State and Local Officials Conference Call: Global Trade and the U.S. Economy

Global Trade and the U.S. Economy

Aly Song/Reuters
from State and Local Conference Calls

More on:

Trade

United States

State and Local Governments

U.S. Economy

Jennifer A. Hillman, senior fellow for trade and international political economy, discusses ongoing global trade negotiations and their implications for the U.S. economy, as part of CFR’s State and Local Officials Conference Call series.

Learn more about CFR’s State and Local Officials initiative.

Speaker

Jennifer Hillman

Senior Fellow for Trade and International Political Economy, Council on Foreign Relations

Presider

Irina A. Faskianos

Vice President, National Program and Outreach, Council on Foreign Relations

FASKIANOS: Good afternoon from New York and welcome to the Council on Foreign Relations’ State and Local Officials Conference Call series. I’m Irina Faskianos, vice president for the National Program and Outreach here at CFR. We are delighted to have more than fifty of you joining us from twenty-nine states across the county.

As you may know, the CFR State and Local Officials Initiative serves as an authoritative politically independent resource on pressing international issues that affect the priorities and agendas of state and local governments and CFR, as you all know, is a nonpartisan think tank. So we are proud to bear that moniker.

The question and answer portion is not for attribution so that we can have a candid conversation.

Jennifer Hillman is a senior fellow for trade and international political economy at the Council on Foreign Relations, specializing in U.S. trade policy, the law and politics of the World Trade Organization, international organizations, and Brexit. She’s had a distinguished career in public service, having served as a member of the World Trade Organization Appellate Body, commissioner at the U.S. International Trade Commission, general counsel, ambassador, and chief textiles negotiator at USTR and legislative director for U.S. Senator Terry Sanford in North Carolina.

Jennifer Hillman, thank you very much for being with us and welcome to the Council on Foreign Relations. She just joined our team so we’re happy to have you on board. I thought you could get us started with an overview of what’s happening with tariffs, both how it’s affecting our country, the inflows and the outflows.

HILLMAN: Sure. And thank you, and welcome to all of you. And I really want to say, particularly for those of you for whom trade issues and tariffs was something you never thought you’d need to know about, I appreciate your taking the time to be on this call.

I think it’s fair to say that even for those of us who’ve spent our entire careers in the international trade field we’ve never experienced anything like what we’re seeing now. So I thought I’d try to take a stab at parsing out the things that I think may be of interest or that you ought to be aware of into kind of three different buckets, if you will.

First is what might be happening in terms of tariffs or other restrictions on goods coming into the U.S. market in terms of what kinds of goods are we likely to see tariffs on. Second bucket would be then what is happening to U.S. goods that are going out into the outside world; I mean, where are they going to be hit with tariffs or other barriers as they try to be exported. And thirdly are some of the sort of overarching key issues that are happening outside of U.S. borders but that are likely to have an effect within the U.S. in the near term.

I mean, part of this is to start by saying the reason why so many of us are struggling with this is that the vast majority of these tariffs are, in many ways, illegal or at least are a violation of our WTO obligations and that’s why they’re so hard and so chaotic for everybody to deal with.

As many of you may know, the United States, along with 163 other countries, are members of the World Trade Organization, and one of the key principles and the sort of bedrocks of the WTO is that you’re not supposed to charge anyone a tariff that is higher than what is in your bound tariff schedule, which is why all of these tariffs that we’ve seen have been so hard for everyone in the U.S. to deal with and so hard for everyone outside of the U.S. to figure out how to respond to because they are fundamentally breaking that commitment.

And this obviously started when the administration put a 25 percent tariff on steel imports even though the bound rate in our tariff schedule on steel is zero. We went ahead and imposed a 25 percent tariff and said that we needed to do that to protect the national security of the United States.

We also put a 10 percent tariff on aluminum, again, in the name of national security, even though our tariffs in our binding on aluminum are somewhere between zero and 5 percent. Those tariffs are still in place except on Australia, Canada, and Mexico. So other than that, everybody is still paying those tariffs on steel and aluminum imports and we now also have quotas on the total amount of steel and aluminum that can be imported from South Korea, Argentina, and Brazil.

