July 18, 2017

NAFTA re-do spurns manufacturing, benefits finance, media, agriculture

Since the Establishment hijacked the Trump White House in April, I've always emphasized the exception of the trade issue. It was the one area where the Trump campaign was being put into action, whereas on all other major topics the key GOP power groups (Pentagon, RNC, etc.) had seized control. That was reflected in personnel, where Ross as Commerce Secretary and Lighthizer as Trade Representative were clearly from the economic nationalist camp, unlike the globalists in charge of Defense, National Security, Treasury, etc.

I reasoned that the Establishment was letting Trump get his way on trade in order to keep the Rust Belt voters happy, so that the GOP could win further presidential elections and maintain its grip over the executive branch. Without Rust Belt voters, the GOP never wins the White House again.

So I was using "trade" synonymously with "re-industrialization" and manufacturing -- Trump won those Rust Belt states that have been de-industrialized, giving them hope that their economies would re-industrialize and return prosperity to their communities.*

Unfortunately, when the office of the Trade Representative released its objectives for re-negotiating NAFTA, manufacturing is just a little afterthought, while the sectors of finance, telecommunications (media), and agriculture make up the bulk of the focus, and with the most highly detailed goals.

The headline from the Axios article says it all: "Trade advocates relieved at Trump's moderate turn on NAFTA".

Free-trader approval:

House Ways and Means Committee Chairman Kevin Brady and Trade Subcommittee Chairman Dave Reichert released a statement praising the Trump administration's document. Why you should pay attention to Brady: He's a Texan with vested interest in keeping NAFTA afloat, and he's one of the most principled free-traders in Congress.

The Chamber of Commerce's commended the objectives because they "hew to the 'do no harm' philosophy long advocated by the business community," per Inside Trade.

In short: plenty were worried Trump would blow up NAFTA and today's document is the clearest sign they're moving in a more conventional direction.

The article doesn't go into detail about why the free trade ideologues and Chamber of Commerce are happy about the proposed goals, but a look into the document itself shows why: there is no sincere effort to reverse the "giant sucking sound" of manufacturing jobs going from America into Mexico over the past 20-odd years. The only sectors that they are planning to go to bat for are agriculture, finance, and the media.

Here is the entire brief section on objectives for industrial goods:

- Maintain existing reciprocal duty-free market access for industrial goods and strengthen disciplines to address non-tariff barriers that constrain U.S. exports to NAFTA countries.

- Maintain existing duty-free access to NAFTA country markets for U.S. textile and apparel products and seek to improve competitive opportunities for exports of U.S. textile and apparel products while taking into account U.S. import sensitivities.

- Promote greater regulatory compatibility with respect to key goods sectors to reduce burdens associated with unnecessary differences in regulation, including through regulatory cooperation where appropriate.

The last item is meaningless, since it's not regulations that sucked the jobs out. The first two are mostly about "maintaining" the status quo and just making it easier for the handful of remaining American manufacturers to get their products into Mexico.

It takes as fait accompli the tens of thousands of vanished factories of the entire past quarter century, and does not seek to force them back into America through any means at all -- e.g., by slapping a big fat 35% tariff on every item made in Mexico by an American-owned company that outsourced its workforce, so that the American company's cheap labor strategy will be foiled, and they might as well do production here again.

Notice the lack of specific areas of focus and specific problems within them that need to be corrected. They don't really care about manufacturing, which is treated as a boring homogeneous blob that is only there for feel-good lip service.

Contrast that with their attention to agriculture:

- Maintain existing reciprocal duty-free market access for agricultural goods.

- Expand competitive market opportunities for U.S. agricultural goods in NAFTA countries, substantially equivalent to the competitive opportunities afforded foreign exports into the U.S. market, by reducing or eliminating remaining tariffs.

- Seek to eliminate non-tariff barriers to U.S. agricultural exports including discriminatory barriers, restrictive administration of tariff rate quotas, other unjustified measures that unfairly limit access to markets for U.S. goods, such as cross subsidization, price discrimination, and price undercutting.

- Provide reasonable adjustment periods for U. S. import sensitive agricultural products, engaging in close consultation with Congress on such products before initiating tariff reduction negotiations.

