#1 - TRUMP LAYS OUT NAFTA WITHDRAWAL VIEW

WATCH ABOVE:
On Wednesday, President Trump offered his assessment of whether a NAFTA deal is possible in an interview with Lou Dobbs.


The takeaway: Trump indicates in the interview that his guidance to U.S. NAFTA negotiators has been “to make a fair deal with NAFTA you have to terminate the deal.”

This echoes something the President reportedly told Republican lawmakers at a private lunch last week. According to Inside U.S. Trade, at the Tuesday lunch:
“The president said there was no way to get the changes we need unless we get out, then have six months to negotiate.”

What it means:
To date, Mexico and Canada’s strategy - even in the face of hard-line U.S. negotiating positions - has been to stay at the table NO MATTER WHAT. The theory being that they don’t want to give the U.S. administration any excuse to pin the dissolution of NAFTA on them.


But, U.S. withdrawal would free them from blame and likely lead to at least Mexico walking away from the table.

#2 - WHY “ZOMBIE NAFTA” IS THE TRADE NERD’S HALLOWEEN COSTUME OF CHOICE

The debate continues to rage about whether Trump has the legal authority to withdraw from NAFTA and what Congress’s role in stopping him might be. This week, Vox polled several experts to get their views .

The takeaway: Most experts believe Trump can trigger withdrawal. The debate is about what happens after that. One increasingly popular theory is that in the event of a Trump NAFTA withdrawal, we get a “ZOMBIE NAFTA” ; described by Todd Tucker of the Roosevelt Institute as a scenario in which “America’s formal participation is dead, but our domestic law would still treat Canadian and Mexican products as if it weren't.”

The Zombie NAFTA theory was also
covered extensively by Shawn Donnan of the Financial Times who lays out several scenarios in which either Congressional opposition or legal wrangling leaves us with a NAFTA that is neither fully living, nor fully dead.

#3 – THE BUSINESS “ARMY” PUSHING BACK AGAINST NAFTA WITHDRAWAL

There was no shortage of attention paid last week to a coordianted lobbying effort against NAFTA withdrawal launched by businesses and trade associations. The efforts of the Chamber of Commerce, retailers, auto groups, the Farm Bureau and manufacturers on Capitol Hill are profiled in this NY Times story .

The “army” is pushing back against what they see as a group of poison pill provisions that we highlighted in last week’s recap including the “sunset” provision, increasing auto rules of origin, and ag policies opposed by Canada and Mexico.

#4 – THE POTUS ASIA TRIP: A TRADE PRIMER

With the President set to take off for a 10-day Asia trip at the end of this week, we offer a look at the hot trade topics for each stop. HINT: there are a lot of elephants in a lot of rooms.

November 5th - JAPAN – Meeting with Prime Minister Abe

Elephant in the room: The trade elephant in the room will be TPP. Particularly because TPP negotiators are meeting in Japan next week to work toward concludingTPP 11 aka TPP without the U.S. The visit also comes after Prime Minister Abe, who has put significant political capital into TPP, just consolidated power.

November 7th – SOUTH KOREA – Meeting with President Moon Jae-in and speech to National Assembly

Elephant in the room: The President’s threats to pull out of the U.S.-Korea Trade Agreement (KORUS)

November 8th – CHINA – Meeting with President Xi Jinping

Elephant in the room: Multiple threatened trade enforcement actions against China including on excess steel exports from China to the U.S. and on intellectual property theft.

November 10th-11th – VIETNAM - Asia-Pacific Economic Cooperation (APEC) Economic Leaders’ Meeting & meeting with President Tran Dai Quang

Elephant in the room: The remaining TPP participants have set a goal of announcing an agreement in principal on TPP-11 at this APEC meeting. Whether that happens is still a question.

November 12th – THE PHILLIPPINES - U.S.-ASEAN Summit

Elephant in the room: The big question with ASEAN members – which include four TPP countries – is how much the U.S. will continue being a counter to China’s dominance on trade in the region.

#5 – GOING DEEPER: AUTO RULES OF ORIGIN

Last week
, we highlighted how increasing the amount of car components that must come from NAFTA countries to qualify for duty-free status IS A REALLY BIG DEAL in NAFTA talks - maybe even a potential deal breaker. Last week Bloomberg did a really good explainer on this issue for those that want to dive deeper.

#6 – WHAT’S UP WITH CHINA’S VERSION OF TPP?

Last week, we got a quick update on the other big multi-country trade agreement that is currently in the works: The Regional Comprehensive Economic Partnership or RCEP. The agreement, which includes China, India, Japan, South Korea and 12 other countries apparently won’t wrap up before the end of the year .

#7 – A STATE-BY-STATE LOOK AT THE IMPORTANCE OF TRADE

The American Enterprise Institute posted a quick read this week that lays out the volume of international trade activities as a share of each state’s GDP.

The big winner: Michigan. Followed by Kentucky, Louisiana, Tennessee, and South Carolina. Read the full list HERE.

Prepared by Matt McAlvanah (matt@monumentpolicy.com) and the Monument Trade Team.