U.S.-Mexico trade agreement

President Trump announced a new trade agreement between the U.S. and Mexico on Monday. However, there are not many details, with Mexico’s President asking for the participation of Canada. “Arizona Horizon” talks about what the deal is with Glenn Hamer, president and CEO of the Arizona Chamber of Commerce and Industry and Sapna Gupta, senior policy analyst with Arizona State University’s Morrison Institute.

Transcript:

TED: PRESIDENT TRUMP TODAY ANNOUNCED A TRADE AGREEMENT WITH MEXICO AT A PRESS CONFERENCE THAT INCLUDED MEXICAN PRESIDENT ENRIQUE PENA NIETO BY SPEAKERPHONE WITH A TRANSLATOR.

VIDEO TRUMP: THIS IS SOMETHING THAT IS VERY SPECIAL FOR OUR MANUFACTURERS AND FOR OUR FARMERS FROM BOTH COUNTRIES FOR ALL OF THE PEOPLE THAT WORK FOR JOBS. IT'S ALSO GREAT TRADE, AND IT -- IT MAKES IT A MUCH MORE FAIR BILL.

TRANSLATOR FOR ENRIQUE: I THINK THIS IS SOMETHING VERY POSITIVE FOR THE UNITED STATES AND MEXICO. IT IS OUR WISH, MR. PRESIDENT THAT NOW CANADA WILL ULTIMATELY WANT TO BE INCORPORATED IN ALL OF THIS.

TED: INDEED DESPITE THE PRESIDENT'S CLAIM OF A NEW TRADE DEAL THIS LOOKS TO BE AN AGREEMENT AT BEST, AND DOES NOT INCLUDE CANADA, WHICH THE MEXICAN PRESIDENT HAS INDICATED WOULD BE REQUIRED FOR A FINAL AGREEMENT. HERE TO TALK TO US ABOUT TODAY’S ANNOUNCEMENT IS GLENN HAMER, PRESIDENT AND CEO OF THE ARIZONA CHAMBER OF COMMERCE AND INDUSTRY AND SAPNA GUPTA, SENIOR POLICY ANALYST FOR ASU’S MORRISON INSTITUTE. GOOD TO HAVE YOU BOTH HERE. THANKS FOR JOINING US.

GLENN HAMER: GREAT TO BE ON THE SHOW.

TED: ALRIGHT GENN, 16-YEAR TRADE DEAL WITH MEXICO. ONLY MEXICO, NOT CANADA. IS IT A GOOD THING?

GLENN HAMER: IT'S VERY STRONG PROGRESS. SO IT WAS A VERY POSITIVE DEVELOPMENT. 16 YEARS, YOU KNOW, WHEN YOU LOOK AT -- FOR ARIZONA, MEXICO IS FAR AND AWAY OUR LARGEST TRADING PARTNER. ABOUT 40% OF OUR EXPORTS GO TO MEXICO. WE HAVE KEY SECTORS SUCH AS AGRICULTURE AND TOURISM THAT ARE HEAVILY RELIANT ON THE TRADE WITH MEXICO. SO IT WAS A BIG DEVELOPMENT, BUT WE NEED TO MAKE SURE THAT CANADA IS IN THE FINAL AGREEMENT.

TED: IF CANADA IS NOT IN THE FINAL AGREEMENT, THERE IS NO FINAL AGREEMENT, IS THERE?

SAPNA GUPTA: WELL TO SOME EXTENT THAT COULD BE TRUE. AND I AGREE WITH WHAT GENN SAID. MEXICO IS VERY IMPORTANT TO THE U.S. AND TO ARIZONA, BUT IN ORDER TO HAVE A NORTH AMERICAN SUPPLY CHAIN IN MANUFACTURING AND HOUSING AND AGRICULTURE, YOU REALLY NEED TO HAVE CANADA ON BOARD. IT IS VERY IMPORTANT THAT CANADA BE PART OF THIS DEAL. AND I THINK ONE OF THE ANNOUNCEMENTS TODAY WAS AN AGREEMENT WITH MEXICO, THE HOPE IS THIS GETS FOLDED INTO A LARGER AGREEMENT WITH CANADA AT THE TABLE. AND IT IS-- YOU CAN CALL THIS A NEGOTIATING TACTIC TO SAY MEXICO AND THE U.S. AGREE ON SEVERAL POINTS, IT'S TIME FOR CANADA TO COME AND BE AT THE TABLE.

