The Art of the International Deal

Photo by Geralt on Pixabay

“My style of deal-making is quite simple and straightforward. I aim very high, and then I just keep pushing and pushing and pushing to get what I’m after.”

Type this quote into Google and you’ll find a number of news articles and opinion pieces talking about Donald Trump’s supposed deal-making prowess and the limited examples we’ve seen of it since January 20, 2017. The quote is taken directly from Trump’s ghost-written memoir and book of advice, The Art of the Deal. Since taking office, President Trump has shown how he translates his deal-making skills to politics: buck diplomatic efforts, use public statements and social media to strongarm potential partners, make unrealistic demands, and walk away from any deal that he thinks is “unfair.” Unfortunately, from his statements we cannot be sure he fully understands the deals that he is walking away from or how that action of leaving a deal will affect foreign policy.

The Paris Climate Accords, the Trans-Pacific Partnership, and the Iran Nuclear Deal were some of the most decisive examples so far and the North American Free Trade Agreement or KORUS Free Trade Agreement might be next. This doesn’t even mention any military agreements, such as NATO, which have been shaken by Trump’s lukewarm support and incendiary statements about America potentially not honoring its commitments.[1] Yet, I will not put the blame of America leaving the United Nations Educational, Scientific, and Cultural Organization (UNESCO) entirely on Trump’s shoulders as this process was really started years before, under the Obama Administration. In 2011, the U.S. withdrew all funding from the organization due to a domestic law restricting any funding to UN bodies that grant membership to groups that are not recognized internationally as states. UNESCO voted to include Palestine as a member, which automatically triggered the law and cost the body about one-fifth of its funding.[2] The law, 103–236,[3] was passed under the Clinton Administration and was supported by an earlier bill, 101–246,[4] which had been authorized February 16, 1990 under the first Bush Administration. We lost our vote in UNESCO in 2013 due to our unpaid fees.[5] Also, this is not the first time that America left UNESCO. President Reagan withdrew from the body in the 1980s[6] and we only rejoined under the second President Bush,[7] so yes, there is technically precedent for this one action and it may be easier to eventually reverse than other decisions like leaving the Iran Nuclear Deal.

That is just about the only break I will give to Donald Trump. The truth is, I have held off on writing this blog because the updates do not stop coming. Granted, the UNESCO departure was not a surprise, but it still reflects poorly on the United States’ international reputation. The most recent update (at the time I wrote this) was that a Senator of Trump’s own party criticized how the President was threatening the stability of the world with his behavior towards our alliances and agreements.[8]

Jeff Flake (R-AZ): “The notion that one should stay silent as the norms and values that keep America strong are undermined and as the alliances and agreements that ensure the stability of the entire world are routinely threatened by the level of thought that goes into 140 characters — the notion that one should say and do nothing in the face of such mercurial behavior is ahistoric and, I believe, profoundly misguided.”

Quite honestly, Trump’s “deal-making” in international politics does not consist of much negotiation. He may end up ruining the expectation of states that deals arranged under one administration will be honored by the next. How seriously could countries really take the United States if we make promises to them one day and spit in their eye the next? Trump seems to think that America is able to just lay out what it wants and other states will get into line to serve our needs. (If any of you are confused, this is not actually how the world works.) This is the ultimate essence of thinking the U.S. is so exceptional that it gets to play by its own rules. It actually could end up isolating America from other countries, which again, is not how world politics (or any other kind of “deal-making”) works.

Some of you might think I am exaggerating. In that case, I appreciate you reading this far into the work of someone you do not agree with. However, if you would, please just take two things away from this article for your further consideration: capitalism and terrorism. OK, yes, those are two buzzwords that tend to ignite strong feelings but bear with me a minute. Trump is a businessman. Yes, right now he is the President, but he prides himself on being a businessman who can make “huge” deals. Free trade is therefore an issue where you might expect the President to pay close attention to negotiation instead of bullying. Sure, there is something to be said about playing a strong hand with confidence, but consider the current state of ongoing NAFTA negotiations.

To be clear, I’m not going into the relative benefits of NAFTA versus their drawbacks here. The larger point is that NAFTA increased cooperation and trade between Canada, Mexico, and the United States and in American law the Executive Branch gets to negotiate free trade deals outside of direct congressional intervention until the ratification process.[9] However, current negotiations are stalled, largely because of two of Trump’s demands.[10] The first, Trump wants a “sunset clause” to let the deal end in five years unless all three states sign an extension. It would make it obscenely easy for any one of the states to end the deal for them all. Since Trump has already railed against NAFTA, letting him add an easily accessible self-destruct button seems absurd to demand of any rational partner who sees a benefit in NAFTA. Second, Trump wants to change the requirement in NAFTA that currently demands that at least 62.5% of the components in automobiles sold in North America must be made in North America in order to be sold tariff-free. President Trump offers a new sticking point: 85% of parts must be made in North America and 50% must be made in the United States.

It is important to note that Mexico and Canada have made no such extreme demands because they don’t want this deal to implode. It should also be noted that the American automobile industry and the U.S. Chamber of Commerce are among the groups calling on President Trump to stay in NAFTA because it is generally good for their business interests.[11] Before NAFTA, Mexican tariffs on American goods were much higher than American tariffs on Mexican goods and if America leaves NAFTA, it will lose the benefits and protections it has gained in trade and possibly give Canada and Mexico the chance to work together and cut out the United States which could really hurt American trade. More importantly though, this would cut America out of a 23-year-old deal and could hurt weaken our hand if we ever try to negotiate multilateral deals in the future because we will be seen as unreliable partners.

Photo by Daniel Diaz Bardillo on Pixabay