NAFTA Replacement Has a Chance — There’s Bipartisan Support; The Epstein Scandal
Author: Greg Valliere
August 12, 2019
ALL OF THE KEY PLAYERS — The Trump Administration, most Democrats, the Canadian and Mexican governments, business leaders in all three countries — are pushing hard to win Congressional approval of the NAFTA replacement, called the U.S.-Mexico-Canada Agreement (USMCA), and it appears they have a chance to succeed.
WE TALKED WITH A TRADE EXPERT on Friday who reported that negotiators are making progress behind-the-scenes. He said U.S. Trade Representative Robert Lighthizer has surprising support from most of the key Congressional players as they negotiate throughout August on labor and environmental provisions that would be added to the new pact.
PELOSI IS THE KEY: House Speaker Nancy Pelosi isn’t anxious to do Donald Trump any favors, but she was instrumental in raising the debt ceiling (in part because she got something in return — vastly more domestic spending). And she would get much in return for U.S. labor unions if there’s a USMCA deal; no one wants to magnify the China debacle with a trade dispute with Canada and Mexico.
BUSINESSES ALSO WANT A DEAL: Already reeling from the uncertainty created by the tariff war with China, U.S. business leaders — especially in the Midwest — are pushing hard for the USMCA. This is a major goal of Vice President Pence, who is quietly leading the lobbying effort for a deal. The Trump Administration and pro-labor Democrats are in virtual lock-step on many trade issues; the new deal, for example, would require that at least 40% of all auto parts must be made by workers earning at least $16 per hour.
TIMING IS CRUCIAL: All of the participants agree that a deal needs to be done by mid-September, before appropriations bills clog the Congressional agenda — and before Canadian politics heat up, with an October election that looks too close to call for Prime Minister Justin Trudeau. Like most politicians in all three countries, Trudeau wants a deal.
BOTTOM LINE: We’ll stick our neck out and predict a 60% chance that the USMCA deal will win approval. Some Democrats will never agree — they have latched onto a controversial proposal to extend some pharmaceutical patents, they want a tougher enforcement mechanism, and they don’t want to give Trump a signing ceremony on anything.
BUT NEARLY ALL REPUBLICANS and perhaps half of the Democrats want a deal, and they’re getting an earful from struggling businesses in their home districts. So we think this is do-able, perhaps within a month.
* * * * * *
CONSPIRACY THEORIES that involve sex and mysterious deaths are like catnip for the media and the Twitter world, so the Jeffrey Epstein saga will continue to produce lurid speculation. Our take is that gross negligence in the NYC prison was responsible for Epstein’s apparent suicide, but there’s no question — lots of people wanted him dead because dead men tell no tales.
A POX ON BOTH THEIR HOUSES: Just when the fever swamp of U.S. politics couldn’t get any more cringe-inducing, an ugly fight looms between Donald Trump and Bill Clinton over who won the most favors from Epstein. Trump reportedly thinks there’s still a chance Hillary Clinton may run, so he could use this scandal to taint the Clintons forever. Democrats, meanwhile, are focusing on Trump’s dealings with Epstein in Palm Beach.
HOW CAN AMERICANS HAVE FAITH in the country’s leaders when a who’s who of prominent officials are connected to Epstein? What an opening for the Russians, who are certain to exploit this with more disinformation — as Congress still refuses to act on a plan to thwart intervention by Moscow in the 2020 election.
The views expressed in this blog are provided as a general source of information based on information available as of the date of publication and should not be considered as personal investment advice or an offer or solicitation to buy and/or sell securities. Speculation or stated believes about future events, such as market or economic conditions, company or security performance, or other projections represent the beliefs of the author and do not necessarily represent the view of AGF, its subsidiaries or any of its affiliated companies, funds or investment strategies. Every effort has been made to ensure accuracy in these commentaries at the time of publication; however, accuracy cannot be guaranteed. Market conditions may change and AGF accepts no responsibility for individual investment decisions arising from the use of or reliance on the information contained herein. Any financial projections are based on the opinions of the author and should not be considered as a forecast. The forward looking statements and opinions may be affected by changing economic circumstances and are subject to a number of uncertainties that may cause actual results to differ materially from those contemplated in the forward looking statements. The information contained in this commentary is designed to provide you with general information related to the political and economic environment in the United States. It is not intended to be comprehensive investment advice applicable to the circumstances of the individual.
AGF Investments is a group of wholly owned subsidiaries of AGF Management Limited, a Canadian reporting issuer. The subsidiaries included in AGF Investments are AGF Investments Inc. (AGFI), Highstreet Asset Management Inc. (Highstreet), AGF Investments America Inc. (AGFA), AGF Asset Management (Asia) Limited (AGF AM Asia) and AGF International Advisors Company Limited (AGFIA). AGFA is a registered advisor in the U.S. AGFI and Highstreet are registered as portfolio managers across Canadian securities commissions. AGFIA is regulated by the Central Bank of Ireland and registered with the Australian Securities & Investments Commission. AGF AM Asia is registered as a portfolio manager in Singapore. The subsidiaries that form AGF Investments manage a variety of mandates comprised of equity, fixed income and balanced assets.
About AGF Management Limited
Founded in 1957, AGF Management Limited (AGF) is an independent and globally diverse asset management firm. AGF brings a disciplined approach to delivering excellence in investment management through its fundamental, quantitative, alternative and high-net-worth businesses focused on providing an exceptional client experience. AGF’s suite of investment solutions extends globally to a wide range of clients, from financial advisors and individual investors to institutional investors including pension plans, corporate plans, sovereign wealth funds and endowments and foundations.
For further information, please visit AGF.com.
© 2019 AGF Management Limited. All rights reserved.