as the one that has gained the most. The U.S. and Canada were already modern economies when NAFTA went into effect, and Mexico, in forging a formal economic relationship with its two developed neighbors, was catapulted into a new playing field. It was forced to abide by new international rules, which created a novel discipline in Mexico’s formerly protectionist, debt-saddled economy, said Hakim. The result is that Mexico became a modernized, liberalized economy, reducing its public debt, stabilizing inflation and attracting foreign investment (although the deal has not done much to slash poverty or boost wages). Notably, Mexico moved away from a focus on agricultural products to industrialization as a result of NAFTA. The most conspicuous example of this is in the automotive industry, where supply chains were created by the free flow of goods between borders that now enables the body of a car to be built in Mexico, then sent to the U.S. for its motor to be put in, then sent back to Mexico to be painted, according to Hakim. There has been a change toward “maquiladora-style manufacturing to provide for the U.S. and Canadian market,” Michael McKeon, project manager of transatlantic relations at the Bertelsmann Foundation, told The Diplomat, referring to factories that import tar-
Graph: Peterson Institute for International Economics
iff-free goods for assembly and export them as part of the supply-chain process. “There’s been a big move from classical agricultural employment in Mexico to low- and mid-level manufacturing jobs. Those jobs in the U.S. moved to Mexico and China and other parts of the developing world, supplanted by automation.”
10 | THE WASHINGTON DIPLOMAT | August 2017
The unforeseen consequence of successfully integrating the North American market has been the loss of blue-collar manufacturing jobs in the U.S., which has contributed to Trump’s voter base. The so-called Rust Belt of the U.S. contains a swath of people who have lost their jobs, and some would argue a whole
way of life, as the auto industry has evolved. Some argue that these jobs have been lost to cheaper labor in Mexico, but others argue that the loss is due to the larger forces of globalization (in particular, China’s accession to the World Trade Organization in 2001) and automation, which has seen technology replace people and increase productivity (also see “Trade, Automation, Cheap Wages Abroad Conspire to Alter U.S. Economic Landscape” in the March 2017 issue of The Diplomat). Economists differ greatly in their opinions on the merits of sweeping trade accords like NAFTA. Some, such as Dean Baker of the Center for Economic and Policy Research, point out that since NAFTA came into effect, America’s trade deficit with Mexico has ballooned and that numerous studies show a link between unfettered trade and lower wages for workers without a college degree. But others say increased trade benefits the economy as a whole. A 2014 Peterson Institute for International Economics (PIIE) study, for example, says that claims of NAFTA stealing American jobs were exaggerated. It points out that almost 17 million jobs were added to the U.S. economy in the seven years following enactment of NAFTA, and that the unemployment rate dropped from 6.9 percent to 4 percent. A more recent PIIE study from May estimates the payoff to the United States from trade expansion between 1950 and 2016 to be $2.1 trillion, which translates into an increase of over $7,000 in per-capita GDP, although the study also concedes that over 150,000 manufacturing jobs have been shed annually over the last 13 years. These figures have “been in keeping with what most economists maintain, that trade liberalization promotes overall economic growth among trading partners, but that there are both winners and losers from adjustments,” according to the Congressional Research Service. That applies not only to American workers, but also to their counterparts in Mexico and, to a lesser degree, Canada. For instance, the elimination of trade barriers under NAFTA exposed millions of small-scale Mexican farmers to competition from heavily subsidized American agricultural firms, putting many out of business. Meanwhile, annual U.S. farm exports to Canada and Mexico since NAFTA took effect quadrupled. That’s why American farmers are now lobbying against significant changes to NAFTA, fearing a loss of access to their lucrative Canadian and Mexican markets. On the flip side, the U.S. auto sector has lost hundreds of thousands of jobs since 1994, while Mexico became a thriving automotiveexport hub. Again, however, economists disagree to what extent this shift was the result of NAFTA versus other factors, such as China’s growth, Mexico’s own efforts to build up its auto industry and the forces of globalization that have connected global supply chains and wiped away traditional divisions. For example, thanks to NAFTA, carmakers in the U.S., Canada and Mexico effectively operate as one large bloc against competitors such as Germany. Parts and labor have become so closely intertwined that “Mexican-made” cars are often made with American parts that support thousands of American jobs, while some 35 percent of “American-made” cars are made with imported components from Mexico, Canada and other nations. While globalization has transformed entire industries, most economists agree that automation — the use of machines and robots to replace low-skilled labor — has caused far more manufacturing disruptions than trade agreements. Today, manufacturing accounts for less than 10 percent of the U.S. workforce, as the nation continually evolves toward a more high-tech, service-oriented economy — pre-
cisely the areas that a revised NAFTA seeks to address. So while Trump blames NAFTA for job losses in the auto industry, even if NAFTA were abolished, “The jobs are not coming back,” said William Reinsch, a fellow at the Stimson Center. Technology is advancing, and so is globalization.