These tariffs have caused a response from all of the countries that were the major steel and aluminum exporters to the United States. Many of those countries have turned around and imposed their own sets of tariffs on U.S. products in retaliation for these steel and aluminum tariffs. Many of these countries have also challenged the tariffs at the WTO.

But we just learned last week that, due to the big backlog in cases at the WTO, a ruling on whether or not the U.S. can impose these tariffs in the name of national security will not come out until sometime next year.

So right now, those tariffs all remain in place and the retaliatory tariffs all remain in place, again, except for Canada and Mexico, who agree to lift their retaliatory tariffs when the United States agree to lift its tariffs on Canada and Mexico on steel.

So that’s kind of one whole set of tariff issues that has caused huge issues, you know, and the other thing that I would—I would say to that is that you may hear often messages coming from the president or elsewhere saying this is a tax on Mexico or Canada or Europe or someone as though it were foreign institutions or foreign countries that are paying the tariffs.

There has now been a lot of studies and work being done that suggests that in fact all of the tariffs are being paid or virtually all of them by American consumers, American companies, American importers. They are not being paid by any foreign institutions and very few foreign exporters are lowering their prices in order to offset the tariffs. So this is, clearly, a burden on U.S. consumers, particularly those that have to import many of these steel components in order to make their goods.

The second then big bucket of tariffs in the United States is the imports on China, and these come as a result of a report under what is referred to as Section 301 of the Trade Act that basically said China is stealing our intellectual property, it’s forcing our companies to transfer technology to China against their will, and that China is engaging in a whole series of subsidies and other activities to promote the various industries that are included in something called Made in China 2025 as a sort of industrial policy development.

As a result of that, the United States has now put tariffs on an entire series of products—$34 billion worth of goods in July of last year, then an additional 16 billion (dollars) in August, and then an additional $200 billion worth of Chinese imports got subject to the tariffs. And now, additionally, tariffs on another $350 billion worth of goods divided between some that are going on or have gone on September 1st and another set that will go on by December 15, such that by the end of that whole time period nearly 97 percent of all of the imports coming in from China are going to be subject to some form of an additional tariff.

So, again, huge, huge amounts of tariffs the likes of which we have not seen and the tariff levels like we have not seen since the early 1930s in terms of the rates that are being imposed on China.

The third thing to sort of know about all of these tariffs is that there is a process by which individual companies can petition, again, the Commerce Department if it’s the steel and the aluminum tariffs, the United States Trade Representative’s office if it’s the tariffs on China to say don’t put the tariffs on my particular imports because it’s not made in the United States. I don’t have anywhere else to get it. And so imposing the tariff is just going to harm a U.S. company that is just as much an American company as a steel producer or an aluminum producer. So don’t put the tariffs on my goods.

And we—and what I will tell you is that that exclusion process is sort of up and running. But it has been very, very slow. I think the initial estimates that there would be some hundreds or maybe thousands of exclusion requests and we’re now in the tens and tens of thousands of requests for exclusions. So the process is very backed up.

But in terms of what advice to give to any of the companies located in your states and localities is that they should definitely be participating in the exclusion process, that they need to get out from under these tariffs because that is really the only way to get any kind of tariff relief in the near term.

So the only news that I can tell you is that it does appear that there will be talks with China next month. There are Chinese officials that are coming here to Washington tomorrow to start setting the stage for those talks and we are beginning to hear rumors that there may be a small partial potential settlement where at least the tariffs won’t escalate a lot more, where there could be a sort of mini truce, if you will, between the United States and China.

So that kind of, I think, covers the tariffs that are at least on U.S. goods. I want to talk a little bit about then what has everybody else done in response. And, obviously, for the vast majority of the countries and definitely for China their response when the U.S. has put these tariffs on is to say, hey, that’s not fair. That’s not legal. It violates the agreement that we had. We negotiated these tariffs. You agreed that you wouldn’t charge more than your bound rates. So, therefore, I have no choice but to put tariffs on U.S. products. And that is where we’ve seen a particularly heavy hit against U.S. agriculture products.

