On the campaign trail, Donald Trump vowed to renegotiate the North American Free Trade Agreement or, failing that, to dismantle it. If the president backs out of NAFTA, the effects could be wide reaching and potentially catastrophic, most trade experts agree.
But the agreement is more than 20 years old, and it could use a fresh coat of paint. Mic interviewed Carla Hills, the chief negotiator of NAFTA under President George H.W. Bush, about steps Trump could take to update the agreement for the 21st century. The follow interview has been edited and condensed.
Mic: First, what is NAFTA?
Carla Hills: It joined the economies of Canada, Mexico and the United States, a $19 trillion market with 490 million consumers. It was the first free trade agreement to join a developing and a developed economy. It eliminated tariffs on all industrial products. It opened up a broad range of services that existed then, and national treatment for a number of cross-border service providers in particular.
And it was the first free trade agreement to protect intellectual property. It opened up the agricultural market between the United States and Mexico. (Canada stood out on that one.)
And it provided an effective dispute settlement. Those are the things it did, and those areas have changed in 23 years. Kind of like a house. It's old. You don't need to tear it down, you need to paint it.
You've said you think there are some specific things the president could change in NAFTA to make the U.S. more competitive. What are some of those things?
CH: There are many things they can do because the agreement is 23 years old. Among them is they could cover energy. Energy was not on the table when we sat down to negotiate the NAFTA because of the constitutional prohibition in Mexico. Mexico had a provision that energy was state-run.
For example, a company in the United States could not enter into a contract and withdraw oil. And [Mexico] didn’t have the expertise to do tertiary recovery and, in the Gulf of Mexico, that's really required. Opening up the energy market, and the current president of Mexico has done exactly that by changing the constitution to have rules that cover that sector, would be welcome to the oil companies around the region.
Who, besides oil companies, would benefit from that change?
CH: All companies would benefit from that. Mexico would benefit from that. The more assurance you give for companies that are going to invest, they more likely they are to invest and to create jobs and economic benefits.
Could small business in the U.S. benefit from that change?
CH: Yes. And you and I would too because when you increase your economic output that creates jobs and benefits for the participants.
You've also mentioned digital trade. Can you elaborate?
CH: We could certainly deal with digital trade and digital trade flows. You probably didn't have a cell phone in 1990. So those are areas that could be addressed. Your computer. You can buy things by means of a computer. Digital data flows. If I could buy something directly across a border, that creates an economic benefit.
Plus a number of services. All kinds of services are now conducted by digital means. Purchase of airline tickets, for example, are now digital. If you open up that market, you help the user and the supplier and the countries that are involved.
And we could put into the agreement the same kind of labor and environmental standards, or something similar, to the Trans-Pacific Partnership. Those were side letters in the North American Free Trade Agreement. So there are a number of things we could do to bring the agreement up to date.
In 2014, you told Foreign Affairs you were optimistic about the future of trade deals in the U.S. you were optimistic about the future of trade deals in the U.S. Do you still feel that way?
CH: I'm not perhaps as optimistic as I was in 2014. I thought that we could get the Trans-Pacific Partnership done. I think that would have been of real benefit to the United States. I think the Peterson Institute has done studies that show it would have added considerably to our GDP, and it would have been the first step to a broader trade agreement: free trade throughout the Asia-Pacific region, and that’s the fastest growing region in the world. So I had hoped that would get done. We're going to have to work to try to see if we can get some equivalency there.
Why do you think American public opinion has shifted so rapidly on free trade? It seems like in the last few years, the Republicans, in particular, went from being all free trade all the time to being very much against it.
CH: I think that trade was given a name on the campaign trail. It wasn't the first time. I recall in 2008 two respected senators, Senator Obama and Senator Clinton, ran harshly against trade.
But this time it was particularly intensive. And I think we’ve had quite a bit of automation and technology advances that have taken jobs and require different skills and it happened very rapidly. So I think the polls, if you look up the Pew polls, you'll find if an American is asked, "Do you think trade is good for your country?" they say yes. If you ask them, "Is it good for you?" a majority may say no and that's because it’s been presented to them as it's international competition, that it's taken their jobs, when in fact the overwhelming majority of jobs have been taken over by technology and automation.
I used to go on the floor of an auto company and it was a very busy place, like 5th Avenue in New York on Christmas time. You go on the floor of an auto company today and the folks are wearing smocks like they were surgeons and buffers on their shoes, there are about half a dozen on the floor because so much is done through automation.
So what we need to do is to train people to do the jobs we have today, not the jobs we had yesterday. And we have about 4 million jobs in the country that need skilled workers. I’m not suggesting they need to go get a college degree or a doctorate, but they need training. About 10, 15 weeks of training. And it’s across the board on a whole variety of different skills.
Can you give me a few examples of those types of jobs?
CH: Well, my heater went out last week for my house. The guy was terrific who came to fix it. He said, "I'm sorry it took four days for us to get here, but we just don’t have people who have the skills, who know how to do this, and we’re shorthanded."
But you can pick any number of sectors. In Silicon Valley. Who do you call to fix your computer? Who do you call to fix the robot that took your job? There are just an awful lot of skills, but they’re different skills than we had yesterday.