- Promote greater regulatory compatibility to reduce burdens associated with unnecessary differences in regulation, including through regulatory cooperation where appropriate.

All of a sudden, they're obsessed with expanding the American producers' market in Mexico and Canada, not just "maintaining" the status quo. And look at all the fine-grained mechanisms they are targeting -- rate quotas, cross subsidization, price discrimination, undercutting. They don't even name the practices by which American manufacturing has been sucked out into Mexico.

They're so fixated on agriculture that they have a separate section with five goals just about safety regulations that might limit American agricultural products.

Reality check: agriculture was invented 10,000 years ago, and did not make us into the prosperous nation we were in the 1950s. It is mostly done in the deep red states of the Plains and Mountains, so that catering to that sector draws no new Republican voters. Most of the labor is done by immigrants rather than Americans, whether they are here legally or illegally. Agriculture is heavily subsidized by the American taxpayers, unlike manufacturing.

And BTW, General Kelly at DHS just approved another 15,000 visas for unskilled seasonal labor, since the cap had already been met at 66,000 for the year. What is reduced from the "illegal immigrant" column will simply be moved into the "legal immigrant" column by increasing visas. 

The only ones who benefit from this are the big agribusiness corporations, akin to the landowning class who ruled over the serfs in feudalism.

During the campaign, Trump dismissed the focus on agriculture in trade deals by pointing out how "all we send to Japan is beef," while they're sending us cars that zip off the over-stuffed container ships at 40 mph. Making cars leads to national prosperity, raising cattle does not.

So much for trade in goods, what about trade in services? Here is where the American elites are really going to make a killing, since only advanced professionals will be in demand at the international level. It's not going to be blue-collar workers who are put on retainer for intellectual property litigation.

The media sector:

- Promote competitive supply of telecommunications services by facilitating market entry through transparent regulation and an independent regulator.

- Secure commitments to provide reasonable network access for telecommunications suppliers through interconnection and access to physical facilities and scarce resources.

- Establish provisions protecting telecommunications services suppliers' choice of technology.

It's not enough for AT&T to merge with Time-Warner (parent company of CNN), they have to expand their telephone / cable / internet / entertainment empire into Mexico's large market as well. That creates jobs for the high-powered lawyers in mergers and acquisitions who will draft the contracts, and it will enrich the big stockholders. But the skilled technicians and unskilled workers who install the Mexicans' cable and internet will be local Mexicans, not Americans.

The finance sector:

- Expand competitive market opportunities for United States financial service suppliers to obtain fairer and more open conditions of financial services trade.

- Improve transparency and predictability in their respective financial services regulatory procedures.

- Ensure that the NAFTA countries refrain from imposing measures in the financial services sector that restrict cross-border data flows or that require the use or installation of local computing facilities.

Same thing applies here as with the media -- only the high-powered professionals will see new jobs and greater income by spreading the tentacles of the big banks into Mexico.

Finally, the digital sector:

- Secure commitments not to impose customs duties on digital products (e.g., software, music, video, e-books).

- Ensure non-discriminatory treatment of digital products transmitted electronically and guarantee that these products will not face government-sanctioned discrimination based on the nationality or territory in which the product is produced.

- Establish rules to ensure that NAFTA countries do not impose measures that restrict cross-border data flows and do not require the use or installation of local computing facilities.

- Establish rules to prevent governments from mandating the disclosure of computer source code.

Once again, no blue-collar or middle-class Americans will gain jobs or income. This is designed to benefit elite professionals whose digital products can be scaled up to an international level -- a smartphone app, a pop song, etc.

These three service sectors -- finance, media, digital -- are all deep blue liberal Democrat constituencies, unlike the deep red agribusiness. But the result is the same: no new Republican voters are brought on board, few new jobs for American workers, and greater wealth concentrated in the elite stratum. Also like agribusiness, these sectors are heavily subsidized by the taxpayers -- bailouts of big banks, handing over the airwaves and internet to private mega-corporations, and inflating one tech bubble after another.

