USMCA - Winners: Big Business / Losers: The Little Guys

What would happen if I offered you a huge cash gift (no strings), one that one has to be paid back by millions of people (you would only have a tiny fraction of debt compared to your gift)? Would you be feeling pretty good? Would your net worth skyrocket? You mean as in “here, corporate America, have a trillion+ dollars in hard cash benefits in the form of a huge tax cut. Massive increase to the federal deficit? Don’t worry, the cost will be spread across every taxpayer in the land. Eat up!”?

You think maybe the stock market just might soar to its highest level as a result? Duhoh! So what if almost no well-paying jobs were created or that the resulting tsunami of dividends and stock buybacks pretty much only benefitted those with massive stock portfolios. If giving taxpayer money away is the cause of the overperforming stock market, is that really a sign of a great economy? Slowly, I move, towards the underlying issues in replacing NAFTA.

Sure the majority of American farms are family-owned, and about half of what we consume in the United States comes from small family farms. Exports, not so much. That’s where agribusiness gets seriously corporate. And there are market segments where big business dominates in every way. The USDA tells us: “64 percent of all vegetable sales and 66 percent of all dairy sales come from the 3 percent of farms that are large or very large family farms.” So all those benefits in the U.S. – Mexico – Canada agreement on trade (nicknamed: “USMCA,” aka NAFTA’s replacement) that opened up American farm products to Canada and Mexico… ah… er… mostly go to those agribusiness corporations? Oh, yeah.

Our massive annual trade deficit, according to Donald Trump which he describes as “lost money,” is on the order of $800 billion a year. I am still struggling to understand how Americans acquiring $800 billion dollars of imported goods and services a year is “lost money.” We apparently got a bargain on those goods and services… they’re ours… so where did we “lose” money? It’s like saying since you bought and own a house and bought and own a car, you lost the money you paid for those assets? Huh?

Add to that reality a proviso in the USMCA that keeps prescription drugs manufactured in Mexico and Canada out of the U.S. As Trump said in his Rose Garden speech on October 1^st announcing the USMCA, “you don’t know how those drugs were made.” Yup, that third world country, Canada, probably has no standards for their pharmas!

Of course, all of this means one thing: higher prices for consumers. Big U.S. companies have less competition and can jack up those prices without much fear of a price war. But think about all those jobs we are going to bring back. Really?

You might forget why so much of the U.S. automotive manufacturing business went (mostly) to Canada in the first place. It was quite a few years ago, well before the assembly-lines were mostly robots (and well-before the great automotive bankruptcies and bailouts in the last decade). The Canadian workers were paid pretty much the same as their American counterparts, but the big difference was that about $1500/car came from the automakers’ having to paying for their union workers’ healthcare through private plans, while Canadian workers got that benefit just by being Canadian residents! The lack of national healthcare in the U.S. made the movement of jobs north possible! A whole lot of American automakers, noting that Ontario was close to Michigan anyway, opened big plants north of the border accordingly. Saved $1500/car!

Meanwhile, after those Canadian plants had been operational for over a decade, as a result of the Chrysler/General Motors bankruptcies, there was a major shift away from U.S. assembly-line workers towards fully-automated robotic manufacturing. Robots did not need healthcare or fringe benefit packages. A whole lot fewer people were involved in making cars. Thus, bringing car-manufacturing back to the United States – bringing just about any manufacturing back to the United States – wasn’t going to be about creating lots of new jobs.

It was clearly no more expensive to manufacture in the “automated” United States than it was to outsource to cheaper labor overseas. Labor wasn’t even an issue. The huge beneficiaries to onshoring manufacturing? Not workers who had long been replaced. The mega-wealthy corporations who owned the robots! Income inequality accelerated as Trump’s corporate cronies, waddling fat from the tax cut, could waddle further by having their machines generate more wealth that used to be paid to workers.

But hyperbole-driven Donald Trump is also touting all those new protections for American intellectual property the USMCA will bring us. Really? Let’s dig deeper. Canada, for example, tends to protect its citizens from loss of privacy and excessive corporate profits. It favors the little guy, including creative individuals who generate copyrights. The United States, on the other hand, tends to favor big companies who have little or no responsibility under U.S. law if their behemoths accidentally become major enablers of content piracy. Well, the USMCA extends that “safe harbor” concept to American businesses operating in Canada and Mexico. Screw the content creators; they’re just little guys!  

“Mitch Glazier, president of the Recording Industry Association of America, zeroed in on the inclusion of a safe harbor provision in the proposed text of the new pact, meant to be an updated version of the North American Free Trade Agreement.

“The safe harbor shields internet providers and tech companies from liability for piracy as long as they take infringing content down promptly upon notification of the copyright holder. Record labels, studios, and other content groups have long criticized the safe harbor provision of U.S. copyright law as putting too much of the burden on content owners to police piracy online.

“‘Unfortunately, the agreement’s proposed text does not advance adequate modern copyright protections for American creators,’ Glazier said in a statement on Monday [10-1]. ‘Instead, the proposal enshrines regulatory 20-year-old ‘safe harbor’ provisions that do not comport with today’s digital reality. These provisions enrich platforms that abuse outdated liability protections at the expense of American creators and the U.S. music community, which provides real jobs and is one of our nation’s biggest cultural assets.’” Daily Variety, October 1^st. The Rose Garden speech continued.

Recently, Mr. Trump’s trade representatives approached their counterparts in the People’s Republic with an invitation to begin new serious bilateral negotiations towards a new Sino-America trade agreement. Bully Trump was sure that adding more tariffs against PRC imports would bring China to its knees. China, enjoying massive success in its multilateral trade agreement negotiations both in Asia and reaching to the European Union (clearly excluding the United States), rebuffed that U.S. invitation and instead instituted some new limitations on American companies operating in China.

“China has scrapped trade talks with the United States days before President Trump [was] set to escalate the commercial battle with a new round of tariffs, according to a person familiar with the discussion.

“Chinese officials canceled the planned negotiations after Trump announced he would impose new levies of up to 10 percent on another $200 billion in Chinese imports, effective Monday [9/24]. Beijing vowed to strike back, slapping duties of up to 10 percent on an additional $60 billion in American products.” Washington Post, September 22^nd.

But in Trumpian revisionism, the Donald explained during his Rosen Garden speech that while the Chinese desperately wanted the United States to return to the trade agreement bargaining agreement, it was the United States who rebuffed China’s request. Not exactly. And when the Americans and the Chinese do sit down to work out a trade agreement, inevitably, the Chinese know that they aren’t going to give very much. But by the time Trump explains how great that agreement will be, even if the results are mediocre as most experts expect, most Americans will take his description at face value. They are hardly likely, unless they are directly impacted, to examine the details. Are you getting used to losing yet?

I’m Peter Dekom, and the master of spin and fake news, Donald John Trump, is at it again… doing what he does best… even if the American people do not remotely have the flamboyant benefits their President is describing.