TED: I WAS GOING TO ASK NEXT. WHY ISN'T CANADA AT THE TABLE? WHY MEXICO AND OH WE’LL JUST GET TO CANADA LATER.

GLENN HAMER: WELL, SOME OF THE ISSUES WITH MEXICO ARE PROBABLY A LITTLE MORE DIFFICULT TO RESOLVE, SUCH AS THE CONTENT ISSUES, THE WAGE ISSUES IN TERMS OF PARTICULARLY IN THE AUTO SECTOR. SO TED, I BELIEVE THAT IT'S VERY POSITIVE THAT THE UNITED STATES AND MEXICO HAVE COME TO TERMS WITH THIS AGREEMENT. AND ALSO WHAT IS IMPORTANT TO SAY HERE IS THAT YOU’VE GOT THE CURRENT ADMINISTRATION OF MEXICO, AND THE IN-COMING ADMINISTRATION OF MEXICO, WHICH WILL TAKE EFFECT DECEMBER 1ST, BOTH IN AGREEMENT. SO TODAY WAS VERY POSITIVE LIKE USUAL. A LITTLE BIT DIFFERENT THAN YOU MIGHT EXPECT FOR A TRADE AGREEMENT. [ LAUGHTER ]

TED: YES

GLENN HAMER: THE PRESIDENT DIDN'T SAY TWO OUT OF THREE ISN'T BAD. I DO BELIEVE THAT WE WILL GET CANADA, BECAUSE AS WAS JUST POINTED OUT, WE NEED TO MAKE SURE THESE SUPPLY CHAINS THAT HAVE BEEN SO BENEFICIAL FOR ALL THREE COUNTRIES REMAIN INTACT.

TED: I WONDER, ARE YOU GOING TO KEEP MEXICO, THOUGH, THE TARIFFS ON METAL AND ALUMINUM, THOSE ARE STILL IN PLACE AGAINST MEXICO. NOTHING CAN HAPPEN TODAY TO CHANGE THAT.

SAPNA GUPTA: NOT ONLY ARE THEY STILL IN PLACE FOR MEXICO, THEY ARE STILL IN PLACE FOR CANADA. HOWEVER, IF AN AGREEMENT IS REACHED WITH MEXICO, THERE COULD BE A DEAL BETWEEN MEXICO AND THE U.S. THAT THE U.S. CAN SAY THOSE TARIFFS ON ALUMINUM AND STEEL NO LONGER APPLY. THE KEY THING IS—IS THAT TO GET BOTH PARTIES AT THE TABLE—SO BOTH GET CANADA AND MEXICO AT THE TABLE--FORM A NORTH AMERICAN AGREEMENT. NOW IT'S INTERESTING, PRESIDENT TRUMP SAID IT'S NO LONGER CALLED NAFTA, SO IT WILL BE INTERESTING AS TO WHAT THE NAME OF THE NEW AGREEMENT WILL BE.

TED: WELL, RIGHT NOW IT IS CALLED THE U.S. MEXICO TRADE AGREEMENT. HE WANTS THAT TO REPLACE NAFTA. BECAUSE I THINK HIS QUOTE WAS NAFTA-- A BAD CONNOTATION FOR THE U.S. BECAUSE IT WAS A RIP OFF—EXCUSE ME, A BIG RIP OFF.

SAPNA GUPTA: YEAH, TO ME THAT STATEMENT DOESN’T QUITE REFLECT THE REALITY. NAFTA RESULTED IN MEXICO AND THE U.S. AND CANADA BENEFITING TREMENDOUSLY. THEIR ECONOMIES. WE BECAME A STRONGER -- THE U.S. BECAME A STRONGER MANUFACTURING HUB, MORE COMPETITIVE GLOBALLY BY HAVING MEXICO AND CANADA PART OF THE FREE TRADE AGREEMENT, AND SO I'M NOT SURE CHARACTERIZING IT AS A BIG RIP OFF REALLY MAKES SENSE OR REFLECTS THE REALITY.