Unlike these sectors that are the focus of NAFTA negotiations, the ignored manufacturing sector used to lie in purple states, offering the chance to swing yuge numbers of voters into the GOP column. It created millions of jobs for working and middle-class Americans -- not foreigners, and not elites. It paid high wages. And it was not kept alive by government subsidies.

Just look at what the different governments subsidize -- America subsidizes farming and banking, while letting manufacturing fend for itself, whereas Mexico or South Korea subsidize industry, while allowing their farms to get driven out of business and their finances to be taken over by multinational banks.

Until that is reversed, our country will continue to lose high-paying jobs for ordinary Americans, and be further driven into a polarized wealth pyramid with more poors and more elites. That is a recipe for a literal bloody revolution, and if the people in charge want to avoid that, they will bring back those manufacturing plants and jobs that allowed for a large prosperous middle class in America -- prosperous and satisfied with fairness concerns, that they did not feel like launching a Russian Revolution against their superiors, who treated them with noblesse oblige.

Sadly, it looks like the greedy short-sighted Establishment is taking over the issue of trade, preventing the re-industrialization of the Rust Belt -- or anywhere else in America that wants plentiful high-paying jobs for everyday people.

Silver lining: unlike the issue of warmongering, where there are no anti-war groups left to organize citizens against their wasteful and reckless government, there still are trade and industrial unions left to organize workers -- especially after they were promised a restoration of the Rust Belt.

Trump needs an organized mass of citizens to fight for his agenda, giving him cover in the swamp of Washington. If he is left to fight the populist and nationalist battle all by himself, the Establishment members will tell him to go to hell, ignore his priorities, and go right back to business as usual. He has no leverage within DC itself, so he will not be able to retaliate against them -- unless he wants to take the fight public and dare them to defy him out in the open! Even so, that will be much more likely to succeed if he is given cover fire by armies of citizens.

The corrupt leadership of the big unions has gone along with de-industrialization, but the rank-and-file are still organized, and are not exactly the "go along to get along" type. Especially if Trump himself wages war against the de-industrializers who are trying to hijack the effort to re-negotiate NAFTA, the rank-and-file union members will eagerly team up with him. They want to be led, and their current leaders are largely sell-outs. If Trump wants to lead, they will follow -- but only if it's toward re-industrialization.

Lastly, it turns out that the GOP really is still the party of stupid. I thought they'd at least concede the battle over re-industrialization in order to keep the Rust Belt states in the red column, but they are hell-bent on defying the Trump agenda all the way through.

They think white working-class people in Michigan will be too stupid to notice the lack of delivering the goods on restoring the Rust Belt industries, and will simply be won over by image and messaging, rather than substance and results.

News flash: Great Lakes people don't care for Trump's image or tone! They took a chance on him because of his promise to re-build their lost factories. They may even give him a chance again in 2020 regardless. But if the RNC, Chamber of Commerce, and the rest of the Establishment prevent Trump from delivering the goods, kiss the Rust Belt good-bye after he's left office.

* It was the Industrial Revolution that made us so prosperous, and narrowed the inequality gap between workers and elites. Finished goods are highly valued by buyers because most people cannot turn raw materials into a final usable product on their own. The more useful the good, and the more difficult it is to make, the more the consumer is willing to pay beyond the cost of making it -- like a car. That means higher profit margins compared to low-margin things that people can easily make themselves, like meals.

If the industry were competitive, the owners of a company would have to pass along a lot of that high profit margin to their workers, or they would work somewhere else. Low-margin industries like food service and retail service do not have much profit to pass along to begin with, even if the worker got 100% of it. Only manufacturing industries can support a large prosperous workforce.


  1. Related article on agriculture being a top TPP supporter, being pissed at Trump for killing TPP, and now wanting him to get them the market access and low tariffs they would've gotten under TPP:


    "For the beef industry, the stakes are particularly high. Japan's tariff on U.S. beef was slated to drop from 38.5 to 9 percent over the next 16 years under TPP. Now producers are pushing the administration to deliver terms that are at least as favorable.

    " 'That's the greatest market access ever negotiated — so far,' said Kent Bacus, director of international trade at the National Cattlemen's Beef Association, a trade group. 'We're hopeful that the new administration will be able to strike a bilateral deal very soon and either improve upon that or at least get us the 9 percent that TPP would have offered.' "

    So for the moment agribusiness is trying to hijack the NAFTA re-negotiations in order to get more beef into Mexico and at a low tariff, to make up for their lost premium access to Japan.

