Trump’s Tough Talk on Trade Deals is Absent from New Executive Orders
Commerce department given 90 days to report reasons for trade deficits, but the rest of the order is vague, says Justin Akers Chacon, professor at San Diego City College.
KIM BROWN: Welcome to The Real News Network in Baltimore. I’m Kim Brown.
Donald Trump, on Friday, signed a pair of Executive Orders aimed at addressing what he calls bad trade deals for the United States. Is Trump really willing to play hardball with our trading partners?
Well, to discuss this, we are joined by Justin Akers Chacón. He is an individual activist, writer and an educator who lived in the San Diego-Tijuana border region. He is also co-author of the book titled, “No One is Illegal,” along with Mike Davis, and he’s a professor of Chicano history at San Diego City College.
He joins us today from the west coast. Justin, thank you so much for being here.
JUSTIN AKERS CHACÓN: Thanks for having me.
KIM BROWN: These Executive Orders were a little vague, and Trump has tasked the Commerce Department with reporting within 90 days about what factors into our trade deficit. Justin, what were your thoughts about these Executive Orders, when you read them, and is this an appropriate thing for the Commerce Department to be doing?
JUSTIN AKERS CHACÓN: Well, what struck me was how different in content they were from the rhetoric that Trump used during the campaign. And I think this reflects the fact that, at least pertaining to trade with Mexico, that the U.S. has a lot of vested interests -– I should say corporate interests have a lot of vested interests in Mexico -– and I think, when Donald Trump talked tough on trade with Mexico, he was really coming from a place where he didn’t exactly know to what extent U.S. interests had invested there.
And I think he had to recalibrate his approach there, because in fact, trade with Mexico is very lucrative for U.S. corporations. I think he got the message that messing with that was not the right idea.
KIM BROWN: Get into that a little bit more, Justin. Because Donald Trump, while he was on the campaign trail, railed heavily against these international trade deals. He vowed to pull the United States out of the Transpacific Partnership — which he has done — and he says that NAFTA was a bad trade deal for the United States.
So, talk to us about the history of this trade deal, the North Atlantic Free Trade Agreement, signed in the ’90s during the Clinton administration between the United States, Mexico and Canada. I mean, has this trade deal been bad for the United States? Has it been bad for U.S. corporate interests, and bad for American workers, as well?
JUSTIN AKERS CHACÓN: Well, the North American Free Trade Agreement really began with a drive from U.S. corporations to open up Mexico’s economy. Mexico traditionally had a closed economy. Really stemming from its… going back to its revolution, that began in 1910. And the conclusion of the revolution was with a constitution that contained various clauses that were designed to protect Mexico’s economy from foreign control.
Essentially, in the 1980s, much of those constitutional protections that were designed to protect the economy from foreign domination, were lifted, were written out of the constitution, and NAFTA was written into the economy.
So, what that basically means, is NAFTA was a series of requirements -– well, I should say prior to NAFTA, there were a series of requirements that were designed to open Mexico’s economy. This began, really, in the early 1980s when Mexico began to experience a significant debt crisis. And much of that debt was owned by the United States.
And so, when Mexico began to experience this, the United States, primarily through the institution of the International Monetary Fund, began to issue what were called, Structural Adjustment Programs. Which were, in exchange for loans to deal with their debt, they were required to basically change the rules within their economy.
And so, there were over nine Structural Adjustment Programs that were implemented through the 1980s that, in exchange for debt servicing, required Mexico to remove tariffs. Required Mexico to basically end state ownership of much of the economic infrastructure — began to reduce, or remove currency controls.
And basically we saw the opening up of Mexico’s economy, completed in 1994 with the signing of the North American Free Trade Agreement, which basically was the consolidation of all of these Structural Adjustment Programs into a treaty.
KIM BROWN: When we look at the after-effects of the North American Free Trade Agreement, some 20-plus years after it’s signing, who made out the best here?
Did the United States make out well? How did Mexico fare? What about Canada? And, again, was this trade deal more beneficial to U.S. corporations than it was to U.S. workers? Because many point to the signing of this trade agreement as sort of the beginning of the end for the manufacturing economy in the United States.
JUSTIN AKERS CHACÓN: Well, yes. The people who won out in NAFTA were U.S. corporations — by a large margin. The transformation of the Mexican economy, basically allowed U.S. corporations, U.S. capital, U.S. investors, et cetera, to operate freely in Mexico. And so, we’ve seen over the last few decades, we’ve seen a fundamental transformation of the Mexican economy. About 80% of Mexico’s financial sector is now owned and controlled by U.S.-based banking institutions.