But it’s not limited to agriculture. So almost everyone in the world has now put additional tariffs on U.S. steel and aluminum exports and on most of the major U.S. crops that are coming out of our Farm Belt are being subject to additional tariffs in China, in Europe, and in a number of other places. So, again, I think a significant response there.

The last thing that I wanted to talk about is sort of what’s upcoming that at least maybe ought to be on your radar screen because there certainly are a whole series of potential upcoming additional trade skirmishes that you should be aware of. And the first and probably the biggest is a potential dispute between the United States and the European Union that could, again, result in lots and lots of tariffs being imposed by the United States on European products and the EU will likely retaliate in kind.

This is as a result of an ongoing and long-term dispute over subsidies that various European Union member states granted to the production of Airbus aircraft—large civil aircrafts, and, again, the general rules under the WTO are you’re not supposed to trade in products that have received subsidies. I mean, the theory is that I didn’t get a subsidy for my goods and for my stuff, and why should I have to compete with subsidized goods that are coming in from somebody else.

So the general rules are no trade in subsidized products and, obviously, the United States is saying, but you’re trading in Airbus aircraft and they were subsidized. So the U.S. has won this dispute before a panel and the Appellate Body of the WTO, and now the issue is how much is the—(inaudible).

And so we’re waiting for a decision that we expect to come out within the next ten days that will tell us how much have the various arbitrators decided this case is worth. The speculation is the number is going to be somewhere between 5 (billion dollars) and $7 billion, which would allow the United States, if they wanted to, to impose tariffs on 5 (billion dollars) to $7 billion worth of imports coming in from the European Union.

Now, the European Union also has its case against subsidies that were granted to Boeing Aircraft and, again, the European Union expects to get its own decision about how much it can retaliate in January or February of next year, and they’ve indicated that, again, if the U.S. puts on tariffs they will do likewise.

On top of all of this is a decision that’s coming out in November that is in the same vein as the steel and the aluminum tariffs—an allegation that imports are threatening the national security of the United States. But this time it’s on autos and auto parts. And, initially, this was supposed to be a decision imposed in May. The president took the maximum amount of an extension and extended the deadline for this auto skirmish, if you will, until November.

But in November he must make a decision whether he is or is not going to impose tariffs on autos and auto parts, and, again, this is obviously a hugely traded sector. Virtually all autos made in the United States, no matter who’s making them, are made with imported auto parts. So if this were to be a decision that the administration makes it will have a very, very dramatic effect on the entire auto and auto supply chain because it will make it much more expensive to import many, many parts as well as to import finished automobiles. So, again, be on the watch for what’s going to happen in that one.

And then the last one that I’ll just mention that ought to be potentially on your radar screen is an ongoing dispute right now between Japan and Korea, which you may not think is really going to have any effect within the United States but because of what’s happening it very well may.

Basically, what happened was Japan and Korea—as you may know, Japan occupied Korea for quite some time during the war. As a settlement at the end of World War II there was a peace agreement worked out between Korea and Japan, but most recently there was a lawsuit in Korea by a number of the so-called comfort women challenging the fact that they were enslaved, raped, et cetera, during that time period and that Japan owes reparations to these comfort women. And the Japanese basically said, absolutely not, and that we think all of these matters were already settled way back when in this peace accord and we are not going to pay a penny of reparations to any of the Korean comfort women.

As a result, Korea started to take actions against Japan. Japan has now started to block the export of almost everything that is used to make a semiconductor and many other kinds of goods in Korea. And as you may know, Korea produces more than 70 percent of all the semiconductors in the world. They are now being deprived of the parts that they need to make semiconductors.

So this is going to have a ripple effect throughout the entire computer ICT and other industries the fact that Japan and Korea are sort of locking horns and getting farther and farther dug in on a trade war between Japan and Korea but that will heavily affect anybody that is importing product, particularly in that information communications technology sort of space coming in out of Korea.

