Before meeting Mexican and Canadian heads of state, president bypasses Congress by signing trade liberalisation orders
Dan Roberts in Toluca
theguardian.com, Wednesday 19 February 2014 09.46 EST
Barack Obama begins a North American summit in Mexico on Wednesday with a gesture of defiance toward allies in Congress who are hampering his ability to negotiate controversial trade liberalisation agreements.
In the latest in a series of so-called executive actions promised in his state of the union address, the US president will sign new measures to speed up imports and exports for businesses by reducing bureaucratic barriers.
Though more limited than the sweeping free trade agreement with China that Obama plans to discuss later in the day with Mexican president Enrique Peña Nieto and Canadian prime minister Stephen Harper, the White House claims that streamlining trade rules will help businesses further integrate their supply chains and boost jobs.
Their summit in the Mexican industrial city of Toluca comes on the 20th anniversary of the North American Free Trade Agreement (Nafta) which has led to an explosion in cross-border manufacturing to the point where the components of an average car cross the US/Mexico border eight times before final assembly.
But attempts to extend Nafta to a broader Trans Pacific Partnership with Asian economies have divided Democrats in Washington who fear its impact on manufacturing jobs, leaving Obama without the authority of Congress to negotiate final details of the deal.
Instead, the White House is doing what it can to boost trade with executive orders, adapting a strategy originally designed to bypass Republicans in Congress into territory where he has been blocked by Democratic allies too.
“In his state of the union address, President Obama set an ambitious agenda to make 2014 a year of action: using his pen and his phone to take steps that expand opportunity for America’s middle class – including helping small American businesses compete in a global economy,” said the White House in a statement.
“Today, aboard Air Force One, the president will sign a new executive order on streamlining the export/import process for America’s businesses … [cutting] processing and approval times from days to minutes for small businesses.”
Proponents of further trade liberalisation argue that the experience of Nafta has shown that businesses on both sides of the border benefits from lower barriers, but critics say it has destroyed manufacturing jobs in the US and fear further damage if trade with China is similarly relaxed.
“I don’t think there’s any place on the place of the earth where a free trade agreement has developed the integrated supply of production chains that Nafta has,” said Arturo Sarukhan, a former Mexican ambassador to the US.
“When members on Capitol Hill talk about buy America or export American, they’re losing one very powerful point which is that we’re no longer exporting Mexican, US or Canadian products, we’re exporting North American products. Out of every dollar for example that Mexico exports about 40 cents are US content.”
But Obama and Peña Nieto are also expected on Wednesday to discuss ways of updating Nafta to address concerns that it is too one-sided in favour of corporate interests , according to Josh Meltzer, a trade expert at the Brookings Institution in Washington.
“The fact that [the Toluca summit] is 20 years after Nafta is going to be sort of a touchstone and an opportunity to revisit what that trade deal has meant and what could be done going forward,” he said.
“The Trans Pacific Partnership really is the opportunity to renegotiate Nafta in the sense of not actually having to open the agreement. Some of the controversy that always surrounded Nafta has continued and now we see it reemerging in the TPP context.”
Obama and Peña Nieto will meet for a bilateral meeting on Wednesday afternoon before a session including prime minister Harper and a speech to business leaders.
Further trade announcements are expected at a press conference on Wednesday evening but the White House said that the executive order, signed enroute to Toluca, was an important first step.
“Today, businesses must submit information to dozens of government agencies, often on paper forms, sometimes waiting on process for days to move goods across the border,” said a fact sheet provided by officials.
“This new electronic system will speed up the shipment of American-made goods overseas, eliminate often duplicative and burdensome paperwork, and make our government more efficient.”