About 60% of its manufacturing is now controlled by U.S. corporations. There are over 2,800 maquiladoras, which are primarily U.S.-owned assembly plants in Mexico. We go industry, by industry — automotive, electronics — much of the infrastructure in Mexico is actually owned by U.S. corporations.
And so, we’ve seen a tremendous amount of investment coming in, and that has led to a very profitable arrangement for U.S. corporations. So, as of 2016 for instance, U.S. corporations within Mexico, employed about 1.3 million people, and generated about $250 billion in sales revenue. Much of what they produce came back to the United States.
So, this is what is interesting about our trade deficit, is that there is a trade deficit of about $60 billion between the United States and Mexico. But much of the trade that’s coming from Mexico into the United States, is coming from U.S.-based corporations, or U.S.-based facilities operating in Mexico, and furthermore, about half of what they use to produce, their products come from the United States.
So, we’re not really talking about a deficit between the U.S. and Mexican-based corporations, or Mexican-based enterprises, we’re really talking about a deficit (laughs) that’s really reflecting of the fact that U.S. companies in Mexico are doing more business. And much of that is coming back into the United States.
So, this is one of the contradictions of Trump’s claim that, you know, that we have too big of a deficit with Mexico.
Furthermore, the United States is now entering into the once-protected oil industry of Mexico. And so, much more capital is being invested there, with the intention of producing more oil for export.
KIM BROWN: Justin, when we talk about what Donald Trump is proposing, in terms of amending American trade policy, I mean, he has proposed a number of things, including import tariffs on Mexican goods into the United States. He’s also going to be hosting the Chinese Premier, Xi Jinping, later this week, and there’s a lot of talk there.
He has had many strong words for China, he has criticized China for allegedly devaluing their currency, and how much of American debt that China actually holds. So, have any of his sort of, loose proposals for addressing America’s trade issues, does any of it sound appealing to the American worker in your opinion?
JUSTIN AKERS CHACÓN: Well, I don’t think Donald Trump has the American worker in mind when he’s talking about getting tough on trade, or deficits, or whatever. I think he’s really posturing, in order to represent the interests of the investor class in the United States. And I think that’s one of the reasons why NAFTA has sort of fallen off of his radar, in terms of being a central problem for U.S. trade, and that’s perhaps why he didn’t mention it specifically in his Executive Orders.
But really, I think what’s happening here, is an attempt to try to increase U.S. control, or U.S. access in places like Mexico by posturing, by threatening to impose taxes, or threatening to take some sort of action, based on the false idea that the United States is losing out from these measures.
So, for instance, if we look at Mexico, and we try to understand what is the root of the problem here, where is the trade deficit coming from, or how is it being produced? It really… there’s no discussion of what’s actually happening in the Mexican economy, as a result of NAFTA.
So, for instance, prior to 1994, prior to NAFTA being fully promulgated, like I had mentioned before, there were over 700 economic activities that were closed to U.S. investors, or at least required restrictions on any kind of investment activity. While, since 1994, 669 economic activities within Mexico, we’ve seen all restrictions lifted. We’ve seen all restrictions lifted. And so, there has been a significant investment within Mexico of U.S. capital. And for instance, Walmart now is the largest retailer in Mexico. It’s a significant… banking institution, as well. It’s actually expanded its range of economic activities.
Exxon Mobil, and Chevron, now operate within the Gulf of Mexico. Now, as of last year, have moved into Mexico’s once very, very protected and cherished oil industry, and it’s not a coincidence that the Secretary of State is himself a former CEO of Exxon Mobil, Rex Tillerson.
So, I think part of the posturing here, part of the threatening behavior on behalf of Trump, is not so much to actually address the tremendous economic displacement that’s happened in places like Mexico, as a result of this massive influx of capital, and the export of profits, which has displaced, by the way over, 7 million people in Mexico since 1994.
Nor is it to address the export of jobs, or the role of U.S. corporations to move operations into Mexico, to take advantage of cheap labour to make more profit off of the lower labour costs in Mexico -– it’s not to address either one of those issues. It’s to figure out how to create more opportunities for corporations to operate in Mexico, and to extract more wealth from that process.
KIM BROWN: Indeed. Well, we’ll certainly be keeping an eye on what Donald Trump does, because obviously what he does, and what he says, don’t always match up.
Today we have been speaking with Justin Akers Chacón. He is an activist, writer and an educator, who lives in the San Diego-Tijuana border region, and he’s also the author of a recent book titled, “No One is Illegal”, and he teaches Chicano history at San Diego City College.
Justin, we appreciate you joining us today. Thank you.
JUSTIN AKERS CHACÓN: Thank you.
KIM BROWN: And thank you for watching The Real News Network.