The new United States-Mexico-Canada Agreement (USMCA) was signed November, last year, by the President with warm enthusiasm from Congress. The promise was a no-tariff zone, free trade, American prosperity, all good for big business and consumers.
Unfortunately, our Negotiator-in-Chief was trumped by Mexico. This House of Cards trade deal will create even larger deficits ($566 billion in 2017), and enhance China’s position as the world’s biggest exporter of goods – currently $2.26 trillion, about 1.5 times the U.S. or Germany.
To understand this fiasco, consider two elements.
Number one is that the average Jill doesn’t buy goods from China. American businesses do. And they buy at very low prices and sell at huge profits to the American market.
Consider the $100 phone made in China that costs you $1,200. Or sunglasses here at $550, that are $14 to import. And even our children are ripped off for sneakers that cost our companies $11 to import and are peddled here for $280 – on sale!
Importing from China guarantees huge profits for the modern business that will change suppliers to save a dime on a million-dollar purchase, or fire its older employees, just to save on health insurance premiums and seniority raises.
Number two is that the United States is working on a fair trade agreement with China. And if that doesn’t pan out, both countries will continue tariffs to protect domestic production, which will put a huge squeeze on American imports from China.
Now, back to USMCA.
Mexico looked at this deal with Donald Trump and his merry munchkins and decided it was flawed.
This conclusion may or may not have been a surprise to Trump’s chief negotiator, Steven Mnuchin, Treasury Secretary, and a director of Sears Holdings from 2005 to 2016. This avowed defender of the average American consumer is also a featured attendee of the Trilateral Commission, a former Hollywood producer and Executive VP at Goldman Sachs.
What did the Mexicans learn?
Luz Maria de la Mora, Mexico’s undersecretary of Foreign Trade of the Ministry of Economy, explained it this way at the Liánméng 2019 Forum:
If we want to remain competitive, we need to find ways that the Chinese investment will also come to Mexico, because we need to complement trade flows and imports we do in China. We need to bring to the region for China to continue to participate in these commercial flows.
De la Mora said Mexico should promote this type of mechanism with China and other countries to strengthen the country and, in some way, “face the protectionism (against China) that comes from the United States at this time.”
“We have to see the positive side; this is also opening opportunities for Mexico,” the undersecretary said.
We reached an agreement with clear rules, and we are ideally positioned to be the world’s production and export platform to the U.S., so I think this is also an opportunity between China and Mexico. We seek to reinforce those bonds and that shared production that we need so much and that I also believe our economies deserve.
We need to seek to build an agenda, and that is my responsibility, and I assure you that we are going to work with the Chinese authorities to seek to improve that regulatory aspect that allows us to have greater fluidity, he added.
In short, Mexico will import goods from the dictatorship of China, sell items to U.S. businesses without tariffs or quotas, making a fortune as the middleman, and subverting any agreements we make directly with the Chinese. The mad rush for imported products and overseas manufacturing will continue.
The only way the American worker and consumer will benefit from a new trade policy is if we cut imports of manufactured items and bring factories back to this country to create living-wage jobs.
The GOP/Chamber of Commerce plan ignores workers, focuses on balancing the U.S. current account, and offers these goals:
- Export more agricultural products and create slave-wage jobs & encourage border jumping.
- Tighten “intellectual property” rules to increase profits for Hollywood producers – no jobs added.
- Expand our financial services and banking services to China, a Wall Street bonanza.
- Provide more legal services to China – because we need more lawyers here?
- Finally, produce to export amazing TV commercials like: “Liberty, Liberty, Liberty……Liberty”