NAFTA Replaced – At Least With Mexico

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Darrell Castle talks about the new trade agreement negotiated between President Trump and newly elected President Lopez Obrador of Mexico.

Transcription / Notes

NAFTA REPLACED—AT LEAST WITH MEXICO

Hello, this is Darrell Castle with today’s Castle Report.  Today is Friday, September 7, 2018.  Having just celebrated Labor Day with a three day weekend, we here at the Castle Report find ourselves in a contemplative mood.  We continue week by week to bring all our vast resources of engineers, technicians, videographers, sound technicians and those who advise us on language, punctuation, etc., to bear in the war in which we find ourselves.  The war to save our Republic and the war to save civilization is our war, our beat if you will, and we endeavor to report from as close to the front lines of that war as possible.

Moderation in war is an absurdity as Von Clausewitz said, and Corporate America in its hatred and utter disdain for traditional, especially middle class, Americans must believe Clausewitz’s statement because Corporate America continually spits in their faces then rubs their noses in it, and says, buy our products anyway because we believe that you traditional Americans living in flyover country are the most ignorant, stupid and totally brainwashed people on earth.  So despite our best efforts we are losing the war, and consequently the Republic and Western Civilization will soon be gone and a new civilization, once unthinkable, will have replaced it.

We have much evidence for such pessimism but, as I said earlier, we are contemplative today.  Perhaps very soon the ideal desired by all smart, educated, woke people will be realized and then all races, genders, and other pronouns will not only be equal but identical.  Everyone will be aesthetically the same with an understanding that no difficult questions may be asked because that would be, well, difficult, and intolerant, and intolerance will not be tolerated.  We ask ourselves, what is the real problem here in America and we answer; the real problem is that the body politic is infected with a disease of the heart which will be very difficult to cure and may prove to be fatal.

For these reasons and many more we here at the Castle Report sometimes wonder what it would be like to impose upon ourselves the sentence supposedly given by Pope Benedict to Cardinal Mc Carrick and that was to retire to a life of penance and prayer.  That is not our sentence, however, so we soldier on and continue the fight.

 With that in mind we turn our attention today back toward our friends south of the border, and take a brief look at the trade deal recently worked out between the incoming Mexican president, Lopez Obrador, and the American President Donald Trump.

President Trump said repeatedly during his campaign that he thought NAFTA was a bad deal for the United States so when the opportunity arose he withdrew the United States from the formal NAFTA.  When the new President, Lopez Obrador was elected, President Trump seized on the chance to make progress and sent a delegation to meet with him.  Out of that conference evolved bilateral talks about how trade could be made better for both countries.  Bilateral, obviously means between two parties and in this case it means no Canada.

Canada has opted not to participate, or the United States and Mexico have opted not to include them, or it’s just a tactic to squeeze the Canadians, or Donald Trump and Canada’s Trudeau have a personal spat, but somewhere in there lies the reason that Canada has not been included to this point.  The new deal, now called The U.S.-Mexico Trade Agreement, is centered on the auto industry and the labor laws surrounding that industry.

Under the terms of the agreement, 75% of a car would have to be manufactured in North America, up from 62.5% under current rules. In addition, the new rules would impose a minimum wage of $16 per hour to qualify for zero tariffs.  So the car would have to be at least 75% made in Mexico and its workers would have to be paid $16 per hour to qualify the car for zero tariffs upon import into the United States.

The percentages are for the components of the automobiles to prevent shipping sub-assemblies from other regions (Asia, Europe, South America) to the U.S. or Mexico, and then allowing the completed product to be labeled “made in Mexico” or “made in America”.  The agreement also includes wage restrictions that are intended to make it next to impossible to go overseas and pay workers slave wages and still avoid the tariffs.  Now American workers will be competing with $16 per hour workers not with those paid pennies.  This should allow Mexico to develop a middle class better able to afford American products.  It seems like a very good idea, this agreement, everybody wins and nobody loses, except perhaps a little loss for the globalist corporations which controlled NAFTA and profited from the destruction of the middle class in both countries.

President Trump wanted a “sunset clause” in the agreement, meaning a date when it would automatically expire but Mexico was dead set against it.  They believe a sunset clause would hurt business investments and job growth due to uncertainty of the agreement’s existence.  Agreement was finally reached on language that would allow periodic review of the agreement but not an automatic five year renegotiation as Trump wanted.

The very name of the agreement, The U.S.-Mexico Trade Agreement, excludes Canada, not to mention some of the language.  I would guess that Canada will have to eventually come to the table, now from a position of weakness, and negotiate a new deal for itself.  Mr. Obrador, it appears, has assisted Mr. Trump in putting pressure on Canada trade-wise and it will now be hard now for the Canadians to negotiate changes to the deal already in place.  They will probably be left  hoping to join in later in order to keep access to American and Mexican markets.

When Mr. Obrador takes office on December 1^st, he will control the Presidency of Mexico as well as both houses of the Mexican congress, a position that he and his coalition party have never before experienced.  That fact means that he will have more power to do what he wants than any Mexican government for the past 20 years and therefore what he wants is very important.  We’ve talked about his basic campaign issues before, such as fighting corruption, ending the drug wars by possibly legalizing drugs, and reform of the public energy sector including reform of and influence over the oil and gas workers union.  What he has now said is that he also wants is to find a way to fund a more permanent social spending program for the poor of Mexico.

These things that he says he wants are all things his transition team is already starting to work on.  His ideas appear to be good news for the United States.  Logically, it would seem that immigration from Mexico should decrease and perhaps some who have left will return to take advantage of better paying jobs and better opportunities.  The U.S. stock market surged on release of the news that an agreement had been reached.

I wish Mr. Obrador all the best in his efforts to set right what he seems to view as Mexico’s historic wrongs.  He has six years to do so for that is the term of the Mexican president, but in reality he has possibly only three years for that is the time he will definitely control both houses of congress.

 Good for Mr. Trump as well, since it appears that he has persuaded Mexico to commit to actions that will raise wages of workers in their manufacturing sector and perhaps oil and gas as well.  That is good for Mexican workers but it could make Mexico less attractive to those going abroad looking for cheap labor.  That’s good as well because it should keep more American jobs at home.  Low wages have encouraged other countries to locate manufacturing in Mexico but Mexican workers have been left with little to show for it and many have headed north as a result.  Perhaps those conditions will abate now and bring relief to both sides of the border.

Finally folks, good for Mr. Trump, and good for Mr. Obrador. Who says there’s no such thing as good news?

At least that’s the way I see it,

Until next time folks,

This is Darrell Castle,

Thanks for listening.