And then last but not least, hanging over a lot of everything else is the notion that the United Kingdom could withdraw from the European Union under Brexit scheduled to occur right now on October the 31st. Again, this will have a major effect on many, many U.S. companies, many of whom invested in the United Kingdom in order to access the European market.

And let’s just take cars for right now. Lots of U.S. automobile manufacturers produce cars in the United Kingdom in order to sell them into the rest of Europe, and right now, they can do that duty free and with no extra inspections or anything else. They can build their cars in Northern Ireland or anywhere in the U.K. and automatically be able to ship them anywhere into Europe.

If there is a Brexit, then what will happen is all of the autos and auto parts will have to pay a 10 percent duty and will have to be re-inspected again when they move between the U.K. and Europe, and that—autos is just one example. Any products that are made in the U.K. will now be subject to duties and inspections going into the European Union.

So because of the huge volume of trade between the United States and the U.K. and the huge amount of investment between the United States and the U.K., just keep on your radar that there may be, again, huge dislocations as a result of the upcoming Brexit.

And I guess with all that happy news, I will only close by saying, you know, it’s not clear yet exactly what the Trump administration’s real agenda is here. There are many people that think that when you really parse through all of the tweets and all of the things that the president has said that what he’s really looking for is to build a tariff wall around the United States on the theory that it will force everyone to come back and make all goods in the United States.

What is clear is that, to date, if that was the plan it’s not working. You are not seeing companies pull out of China and come back into the United States. To the extent that they’re leaving China they are going elsewhere.

There are others who think that all of this tariff and all of this skirmishing is really just leverage, and at the end of the day the idea is that you will get a better agreement for having exercised all of this leverage.

If that’s the plan, again, the only question is so far we haven’t seen any agreements, good or bad, really of any consequence yet and so it remains to be seen where we’ll end up. So I think I’ll stop there and hope that there may be—at least these comments provoked questions. I’m certainly happy to try to answer any questions that you might have.

FASKIANOS: Jennifer, you’ve written previously about the need for Congress to take back some of this tariffs-levying authority from the office of the president. Can you talk a little bit about why you argue this and why you think it’s so important?

HILLMAN: Sure. I mean, basically, the claim that I guess I’m making and a number of others are making is that the president, in doing this, in imposing all of these tariffs under the name of national security or under this Section 301 law, and as some of you may have heard, the president has also at various times suggested that he would have put a tariff on every good coming in from Mexico under yet a different law referred to as IEEPA, the International Emergency EconomicPowers Act.

So the president and this administration have been in essence dusting off a lot of very old trade statutes, many of them enacted in the 1920s, the 1930s, and putting them to a use that many of us think was not what the Congress intended when those laws were written, and that what really needs to happen is the Congress has to get reengaged and, in essence, express the views that I think the farmers and others are expressing—that these trade policies are really harming America more than helping America and that there at least ought to be a way in which the Congress can assert some authority over this.

And this basic argument stems from the fact that under the United States Constitution the power to impose a tariff, because a tariff is considered a tax—it’s a tax. It’s a revenue raiser. The power to impose a tariff resides—by the Constitution gives that power to the Congress and the Congress alone. It does not give the president the power to ever raise tariffs.

But over the years, the Congress has in various ways and in various places delegated over, given its power to raise tariffs over to the president, provided the president met various conditions, et cetera, and that’s the concern is that the delegation of the power that was done in the ’20s and the ’30s was perhaps overly expansive or not clear enough or not tightly enough defined such that this president has chosen to use this authority in a way that many people think goes well beyond what the Congress intended and that many of the findings that are being made—that imports of steel from Canada are a threat to the national security of the United States, things like that—are not actually justified and are not what the Congress intended.

