Trade representatives from Canada and Mexico are in Washington D.C. for the re-negotiation of the North American Free Trade Agreement, which kicked off Wednesday morning. President Trump has called NAFTA a "disaster" and "the worst trade deal" ever signed by the U.S.
Earlier this year, he threatened to pull the U.S. out of the deal altogether, but later switched gears and called for a retooling.
What's next for the rules governing trade with America's neighbors?
Michael Camuñez is CEO of the consulting firm Monarch Global Strategies. He's the former assistant secretary of commerce under President Obama. He spoke with KPCC business correspondent Andrea Bernstein about what Californians should watch for as NAFTA talks begin, and he joined A Martinez on Take Two on Wednesday.
First, if we're looking at substantial changes to this trade agreement, tell us what NAFTA has meant for California's economy?
Most people don't realize, but when we're talking about Mexico and Canada, we're talking about two of the most important economies in the world not just for California but for the United States.
[These countries are our] first and third largest export markets. We do a lot of trade over a trillion dollars of trade annually – with the NAFTA countries, and this sustains about 6 million jobs in this country. It's been a huge success in terms of the deepening of our manufacturing base, even though a lot of people have the perception that we lost a lot of jobs due to NAFTA.
The truth is, while we did lose some, we also gained depth in many areas, including the automotive and aerospace sectors, where we've deepened our integration with Canada and Mexico and have really been able to compete globally as a result of this regional platform.
So it's been a big success overall. There have been challenges with the agreement. In free trade there are always winners and losers, and I don't mean in any way to make light of those people in parts of the country that have lost jobs as a result of the agreement. But overall, it's been a big win for the United States.
I have Facebook friends from the Midwest, and they can't stand NAFTA. They think all the jobs left and went to Mexico. That's the perception.
That's a common criticism of the agreement, but if you actually drill down on the data and look at what's actually happened, and there have been some very good empirical studies, what you find is the United States has lost competitive advantage in some manufacturing sectors. But over 85 percent of the jobs corresponding with NAFTA that have been lost have been ... lost due to technology. So those jobs would have been lost regardless, whether we have a trade agreement or not. In fact, if you look at where we have lost the most jobs, we've lost more jobs in sectors where we don't have free trade agreements than where we do.
In fact, the Mexican government as part of its case for NAFTA has put out some interesting analysis showing that in those sectors where we trade with NAFTA in the manufacturing space, we've actually seen increases in manufacturing jobs in the NAFTA sectors... And the reason for that is that the United States, Canada, and Mexico form one regional economic block with integrated supply chains.
We talk about a car being made in South Carolina, or being made in Mexico. But the truth is a car today is made in North America.
This interview has been edited for length and clarity. The conversation continues ... please click on the blue media player above to hear the full segment.