McALLEN — A day after the sixth round of North American Free Trade Agreement talks concluded in Montreal, President Donald Trump didn’t even use the five-letter acronym in his nearly 90-minute State of the Union address Tuesday.
Amid emphasis on immigration, North Korea and bipartisanship, the word “trade” was mentioned just four times during the president’s speech. Still, while Trump didn’t highlight the ongoing negotiations Tuesday, many members of his Republican Party did in a letter to the president earlier in the day.
The importance the 24-year-old treaty has had on the United States was stressed in the letter, which was signed by 36 GOP senators, including Texas Sens. John Cornyn and Ted Cruz.
After five slogging rounds between August and November 2017 that cast uncertainty over the trade industry, the negotiations seemed to generate slightly more optimism following this recent round.
“If you pull back, these are experienced negotiators from all three countries,” said Gerry Schwebel, IBC Bank executive vice president. “They need time to learn to work with each other. They’ve only been working since August of last year — six months. Some agreements take years.”
Schwebel, who’s based in Laredo, is also part of the U.S.-Mexico Economic Business Council. He’s been in the room for all six rounds of negotiations, he said, and is the only person from Texas who can say as much.
While he doesn’t believe a deal is imminent following the seventh round in Mexico City later this month, he’s targeting the end of March but isn’t holding his breath.
The trade negotiating veteran has observed pact talks from afar and up close, like he is now and during the initial NAFTA negotiation in the early 1990s, when he was chairman of the Border Trade Alliance.
Of the 22 NAFTA chapters, Schwebel said they “seemed to make advances on 80 to 90 percent on five or six of the chapters. Quite frankly, if you compare to other trade negotiations, it’s going pretty fast.”
Despite Schwebel’s optimism coming out of the sixth round and a hopeful end-of-March conclusion, he allowed for caution on the timeline.
“We’ve always said in our chamber, we need to focus on substance of an agreement, not rush into something we may regret what we agreed upon in the hastiness to reach an arbitrary date,” Schwebel said.
U.S. Trade Representative Robert Lighthizer echoed these sentiments.
However, customs brokers haven’t had the same confidence.
“I don’t think we’re going to see anything until the end of the year,” said Jorge Torres, a McAllen-based customs broker for over 20 years. “There’s still a lot of things to discuss. One day you hear one thing, another day a different thing. And it’s becoming an issue. What companies don’t like is uncertainty. I’m asked by my clients all the time where we see it going, but there isn’t a clear answer.”
Jim McNamara, another McAllen customs broker, was not only troubled by Trump not seeming to place an emphasis on NAFTA in Tuesday’s address, but is also concerned about looming political seasons.
Mexico’s presidential election is on July 1, with three main candidates vying for the presidency. Andres Manuel Lopez Obrador, who rivals describe as a dangerous radical similar to the type of socialist governing that has destroyed Venezuela, is the one candidate who presents dangers to NAFTA.
“The longer the uncertainty drags on, that may feed into a lack of progress between negotiators of Mexico and the U.S.,” Schwebel said. “That may feed into a candidate’s rhetoric of he or she wanting to jump in and change (NAFTA).”
U.S. midterm elections follow in November, when the majority party in either chamber could potentially flip. This could present problems to the passage of a new NAFTA, Torres said.
Canada made an automotive industry proposal that piqued McNamara’s interest. The proposal revolved around rules of origin with automotive parts that McNamara called “innovative” and thought it would “placate to the U.S. a bit.”
Lighthizer disagreed.
“We find that the automobile rules of origin idea that was presented (by Canada), when analyzed, may actually lead to less regional content than we have now and fewer jobs in the United States, Canada and likely Mexico,” Lighthizer said at the conclusion of the sixth round of talks. “So this is the opposite of what we are trying to do.”
Local customs brokers seem to echo each other on their top interests in the negotiations: rules of origin, e-commerce and documentation. Whether those chapters will get updated appropriately remains to be seen.
“Be ready for the worst and hope for the best,” Torres said.