So there are a number of pieces of legislation pending on Capitol Hill, bipartisan. You know, again, both—members of both the Democratic and the Republican Party have put forward ideas that would allow the Congress to potentially have a veto over the president’s tariff authority in certain instances or to allow there to be tighter stronger criteria that the president would have to meet before he can engage in this kind of unilateral tariff making.

FASKIANOS: Great. Can you talk a little bit about—you know, there is this whole perception that AI and trade is taking away American jobs. Can you just talk a little bit about that?

HILLMAN: Yeah, because I do think an awful lot of the message that you’re hearing from President Trump, and indeed, a lot of these trade policies, really stems from his perception I think that this is a winning message that says that, you know, when you have either lost your job or you’re seeing this rise of globalization, or even you’re seeing, you know, the roads go deteriorate or the schools in your neighbor deteriorating, the thing to do is to blame it on foreign, whether that’s a foreign good or whether that’s a foreign person coming in as an immigrant. You know, lay your problems at the feet of all things foreign.

And the problem with it is it’s just not true, because every study would indicate that, to the extent that there have been job losses in the manufacturing sector, somewhere between 85 and 92 percent of those jobs were lost to automation. They were lost to technology. And they’re increasingly going to be lost to artificial intelligence. That’s the truth.

And the problem is that if trade and imports didn’t cause the job losses, shutting off all the trade is not going to bring them back again. And I think that is a little bit of what we’re seeing. So I think there’s a lot more work that needs to be done on what is the right response then to globalization. What’s the right response to trade? What’s the right response to this rise of technology?

And I think those—and I would again commend the work here at the Council on Foreign Relations that Ted Alden, among others, has done in writing a book called Failure to Adjust, in putting out a task-force report on the future of work in terms of what is work going to look like across communities in the United States in this age of artificial intelligence, because what needs to happen, in my own judgment, is not a trade war, but to really invest heavily in people, in long-term worker training, in portable pensions, in better health care, so that we equip our workers for this coming age, because while you may be able to put on tariffs and stop imports from coming in, you aren’t going to be able to turn off the internet or stop computers or stop the developments in the technology space.

So rather than fight it, my own sense is that we’re going to be better off trying to figure out a way to equip Americans to be able to better deal with it. And that again is one of the places where the U.S. is a bit of an outlier. If you look at what the rest of many of the countries in the OECD and other developed countries spend on this kind of long-term investment in their workforce, in training, in apprenticeships, in helping everyone use and be proficient in technology, many of the countries in Europe are spending in the order of 4 percent of their gross domestic product on long-term support for their workers. We’re spending 0.3 percent. So we’re just not making the level or kind of investments that many others in the world are making in this AI technology space to equip our workers to be ready for it.

FASKIANOS: Thank you, Jennifer, for mentioning the Council’s task force on the future of jobs. And I know that this group is really thinking about this at the governors’ level, with the work that Governor Bullock did on the future of the workforce, and then this year’s Governor Hogan is looking at infrastructure and national security in the U.S., and that’s his yearlong project. So I think there’s a lot of thinking going on at the subnational level on how to deal with this, which is very much needed.

If there are no more questions, I will continue with asking you to look out at Brexit. Maybe just talk a little bit about the rollercoaster that’s happening over in the U.K., et cetera.

HILLMAN: Right. And again, you know, for those that are interested, I mean, one of the other parts of Brexit that I think is not getting as much attention as maybe it should is the implications for the United States. We have about 156 treaties or agreements of various kinds between the United States and the European Union. And arguably every single one of those need to in some way be changed to now be an agreement between the United States and the European Union plus the United Kingdom, or we need to develop an entirely new agreement with the United Kingdom that basically just cuts and pastes all of that text into agreements with the United States. And we, like lots of other countries, are really quite far behind.

Just to give you one sort of sense of it, in order for an airplane to land at any airport in the United States, a commercial airplane, you have to have sent the passenger manifest list in advance and there has to be an air-transport agreement in place before those planes are allowed to land in the United States. So if there were to be a hard Brexit and that treaty were not to have been revised or amended, no planes taking off anywhere in the U.K. would be allowed to land in the United States.