GLENN HAMER: I CONSIDER IT THE BEST TRADE DEAL IN HISTORY, SO IT’S A LITTLE BIT OF DIFFERENCE IN OPINIONT THERE. BUT WE ALL KNOW THAT THE AGREEMENT NEEDED TO BE MODERNIZED. AND THERE ARE A LOT OF GOOD PROVISIONS IN THIS AGREEMENT. LIKE FOR EXAMPLE, IT REALLY DOES UPDATE AND SEEM LIKE IT HAS STATE-OF-THE-ART LANGUAGE IN TERMS OF INTELLECTUAL PROPERTY. IT DOES HAVE SOME LANGUAGE THAT INCREASES THE ABILITY FOR U.S. -- SMALL BUSINESSES TO SHIP GOODS TO MEXICO WITHOUT ANY OF THE PAPERWORK REQUIREMENTS, AND IT CONTINUES TARIFF-FREE EXPORTS FOR OUR AGRICULTURAL PRODUCTS, SO THERE ARE A LOT OF POSITIVES IN THIS AGREEMENT.

TED: I KNOW AN EMPHASIS FOR THE PRESIDENT WAS MANUFACTURING, ESPECIALLY AUTO MANUFACTURING, ESPECIALLY HIGHER-PAID JOBS DEALING WITH AUTO -- IS THIS GOING TO MAKE A DIFFERENCE? OR DOES THE MARKET SAY, YOU CAN DO THIS ALL YOU WANT, BUT I'M GOING THE OTHER DIRECTION.

GLENN HAMER: THE MARKET SEEM TO REACT PRETTY POSITIVELY TO THIS, BUT WE NEED TO MAKE SURE CANADA IS PART OF THIS. THE SUPPLY CHAIN IS NOT JUST FOR AUTOMOBILES BUT AN AGRICULTURE AND OTHER INDUSTRIES. IT’S CANADA, THE UNITED STATES AND MEXICO. SO WE NEED TO GET A DEAL DONE FOR ALL OF THE COUNTRIES IN NORTH AMERICA.

TED: SUPPLY CHAIN HAS BEEN REFERED NUMEROUS TIMES HERE. EXPLAIN WHAT THAT MEANS.

SAPNA GUPTA : SO SUPPLY CHAIN IS EFFECTIVELY HOW DO THE MANUFACTURES SOURCE THEIR COMPONENTS—THE COMPONENT PARTS THAT GO INTO MAKING A CAR OR TO MAKING AN APPLIANCE OR TO MAKING AIRPLANES AND AIRCRAFT. SO WHAT HAS HAPPENED THANKS TO NAFTA, IS THAT THE U.S., LET'S SAY FORD COMPANY WILL BE BUYING PARTS FROM CANADIAN SUPPLY MANUFACTURERS AS WELL AS FROM MEXICO, OR A CAR CAN BE ASSEMBLED IN THE U.S. AND HAVE COMPONENTS FROM MEXICO AND CANADA, AND CURRENTLY, THANKS TO NAFTA, THESE PARTS AND THESE ASSEMBLED PARTS CAN CROSS THE BORDER SEVERAL TIMES IN THE PROCESS OF BEING PUT TOGETHER. AND SO A CAR, A FORD, OR EVEN A HYUNDAI CAR, FOREIGN MANUFACTURER WITH PLANTS IN THE U.S. CAN HAVE PARTS THAT ARE MADE IN CANADA, THAT ARE MADE IN MEXICO. AND SO YOU GET TRULY A NORTH AMERICAN PRODUCT.

TED: OKAY, YOU GET TRULY A NORTH AMERICAN PRODUCT. THE PRESIDENT WANTS—THAT NORTH PART SEEMS TO BOTHER HIM. HE WANTS AN AMERICAN PRODUCT. WILL THE SUPPLY CHAIN BE ALTERED SIGNIFICANTLY IF WHAT HAPPENED TODAY WITH MEXICO, SOMETHING SIMILAR HAPPENS WITH CANADA.

