Bush Institute’s Director of Economic Growth Matthew Rooney was invited to testify during a public hearing held by the Office of the U.S. Trade Representative (USTR) in regard to the Renegotiation of NAFTA.
Earlier today, the Bush Institute’s Director of Economic Growth Matthew Rooney was invited to testify during a public hearing held by the Office of the U.S. Trade Representative (USTR) in regard to the Renegotiation of NAFTA. Read his thought-provoking testimony below.
Matthew Rooney, Director, Economic Growth
George W. Bush Presidential Center
Hearing on the Modernization of the North American Free Trade Agreement
Good afternoon. I appreciate the opportunity to testify today. My name is Matthew Rooney. I am the Director for Economic Growth at the George W. Bush Institute in Dallas, Texas. The Bush Institute, a component of the George W. Bush Presidential Center, is a non-profit, non-partisan policy think tank.
The GWBPC’s Interest in NAFTA
Over two years ago, the Bush Institute launched our North America Competitiveness Initiative.
We built a “scorecard” to benchmark North America’s performance in international rankings on numerous dimensions of competitiveness against the performance of other major countries and trade groupings. We found that our region is more competitive than any other economic grouping. We also looked at the integration of the North American economy from a macro perspective and find that all three economies have enjoyed strong economic growth, significant net job creation and increases in global exports since NAFTA was signed.
We went on to convene policy experts and practitioners from all three countries to discuss the most effective ways to strengthen our competitiveness. In November 2016, we issued a set of recommendations focusing on improving border infrastructure, strengthening the human talent pipeline in the region, and capitalizing on our collective energy assets.
We also looked at the integration of the North American economy from a macro perspective and find that all three economies have enjoyed strong economic growth, significant net job creation and increases in global exports since NAFTA was signed.
Earlier this year, we reconvened our working group to look specifically at modernizing NAFTA. Just last week, we issued a new set of recommendations focused on using the upcoming NAFTA review as an opportunity to build on our competitive lead and to make NAFTA the most innovative trade agreement in the world.
The results of this body of work, including interactive tools for exploring our databases on competitiveness and integration, are posted to our website at www.bushcenter.org/northamerica.
Five Objectives
We consider ourselves a “do tank” not a “think tank.” With that in mind, we offer five approaches to the upcoming negotiations that are a pragmatic way to strengthen the U.S. economy in a reasonable period of time.
First, establish a set of common principles. North America is a successful community that works well together and shares critical national security, counter-narcotics and counter-terrorism agendas. Fundamentally, it’s the trilateral nature of NAFTA that makes us competitive. Therefore, all three countries should be at the negotiating table together. We can let go of the outdated notion that “nothing is agreed until everything is agreed” and we should keep in mind that we are neighbors in North America forever, whatever becomes of NAFTA.
Second, in this spirit, we believe the Administration should set its sights on meaningful quick wins. Our governments have been working closely at all levels on trade and other issues for nearly three decades. Many issues are well known and understood. With clear focus and commitment, it should be possible to reach agreement in a matter of weeks on a commercially impactful set of commitments.
Fundamentally, it’s the trilateral nature of NAFTA that makes us competitive. Therefore, all three countries should be at the negotiating table together.
Among these, we should capitalize on Mexico’s recent reforms in the energy sector, which is critical to North American manufacturing and security. We can work together to ensure the integrity of NAFTA’s rules of origin, where subsidized commodities arriving from countries outside NAFTA cause economic harm to producers and consumers alike. And, we should implement targeted upgrades to border procedures and infrastructure to accommodate increased volume while effectively managing risks.
Third, we can “beg, borrow, and steal” provisions that have been innovated – largely by U.S. negotiators – in more recent agreements.
In particular, there is a strong case to incorporate provisions that enable growth of the digital economy; that open access to telecommunications investment and services; that foster regulatory cooperation in sanitary and phytosanitary requirements; that enhance intellectual property protections; and that create a basis for new areas of cooperation such as transparency of currency policies.
Fourth, we believe that with quick wins under our belts, we can pursue longer-term strategic objectives on a much larger agenda. If we try to accomplish everything on our wish list at once, we risk producing a so-called “comprehensive” package with something everyone can oppose. Or, we fail to produce a package at all. The detailed work of aligning and streamlining procedures and regulations requires the involvement of both government and private sector experts from all three countries.
In particular, there is a strong case to incorporate provisions that enable growth of the digital economy
Fifth, and lastly, we believe that, as important as upgrading NAFTA’s provisions is, there are many creative ways to improve economic and commercial relations in North America that do not need to be codified inside the trade agreement.
We should create a regional border infrastructure bank. We can work together to collect and publish trade data based on value-added. We should launch a public-private dialogue on North American competitiveness in advanced manufacturing, where we have a strong regional advantage. These are just three among many ways to improve our trilateral relationships without formal trade negotiations.
Conclusion
These five approaches are offered in the spirit of creating an environment where large, established companies and small entrepreneurs alike remain well positioned to compete anywhere in the world because of their North American relationships.
Our goal is to be helpful to the Administration in producing outcomes that make all three of countries better off. I appreciate the opportunity to speak on behalf of the Bush Institute on this important and timely policy topic and will be happy to answer any questions you may have.
Thank you.
