In Nafta Rewrite, Canada Took Cue From Mexico: Make a Big Concession

As Trump’s deadline for the negotiation neared, Canadian negotiators struggled to make the U.S. give ground

Mexican Economy Minister Ildefonso Guajardo offered advice: Make a key concession to the U.S. to break the logjam. Mexico had bent to U.S. pressure on policies aimed at shifting auto production from Mexico back north, opening the way for Mexico and the U.S. to strike a broader deal a month earlier.

.. For Canada, the equivalent of Mexican cars was dairy. Canadian negotiators had already been thinking along the same lines, and the next day, Canada sent the U.S. a document that included detailed plans for easing curbs on American milk and cheese products, a Canadian official said.

.. Two sectors drew outsize attention in the talks—auto and dairy—that came to be dubbed by some the “cars and cows” negotiations. The path to the deal had plenty of twists and gambits that backfired over the 13 months of meetings, as Mexico and Canada at times accused each other of betraying their early oath to present a united front.

The tone for the Nafta talks was set in October 2017, when Mr. Lighthizer made a number of controversial demands that would recast the pact, such as injecting a “sunset clause” making it easier for a country to terminate the pact and weakening the mechanisms allowing challenges to American trade penalties.

Among the most controversial proposals was one requiring that half the content of cars built in North America come from the U.S. Both Canada and Mexico quickly rejected that as incompatible with the core principles of an agreement designed to tighten integration of a continentwide bloc.

.. But behind the scenes, Canadian officials thought they could work with the idea. They asked a longtime trade bureaucrat to find a creative way to satisfy U.S. goals without capitulating to U.S. demands. He put together a plan that would change the criteria for what qualifies as “North American content,” in a way that would emphasize higher-value input such as software.
.. “It became clear at that stage that Lighthizer wasn’t going to give us anything at all until he knew the outcome of negotiations for the auto sector,”
.. At the end of August, Messrs. Trump and Peña Nieto announced a deal that included the requirement that 40% to 45% of North American auto content be made by workers paid at least $16 an hour.
.. Though the Nafta dairy market is worth a fraction of the auto industry—and the U.S. runs a dairy surplus with Canada—it became an important issue for Mr. Trump after he got an earful during an April 2017 visit to Wisconsin. The president made Canadian dairy a staple of stump speeches and tweets complaining about how Canada took advantage of the U.S.
.. Mr. Kushner had come to play a behind-the-scenes role in the Nafta talks, and Canada’s negotiators wanted him to see right away a document that included Canada’s formal offer on dairy. The key concession had been made and the U.S. soon responded by giving in to some of Canada’s key demands.

A Vengeful and Shortsighted Act

It is hard to imagine how this would coax the Palestinians to offer more concessions in a negotiation with Israel. What they see is that the United States under Mr. Trump has embraced the views of Israeli right-wing nationalists and tried to take two of their most important negotiating issues — the status of Jerusalem, which Mr. Trump undermined by announcing late last year that the United States embassy would be moved to Jerusalem, and now the right of return — off the table.

Through all the decades of peace negotiations, the Palestinians had believed that the United States, dedicated to Israel’s security, was the only power that could fairly mediate with Israel on their behalf. Mr. Trump has abdicated this leadership role, risking a humanitarian disaster and renewed violence.

Michael Cohen to Trump: I will flip on you if I need to

“Once I understand what charges might be filed against me, if any at all, I will defer to my new counsel, Guy Petrillo, for guidance,” Cohen said.

Pressed on his past commentary about being willing to do anything for Trump, Cohen again hinted at flipping: “To be crystal clear, my wife, my daughter and my son, and this country have my first loyalty.”

..  he was unhappy with Trump for not helping with his legal bills.

..  Then Cohen resigned as deputy finance chairman of the Republican National Committee by citing not just the investigation he faces, but his disagreement with the Trump administration’s policy of separating families at the border.

.. And Cohen’s interview came with another big signal: the reported end of a joint agreement between Cohen and Trump’s legal team to share information. Such things often presage a more antagonistic relationship or even cutting a deal to inform on someone else. Michael Flynn’s lawyers stopped sharing info with Trump’s lawyers, for example, shortly before he flipped.

..  if we’re really reading between the lines, it could also be significant that Cohen declined to downplay criticisms of Robert Mueller’s Russia investigation. “I don’t like the term ‘witch hunt,’” he said.

Cohen faces problems unrelated to the Russia probe, but if he flipped he would be providing evidence for that investigation.

.. And in fact, the opposite seems to have occurred. Trump and the White House have minimized Cohen and suggested that his legal problems have nothing to do with it. Asked by Stephanopoulos about that treatment, Cohen grew rigid and assured. “I will not be a punching bag as part of anyone’s defense strategy,” he said. “I am not a villain of this story, and I will not allow others to try to depict me that way.”

.. Does he not think he can pardon Cohen or pay his legal bills, politically speaking? Or is this just part of the intense (if thoroughly and strangely Trumpian) public negotiations that are going on around this whole thing right now?

Trade Fight Threatens Farm Belt Businesses

Many farmers, who depend on shipments overseas for one-fifth of the goods they produce, say they are anxious

Researchers at the University of Illinois and Ohio State University estimate that over four years, a 25% tariff on U.S. soybean imports by Beijing would result in an average 87% decline in income for a midsize Illinois grain farm. The loss would pressure farmland prices, they say, prompting a more than $500,000 decline in the farm’s net worth by 2021.

.. Still, many farmers say they support the Trump administration’s trade goals of modernizing Nafta, shrinking the U.S. trade deficit and combating what they see as unfair trade practices by China. They view the president’s approach as a negotiating tactic and hope it will bear fruit by fall, when farmers will harvest their crops. Some are prepared to sacrifice financially if the U.S. economy benefits in the long run.

.. administration officials have tried to reassure farmers, saying they are considering the use of Depression-era programs, which permit borrowing of as much as $30 billion from the Treasury, as well as other tools to shield farmers from trade-related losses.

..  if farm incomes are significantly squeezed, tensions could emerge between party loyalty and farmers’ wallets. “In a close enough election even a small group can matter,” Mr. Franklin said.

.. Some farmers fear trade battles will jeopardize foreign markets for U.S. agricultural products that took decades to establish.

.. Dairy farmers have been banking on sales abroad to help absorb increasing milk supplies that have pushed down prices. Tariffs imposed on U.S. cheese exports by Mexico, the largest buyer of U.S. dairy products, add insult to injury