GLENN HAMER: IF WE GET CANADA AS PART OF THIS, IT WILL BE ALTERED BUT PROBABLY IN A WAY WHERE WE CAN STILL COMPETE AGAINST THE REST OF THE WORLD. AND WHILE THINGS MAY BE ALTERED IN ONE AREA, I DO BELIEVE THAT SOME OF THE OTHER AREAS SUCH AS INTELLECTUAL PROPERTY, SUCH AS FINANCIAL INSTITUTIONS COULD BE MODELED FOR OTHER TRADE AGREEMENTS. AND HERE IS WHAT IS ALSO IMPORTANT, TED, IS THE ADMINISTRATION MADE A VERY CLEAR STATEMENT THAT THEY CAN GET TO YES ON TRADE. SO THERE WAS A LOT OF ANGST OUT THERE IN THE BUSINESS COMMUNITY—ARE WE JUST GOING INTO A FULL BLOWN WORLD WIDE TRADE WAR--AND THIS GIVES US SOME COMFORT THAT WE COULD NEGOTIATE OUR WAY TO A GOOD PLACE.

TED: BUT IS THIS A DEAL WHERE- I’M GOING THIS FAR THIS WAY JUST TO GET BACK TO THIS -- I MEAN, ARE WE GAINING ANYTHING BY THIS? OR IF YOU JUST LEFT NAFTA ALONE OR TINKERED WITH IT A LITTLE BIT, YOU WOULD BE JUST FINE.

SAPNA GUPTA: THE THING IS, NAFTA ABSOLUTELY NEEDED TO BE MODERNIZED. IT DOESN’T HAVE ANY PROVISIONS FOR INTELLECTUAL PROPERTY, THE DIGITAL ECONOMY. THE ECONOMY HAS SHIFTED SIGNIFICANTLY SINCE 24 YEARS SINCE IT WAS ENACTED, SO NAFTA ABSOLUTELY HAD TO BE MODERNIZED. THE QUESTION IS, CAN CANADA AND MEXICO AND THE U.S. ALL THREE OF THEM COME TO AN AGREEMENT OF SOME OF THE PROVISIONS NOW? SOME OF THE PROVISIONS ABOUT 40% OF THE CONTENT OF A CAR NEED TO BE MADE IN PLANTS WHERE THE WORKERS ARE PAID $16 OR MORE.

TED: RIGHT.

SAPNA GUPTA: THAT IS ACTUALLY SOMETHING THAT WOULD BENEFIT CANADA, BECAUSE WORKERS IN CANADA AND IN THE U.S. ARE PAID MORE THAN WORKERS IN MEXICO. SO YES SOME OF THE SUPPLY CHAIN CAN CHANGE. BUT SOME OF THESE CHANGES WILL BE BENEFICIAL TO BOTH COUNTRIES, AND THE AGREEMENT HAD TO BE MODERNIZED.

TED: AND WE HAVE ABOUT THIRTY SECONDS LEFT HERE. AS FAR AS WE'RE NOT A MANUFACTURING HUB HERE IN ARIZONA. HOW DOES THIS IMPACT US?

GENN HAMER: WELL WE DO HAVE--WE HAVE A STRONG MANUFACTURING SECTOR. I WOULD SAY THAT IT WILL BENEFIT US ON THE MANUFACTURING SIDE, IT WILL BENEFIT US IN TOURISM, OUR LARGEST SOURCE OF INTERNATIONAL VISITORS COME FROM MEXICO, AND WHEN WE COMPLETE THIS AND GET CANADA ON BOARD, I WOULD EXPECT THAT WE'LL SEE EVEN A STRONGER ARIZONA ECONOMY. WE'RE OPTIMISTIC THAT A GOOD DEAL WITH ALL THREE COUNTRIES WILL ULTIMATELY GET DONE.

TED: ALL RIGHT. THE AMERICAN FREE TRADE AGREEMENT. HOW DOES THAT SOUND?

GLENN HAMER: YOU RENAMED IT

TED: GOOD TO HAVE YOU BOTH HERE.THANKS FOR JOINING US. TUESDAY ON "ARIZONA HORIZON" WE CONTINUE OUR COVERAGE OF THE PASSING OF SENATOR JOHN McCAIN, THEN JOIN US AT 10 O’CLOCK TUESDAY NIGHT FOR FULL COVERAGE AND ANALYSIS OF ARIZONA'S PRIMARY ELECTION. THAT'S TUESDAY AT 5 AND 10 RIGHT HERE ON "ARIZONA HORIZON." THAT IS IT FOR NOW. I'M TED SIMONS. THANK YOU SO MUCH FOR JOINING US, AND YOU HAVE A GREAT EVENING. ♪