Now, that, I will say, is one of the areas in which there is work being done. But if you go across lots of other areas, again, this effect of Brexit could have a huge effect within the United States. And, like I said, we, like a lot of others, are not at all sort of ready for what’s coming.

I don’t think anybody really knows what to make of what’s happening on Brexit. As many of you will know, I mean, this referendum was over two and a half years ago with a vote of about 52 percent of the U.K. voters voting to leave the European Union. It caused then the immediate resignation of the existing prime minister.

Along came Prime Minister Teresa May, who negotiated a withdrawal agreement between the United States—between the U.K. and the EU that I think she thought was the best bargain that the U.K. could get that would give a transition period and would allow then for a time to negotiate down the road a more permanent relationship between the U.K. and the EU in terms of trade and other economic things.

But in the end of the day, she was not able to get the U.K. Parliament to agree to it. And because she was not able to do that, she was able to get an extension of the Brexit date from March the 1st to October 31st of this year. When she ultimately could not come up with any agreement that her Parliament would support, she stepped down as the prime minister.

The Conservative Party elected Boris Johnson as the new prime minister. And to put it mildly, Boris Johnson has had a very rough start in his go. The first three major pieces of legislation or support that he needed from his Parliament were resoundingly defeated. The U.K. Parliament passed a resolution that said that Boris Johnson may not exit from the U.K. without an agreement in place. In other words, there can be no no-deal, as they call it, Brexit, and that he has to come back to the Parliament with a deal or seek a postponement as of October 16.

Boris Johnson has said that he would rather die in a ditch than seek an extension of this deadline. And various people within the U.K. are urging him to flout the U.K. Parliament and go to jail as a martyr for the cause of Brexit. He’s then been spending time recently in the various EU member-state country capitals trying to figure out if there isn’t an alternative deal.

And the bottom line is everyone in Europe is saying you, the U.K., have said that you will give us a new plan on how we’re going to address a number of these issues, most importantly the border between Ireland and Northern Ireland, which is a huge sticking point, and you still haven’t presented a plan.

And that’s basically where we are right now. The EU says show me your plan, and Boris Johnson doesn’t have one. And yet he’s got the U.K. Parliament suspended for five weeks. He put through what is called a prorogue that basically suspends the U.K. Parliament from sitting. So he’s got no Parliament sitting right now. And in theory he has to be coming up with a new plan that will pass muster with both his own U.K. Parliament and with the European Union. And it remains to be seen how it’s going to come out. And the problem is, going right down to the wire like this makes it very difficult for anybody to plan with any certainty what to do.

FASKIANOS: Wow. I guess I would like you just to wrap up—we’re out of time—just talking about the first thing that—among the first things that President Trump did was withdraw from the Trans-Pacific Partnership, and just the effect of that and how you view alliances versus these one-off deals.

HILLMAN: So, again, I think there—the Trans-Pacific Partnership was, in my judgment, you know, an excellent agreement among, you know, the big countries that border the Pacific Ocean. So it was the United States, Canada, Mexico, and Chile, and all the countries, again, that border—that border the Pacific on this side. And then, on the other side, you know, it’s Japan and Australia and New Zealand a number of the other countries that are in there; thirteen countries altogether. It would have represented agreement among countries that account for over 45 percent of the GDP of the world and over 70 percent of global trade; so, again, a hugely significant agreement.

The reason why I thought it was a good agreement was that it started, for the first time, to address in trade agreements many of the up-and-coming issues. What are we going to do about digital trade, I mean, which is, again, a huge issue of—so when somebody moves something into the cloud, kind of where is it? What’s its origin? And can you put a tariff on it? Is it a good? Is it a service?

You know, all of these issues about how are we going to think about where’s the right place to tax or put tariffs on digital goods or digital services. It addressed state-owned enterprises and subsidies, which is a China issue. It included a section on what do we do about currency manipulation. In other words, it included a whole lot of issues that had not been included in trade agreements before and, from my sense, was in many ways a very good agreement.