Updating NAFTA There is a consensus among trade experts that while NAFTA has achieved its original objective of increasing trilateral trade, it could certainly use a refresh to bring it up to date with today’s economy. “In particular, we note that NAFTA was negotiated 25 years ago, and while our economy and businesses have changed considerably over that period, NAFTA has not,” Lighthizer stated in his letter to Congress. “Many chapters are outdated and do not reflect modern standards. For example, digital trade was in its infancy when NAFTA was enacted…. [O]ur aim is that NAFTA be modernized to include new provisions to address intellectual property rights, regulatory practices, state-owned enterprises, services, customs procedures, sanitary and phytosanitary measures, labor, environment, and small and medium enterprises.” All three parties say they are ready to come to the table to update NAFTA. Experts say that while the administration hasn’t fleshed out its position in great detail, the main issues will likely be ecommerce, rules of origin and intellectual property. Between the U.S. and Canada, softwood lumber will be a sticking point, and between the U.S. and Mexico, sugar and citrus will be the big points of contention. Any negotiations will be fraught with difficulty and arcane details, however, and just like Trump will be pushing for a better deal, Canada and Mexico will expect concessions from him as well. For instance, Canada will be reluctant to open up its protected dairy industry. Mexico will want more favorable treatment for its truckers crossing the U.S. border. And both countries will want to preserve the dispute mechanism that largely prevents the U.S. from imposing antidumping duties on them. Canada and Mexico are gearing up for a fight, launching an aggressive charm offensive to woo American lawmakers and businesses. Canadian Prime Minister Trudeau, for example, delivered the keynote address at the 2017 U.S. National Governors Association’s summer
ments made under TPP could be a good basis for the upcoming NAFTA negotiations (also see “After U.S. Withdrawal from Trans-Pacific Partnership, Now What?” in the April 2017 issue). Indeed, some of the objectives outlined by the administration with regards to updating NAFTA’s labor and environmental protections appear pulled straight from the TPP playbook. “The TPP could be a basefor NAFTA for certain NOTE: Although every effort is made to assure your adline is free of mistakes in spelling an Trump content it is ultimately up to the customer toissues, makeand the indeed final proof. officials have said they’d like to use TPP as a starting The first two faxed changes will be made at no cost to the advertiser, subsequent change point,” wrote Cimino-Isaacs will be billed at a rate of $75 per faxed alteration. Signed ads are considered approved. in an email. “In particular, in areas like digital trade and Please check this ad carefully. Mark any changesdisciplines to your on ad. e-commerce, state-owned enterprises, laPhoto: wikipedia Commons / Wiki Historian N OH bor standards and environIf the ad is correct sign and fax to: (301) 949-0065 needs changes Honda’s auto manufacturing complex in Marysville, Ohio, is home to the coordinating entity for all Honda North American facilities. NAFTA integrated ment, TPP has been touted automotive supply chains between the U.S., Mexico and Canada and made the region a competitive economic bloc. Mexico became a big beneficiary on the automotive front, and American critics of NAFTA argue that it tookThe awayWashington U.S. automotive jobs. At the same time, car production has become so as setting new precedents for Diplomat (301) 933-3552 U.S. trade deals. However, closely intertwined that “Mexican-made” and other foreign cars are, in fact, made with American parts and support thousands of American jobs. Honda says the unhindered movement of goods and services has allowed it to flourish in North America, where the Japanese conglomerate has it’s not going to be as simple Approved __________________________________________________________ invested more than $22 billion and employs over 40,000 people. as moving over what was done exactly in the TPP to Changes ___________________________________________________________ meeting, touting the benefits ernment’s right to regulate in Obama saw TPP as a way to insurance, accounting and NAFTA because the agree___________________________________________________________________ improve NAFTA, according delivery services were also ment was based on a balance of U.S.-Canada trade. Among the public interest. other things, he noted that The Peterson guide also to Politico Magazine, which brought into the agreement, of concessions between 12 the two countries share the contains a section on what reported that the Obama as well as digital commerce. countries.” largest trading relationship in not to do at the negotiation, administration spent three The U.S. was also able to inthe world, with bilateral trade such as revising rules of years working on upgrading clude more protections for Consequences totaling over $880 billion last origin to require more con- NAFTA under the umbrella intellectual property and the tent from U.S. factories. The of TPP. Under TPP, Canada environment, Politico’s Mi- of Exiting year. The goal, wrote Megan White House argues that in- gave U.S. farmers access to its chael Grunwald reported. No one but Trump knows Trump cut off TPP before what he will do next. His Cassella of Politico, is to creasing the required share dairy industry, and Mexico “build groundswell of local of North American parts in said yes to labor reforms. it could make its way to ConSee n afta • page 45 support in the United States determining what counts as U.S. service sectors such as gress for review, but the agreeto pressure the Trump ad- originating from the NAFTA ministration not to do any- trade area will help American thing radical to the 23-year- manufacturers and reduce competition from low-wage old trade agreement.” countries in Asia. But the Peterson Institute argues that Do No Harm such a revision could erode Indeed, many economists NAFTA trade preferences say the U.S. should approach that make it cheaper for imnegotiations with a “do-no- porters to buy products from harm” mentality. Opponents the region as a whole, makof wholesale change argue ing the free trade zone less that U.S. trade with Canada competitive. The guide also and Mexico is already fairly cautions against promoting well-balanced, particularly “Buy America” policies becompared to America’s gap- cause this will likely result in ing trade deficits with nations retaliation from Canada and such as China. Mexico, which could restrict The Peterson Institute for the ability of U.S. firms to bid International Economics has on their government concreated a guide to renego- tracts, meaning businesses tiating NAFTA, by Melina in all three countries could Kolb and Cimino-Isaacs. For be left hurting. e-commerce, the recomOn that note, economists mendation is to raise North stress that the U.S. should not American limits for imports adopt protectionist policies that count as duty-free, en- that violate World Trade Orsure an open market for ganization rules, which could digital goods and services, spark a raft of lawsuits, titand protect proprietary tech- for-tat tariffs and a trade war nologies, intellectual prop- that hurts U.S. exporters and erty and consumer privacy. raises costs for consumers. The recommendation for rules of origin is to simplify TPP Template? them into a regional content s %.',)3( !3 ! 3%#/.$ ,!.'5!'% Trade experts point to the rule that can be used for all products. The guide also rec- Trans-Pacific Partnership s '2/50 #,!33%3 ). &/2%)'. ,!.'5!'%3 ommends the enforcement (TPP), which was to have of labor rights and laws; en- been outgoing President s 4%!#(%2 42!).).'