SAN ANTONIO — On the same grounds the North American Free Trade Agreement was signed in 1992, Sen. John Cornyn questioned Monday one of the men leading the charge that could potentially upend the transformative treaty.
With the fifth round of NAFTA renegotiations slogging through in Mexico City, Cornyn chaired a rare Senate field hearing at San Antonio’s Marriott Plaza hotel Monday. Stephen Vaughn, general counsel for the United States Trade Representative, submitted a verbal and written testimony before Cornyn’s questions began.
One of Cornyn’s concerns has been the USTR’s idea of a sunset clause, which would mean the agreement would expire after five years unless Americans, Canadians and Mexicans met to renegotiate. Rio Grande Valley officials have scoffed at this idea in recent months.
“One of the things we want to avoid going forward is another situation like what we’re in now, where we have an agreement that is somewhat out of date and hasn’t been updated in a way it should,” Vaughn said. “One of the things that the process shows is it takes a fair amount of political pressure to get nations to come together and work on this agreement.”
Vaughn referred to the clause as a “performance review provision,” a sentiment Cornyn ignored in a follow-up question.
“Are there other ways, other than a sunset provision, that you think you might be able to achieve the same goal without creating more uncertainty?” Cornyn asked.
Preferring not to speculate on how other countries may proceed in the future, Vaughn said the new agreement will be accepted, believing it “will be successful” and “popular.”
“Then hopefully when people come time to approve the agreement and see how it’s performed, there will be widespread understanding that the agreement is working and maybe we need to update this or that thing,” Vaughn said. “But that would be the hope and that would be the goal.”
A group of panelists, made up of six stakeholders from across the country in the trade industry, appeared for testimony and questioning after Vaughn’s near 30-minute hearing. Cornyn asked them about the sunset clause as well, which they unanimously rejected.
“The U.S. Trade Representative believes that a sunset provision should be included in the next round of NAFTA,” Cornyn said. “Does that raise any concerns on the panel’s behalf?”
Mitch Bainwol, president of the Alliance of Automobile Manufacturers and a former Republican Congressional staff member, said “it does.”
“The nature of manufacturing varies along product cycles,” Bainwol said. “It is essential to product planning and to logistics of the whole enterprise. So a sunset threatens that certainty.”
Paola Avila, chair of the Border Trade Alliance from San Diego, and Todd Staples, president of the Texas Oil and Gas Association and former Texas Agriculture Commissioner, agreed.
“The uncertainty that we’re experiencing right now during this renegotiation period has already had a negative impact with some businesses delaying investment or expansion in their businesses,” said Avila, who emphasized the Pharr-Reynosa International Bridge as a vital trade port. “That uncertainty would carry over during that period.”
Staples argued in favor of sunsets, referring to them as “very appropriate for units of government or legislatures.” Still, Staples said it may produce a chilling effect for trade agreements.
U.S. Rep. Henry Cuellar, D-Laredo, who Cornyn mentioned multiple times Monday as an effective colleague on trade issues, has also expressed concern over the clause.
Cornyn called sunset “a relatively innocuous thing.”
“… The idea that you would encourage somebody to invest millions of dollars in some plant or some business model and then pull the plug on it five years from now strikes me as undermining the whole process,” Cornyn added. “There are plenty of mechanisms under NAFTA right now, any one of the countries can force a renegotiation at any time. So I don’t think you need an additional sunset provision.”
While Vaughn’s overall testimony was brief, his tone was similar to that of President Donald Trump and USTR Robert Lighthizer, though not as harsh as the former’s.
“For a very long time, our NAFTA partners have enjoyed an agreement that is tilted in their favor,” Vaughn said, expressing a willingness to renegotiate if it benefits the U.S. “They do not want to give up that advantage, and we can understand why they feel that way.”
However, the stakeholders did not see the treaty as favoring other countries, and simply as a need to modernize outdated elements of the agreement.
If anything, they emphasized the importance of potentially expanding free trade. Bainwol noted that Mexico has free trade agreements with 45 countries, which gives automakers access to nearly half the global auto market — tariff-free — while the U.S. has free trade agreements with 20 countries.
“The bottom line is the problem isn’t free trade, but rather, it is that we don’t have enough free trade agreements,” Bainwol said.