    There's only so much Mexico is willing to concede overall, so making beef and agriculture at the top is going to sideline the effort to get re-industrialization into the deal.

    Even more appalling that those meatpacking plants are all staffed by illegals from south of the border.

    We must cut agriculture down to size in order to re-industrialize and become prosperous again.

  2. So, are we still stuck in 1985? The GOP looks the other way about the lower class being fleeced as long as they pander to abortion single issueists and to people who think that gun manufacturers are such lovely people for flooding America with chintzy handguns that often end up in the hands of criminals.

    Meanwhile, the Dems have moved on from the 80's and embraced every airheaded manifestation of decadent cultural liberalism, which appeals primarily to elites while alienating vast swaths of America.

    Result? We're weak, corrupt, and decadent. And the GOP's record fundraising is turning into a bait and switch. Trump got them where they are, they initially affected at least a little bit of interest in changing their tune to match Trump's, but eventually the treasonous and/or perverted lobbies prevailed (as they always have since the mid 70's). Our "leaders" remain willfully opposed to what normal native people actually want.

    Inertia and taking the money/status boosts that come from elite toadying are still making real progress tough to reach.

  3. China and Russia appear to be shoring up their alliance. No doubt, they realize how screwed in the head the traditional West has become. And they must be astonished how we proudly wear our current decadence, as we claim it's evidence of our superior "modern" ways. Now granted, they also know that prole natives detest what's going on; the East must be wondering at what point the rage finally boils over and something is finally done to rein the elites in. Of course, the civil war proved that a Boom type generation could stubbornly resist moderation while younger generations and non-elites got ground up by the friction. There's no reason that can't happen again, and depress and pain America until such time that this elder generation finally is silenced by mortality.

  4. You can see some DoD/Spying priorities in there too:

    Ensure non-discriminatory treatment of digital products transmitted electronically and guarantee that these products will not face government-sanctioned discrimination based on the nationality or territory in which the product is produced.

    - Establish rules to ensure that NAFTA countries do not impose measures that restrict cross-border data flows and do not require the use or installation of local computing facilities.

    - Establish rules to prevent governments from mandating the disclosure of computer source code.

    No "government-sanctioned discrimination based on the nationality or territory in which the [computer software or hardware] is produced" and no restriction on cross-border data flows and no requiring use of local computing facilities is partly a sop to Google and Facebook and their chums, but is also using "trade" rules to prevent governments refusing to buy and use NSA-backdoored US-supplied gear and/or limiting the export of all their data and all their citizens' data to the US for spying. Even the "no mandating disclosure of computer source code" stuff is partly about keeping NSA backdoors hidden.

  5. Trump went along because he believes in economic growth, "hard work" and america and they convinced him it'd help in all things.

    He's a conservative, with all the negative baggage it implies and not a populist. You want to see high time preference/short term thinking? Look at US cons/

  6. I believe you said a while back that elite solidarity (as opposed to competition) will only return when there is another financial crash to put the upper/upper-middle classes in the same boat as the rest of us. Of course, we also need the crime rate to go up to create a more outgoing/interactive attitude and help us overcome the chronocentrism of the culture wars BS.

  7. It's not related to NAFTA but it says a lot that the only recent "win" Trump has been inching towards recently is the Charlie Gard bullshit which is very much a cause celebre of the GOPe (DEATH PANELS AND COMMUNISM THIS WHAT IS AWAITING US WITH UHC) and religious right (EVERY LIFE IS PRECIOUS EVEN WHEN THE CHILD IS ALREADY VIRTUALLY DEAD).

  8. Yeah. Trump's getting a "win" with the group he should be driving out of the GOP. Let the teavangelical cucks join the rest of the moralizing busybodies in the dems.

    He could have gotten a border wall and serious reductions in legal immigration if he'd traded 1) enshrining legality of abortion in federal law 2) government to pay for abortions with a new tax on churches.