Could it have been improved? Yes. But was it in the main a good agreement? The problem with the president deciding, you know, on his second day in office to withdraw the United States from it is that was the strategy to address our problems with China. The view was if you could get this agreement implemented and then potentially even bring in Europe and some of Latin America into the TPP, or, alternatively, bring the TPP into the WTO, you would have had a strong, transparent, accountable set of rules that would have stood in great contrast to what was going on in China. And it would have put a lot more pressure on China to change many of these very fundamental practices that are at the heart of the U.S.-China trade war right now.

And we missed that opportunity. And now we are in a very go-it-alone strategy. And my concern and I think a lot of people’s concern is, no matter how many tariffs we put on, we do not have enough leverage to get China to make the kind of fundamental changes that we really need China to make, because China is engaging in a lot of behavior that everyone around the world agrees is bad behavior from the perspective of the trading system.

Europe agrees with us. Argentina, Brazil, Canada, Mexico, Japan, Australia, New Zealand, they agree with the substance of what’s wrong with the trading system and what’s wrong with China in terms of its participation. What they do not agree with is the Trump administration’s unilateral tactics.

So my own sense is we would have been better off in the TPP. But if we’re not prepared to go back into the TPP, we at least ought to be putting together a coalition of countries that would go against and try to push back on China, because China at this point, I think, is not going to be able to simply back down from where they are just because of a demand from the United States.

You know, as they’ve said over and over again, we don’t negotiate with a gun to our head. It will be very, very difficult for President Xi to make big changes in response to requests from the United States alone, whereas if it were a coalition, and even maybe a coalition case at the World Trade Organization, then my own view is you would have a much better chance of really engaging in China.

I’ll only comment on that it may be on everybody’s radar screen is whether or not this new version of the North American Free Trade Agreement, the agreement between the United States, Mexico, and Canada, now called the USMCA, what’s going to happen to that.

I don’t know that I have a crystal ball, but I will say there’s currently now starting to be a real push here in Washington to see if there are the votes to get it passed. And the concern has been all along that a number of largely Democratic members, but not entirely—I mean, there’s a bipartisan group that have significant concerns about whether or not many of the provisions within the new USMCA agreement will be enforceable, whether there is an adequate mechanism to hold Canada and Mexico to their commitments, and whether or not a number of the provisions with respect to biologics that affect the price of pharmaceuticals, whether that was done in a way that is going to make medicines more expensive. And there’s a series of concerns.

And the question is, you know, can the concerns that have been raised be addressed, and be addressed in a way that doesn’t require reopening the agreement between Canada and Mexico, because that would be extremely time-consuming and potentially lead to lots of other changes. But I think the push is on right now to see whether or not there would be the votes there to bring up this new USMCA and see it passed. So we’ll see.

You know, again, I think at this point there’s still a lot of undecided members of Congress and/or a lot of those that don’t see why we need to do this change. Let’s leave the status quo alone and we’d be fine. So, again, I think that is one of those things to look for. My own view is if the USMCA is not passed before the middle or late October, I would think it would not be passed in the near term. So I think it’s kind of now or never for it and remains to be seen whether it will pass.

FASKIANOS: Wonderful. Jennifer Hillman, thank you very much for this terrific analysis that you—and sharing your insights with us. We really appreciate it.

To all of you, we really hope that you will call upon us if you need resources or have questions that you didn’t get—didn’t feel comfortable asking here or want to do privately. We’d be happy to field those as well. You can email stateandlocal@CFR.org. I encourage you to follow Jennifer Hillman on Twitter at @J_A_Hillman.

And also tomorrow morning we are launching our task force report on innovation in national security from 8:30 to 9:30. It will be livestreamed on our website at CFR.org. So we will—you can also access the text of that report.

But again, we really hope to be a resource for all of you. Thanks to my colleagues at NGA and SIDO for sharing this invitation with all of your colleagues, as well as to the mayors who were on the call. So we appreciate it, and we look forward to continuing the dialogue.

HILLMAN: Thank you.

Most Recent