  9. Trump is a populist -- re-industrialization is the most consistent view he's held over decades, along with single-payer healthcare. He's not conservative, said so during the campaign, and asked GOP voters, "So what?"

    The evangelicals have not been bad to Trump -- it's the corporate globalists who are blocking his populist agenda, and the Pentagon and Deep State brass who are forcing him into regime change against Syria, sending thousands more troops back to Afghanistan, etc.

    The executive order on religious institutions was empty enough that the ACLU said, "Oh, nevermind, we won't be suing after all -- there's nothing here." Johnson Amendment remains in effect.

    I think they're just happy that there are going to be more conservatives in high-ranking court positions, starting with Gorsuch. But that would've happened under any GOP President, so they'll be thankful to Trump only as a Republican, rather than for anything distinctly Trump-ian that he's doing (unless he goes after the Johnson Amendment).

  10. A general rule of "Is this good?" is how the enemy responds. "The enemy" is issue-specific -- we may not care how a neo-con responds to Gorsuch being nominated to the Supreme Court, because they are not the enemy in the arena of judicial over-reach. If Bill Kristol likes Gorsuch, who cares?

    But in the arena of military over-reach, neo-cons are the 100% enemy. Any action or even speech that they applaud is ipso facto suspect.

    The ACLU may not be the enemy in the arena of surveillance over-reach. But they are the enemy when it comes to religious freedom. Whatever they praise or are OK with, on that issue, is bad for Christians.

    Free trade ideologues, Chamber of Commerce responding favorably to an action or speech about trade and industry -- bad.

    Wall Street rally in response to plans on tax reform -- bad.

    Long-time Republican partisans got suckered into believing the GOP elite power groups would "bend the knee" to Trump, so that any positive response from them on some issue where they had formerly been the enemy, meant that they had changed their views to match the President's, and that the policy reflected the Trump agenda to which they had reconciled themselves.

    I thought that too, until it got torpedoed in April, and has not let up since.

    Since then, it is back to insurgent mode if we want anything to get accomplished. And it is back to viewing any positive reactions from the enemy as proof that the outcome is bad for the Trump agenda.

  11. So what do you make of the news that Trump's ending the arming of Syrian rebels? Anything significant like Trump finally starting to punch back against the Cold War cultists or just the Pentagon deciding to cut their losses and slither into a new mess?

  12. We'll have to wait and see. On its own, it sounds good, but it could also be another case of whack-a-mole.

    Ralph Peters, the neo-con idiot who got butchered on Tucker, said "the Kurds" should run Syria after ISIS is done and/or Assad were removed from power.

    Elijah Magnier's reporting from around the region suggests that the Pentagon and CIA are starting to put all their eggs in the remaining Kurdish basket. Saudi Arabia has also started to bankroll Kurdish groups.

    The Pentagon-Zionist-Jihadist alliance will resort to anyone being the so-called buffer zone between Iran and Israel/Saudi.

    For the moment, things are going well with the jihadist groups getting cleaned out. But it could be a lull before another major push for regime change, only this next time by the Kurds in the post-ISIS landscape.

  13. What's unambiguous good news, though, is McCain getting sidelined by brain cancer. Imagine how many toxic loads Lindsey Graham's butt boy has taken to the face, and even inside his face.

    Maybe if he'd done something good for humanity, America, or just Arizona, we could feel sympathy. Sorry: burn in Hell, you jihadist-enabling fairy.

  14. "He's a conservative, with all the negative baggage it implies and not a populist. You want to see high time preference/short term thinking? Look at US cons/"

    That is true of the working-class conservatives, but its not true of Trump. He's more long-term thinker, future-orientation, abstract-oriented. If he wasn't, he would never be a good strategist.

  15. If we're talking sectors to sideline besides FIRE and agriculture I nominate "intellectual property in general" -- remove any IP laws/participation in intellectual property treaties in general in place as well as prohibiting commercial exports of it.

    It'd destroy hollywood, silicon valley app centers and as a result of this severely set back elite and globalist propaganda tools.

    Imagine it, Facebook and google lose 95% of their audience/market along with Hollywood's no longer having either the third world market or protection from people doing fanworks of ah, dubious quality to compete with their garbage remakes.


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