The Art of the International Deal
Photo by Geralt on Pixabay
“My style of deal-making is quite simple and straightforward. I aim very high, and then I just keep pushing and pushing and pushing to get what I’m after.”
Type this quote into Google and you’ll find a number of news articles and opinion pieces talking about Donald Trump’s supposed deal-making prowess and the limited examples we’ve seen of it since January 20, 2017. The quote is taken directly from Trump’s ghost-written memoir and book of advice, The Art of the Deal. Since taking office, President Trump has shown how he translates his deal-making skills to politics: buck diplomatic efforts, use public statements and social media to strongarm potential partners, make unrealistic demands, and walk away from any deal that he thinks is “unfair.” Unfortunately, from his statements we cannot be sure he fully understands the deals that he is walking away from or how that action of leaving a deal will affect foreign policy.
The Paris Climate Accords, the Trans-Pacific Partnership, and the Iran Nuclear Deal were some of the most decisive examples so far and the North American Free Trade Agreement or KORUS Free Trade Agreement might be next. This doesn’t even mention any military agreements, such as NATO, which have been shaken by Trump’s lukewarm support and incendiary statements about America potentially not honoring its commitments.[1] Yet, I will not put the blame of America leaving the United Nations Educational, Scientific, and Cultural Organization (UNESCO) entirely on Trump’s shoulders as this process was really started years before, under the Obama Administration. In 2011, the U.S. withdrew all funding from the organization due to a domestic law restricting any funding to UN bodies that grant membership to groups that are not recognized internationally as states. UNESCO voted to include Palestine as a member, which automatically triggered the law and cost the body about one-fifth of its funding.[2] The law, 103–236,[3] was passed under the Clinton Administration and was supported by an earlier bill, 101–246,[4] which had been authorized February 16, 1990 under the first Bush Administration. We lost our vote in UNESCO in 2013 due to our unpaid fees.[5] Also, this is not the first time that America left UNESCO. President Reagan withdrew from the body in the 1980s[6] and we only rejoined under the second President Bush,[7] so yes, there is technically precedent for this one action and it may be easier to eventually reverse than other decisions like leaving the Iran Nuclear Deal.
That is just about the only break I will give to Donald Trump. The truth is, I have held off on writing this blog because the updates do not stop coming. Granted, the UNESCO departure was not a surprise, but it still reflects poorly on the United States’ international reputation. The most recent update (at the time I wrote this) was that a Senator of Trump’s own party criticized how the President was threatening the stability of the world with his behavior towards our alliances and agreements.[8]
Jeff Flake (R-AZ): “The notion that one should stay silent as the norms and values that keep America strong are undermined and as the alliances and agreements that ensure the stability of the entire world are routinely threatened by the level of thought that goes into 140 characters — the notion that one should say and do nothing in the face of such mercurial behavior is ahistoric and, I believe, profoundly misguided.”
Quite honestly, Trump’s “deal-making” in international politics does not consist of much negotiation. He may end up ruining the expectation of states that deals arranged under one administration will be honored by the next. How seriously could countries really take the United States if we make promises to them one day and spit in their eye the next? Trump seems to think that America is able to just lay out what it wants and other states will get into line to serve our needs. (If any of you are confused, this is not actually how the world works.) This is the ultimate essence of thinking the U.S. is so exceptional that it gets to play by its own rules. It actually could end up isolating America from other countries, which again, is not how world politics (or any other kind of “deal-making”) works.
Some of you might think I am exaggerating. In that case, I appreciate you reading this far into the work of someone you do not agree with. However, if you would, please just take two things away from this article for your further consideration: capitalism and terrorism. OK, yes, those are two buzzwords that tend to ignite strong feelings but bear with me a minute. Trump is a businessman. Yes, right now he is the President, but he prides himself on being a businessman who can make “huge” deals. Free trade is therefore an issue where you might expect the President to pay close attention to negotiation instead of bullying. Sure, there is something to be said about playing a strong hand with confidence, but consider the current state of ongoing NAFTA negotiations.
To be clear, I’m not going into the relative benefits of NAFTA versus their drawbacks here. The larger point is that NAFTA increased cooperation and trade between Canada, Mexico, and the United States and in American law the Executive Branch gets to negotiate free trade deals outside of direct congressional intervention until the ratification process.[9] However, current negotiations are stalled, largely because of two of Trump’s demands.[10] The first, Trump wants a “sunset clause” to let the deal end in five years unless all three states sign an extension. It would make it obscenely easy for any one of the states to end the deal for them all. Since Trump has already railed against NAFTA, letting him add an easily accessible self-destruct button seems absurd to demand of any rational partner who sees a benefit in NAFTA. Second, Trump wants to change the requirement in NAFTA that currently demands that at least 62.5% of the components in automobiles sold in North America must be made in North America in order to be sold tariff-free. President Trump offers a new sticking point: 85% of parts must be made in North America and 50% must be made in the United States.
It is important to note that Mexico and Canada have made no such extreme demands because they don’t want this deal to implode. It should also be noted that the American automobile industry and the U.S. Chamber of Commerce are among the groups calling on President Trump to stay in NAFTA because it is generally good for their business interests.[11] Before NAFTA, Mexican tariffs on American goods were much higher than American tariffs on Mexican goods and if America leaves NAFTA, it will lose the benefits and protections it has gained in trade and possibly give Canada and Mexico the chance to work together and cut out the United States which could really hurt American trade. More importantly though, this would cut America out of a 23-year-old deal and could hurt weaken our hand if we ever try to negotiate multilateral deals in the future because we will be seen as unreliable partners.
Photo by Daniel Diaz Bardillo on Pixabay
Further, he doesn’t seem to fully understand or care about what the agreements bring to the United States. Specifically, look at NATO. He clearly has heard that NATO invoked Article 5 after 9/11 since he praised this action and thanked our allies during a memorial dedication ceremony.[12] However, he hyper-focused on the idea that the United States and four other nations were the only NATO members to dedicate at least 2% of their GDP to military spending and called NATO obsolete.[13] When you consider that NATO was initially formed as a collective security arrangement to combat the spread of communism and adapted over time to eventually combat global terrorism, you should realise it is not obsolete, but evolving. NATO’s role in combating terror has also become a bragging point for Trump for reasons that defy rational thought as he believes his “pressure” has led the body to address terror more severely.[14] In reality, NATO countries had been increasing their defense spending and had been working to counter terrorism long before Trump was even elected. It’s odd that he will at one point recognize how they invoked Article 5 for the first time in response to an act of terrorism committed against the United States and will also say that they do not do enough in the “War on Terror.”
“Remember the first time I talked about NATO, I said they all owe money?… I said two things: It’s obsolete because it doesn’t cover terrorism. They have now opened up a division to cover terrorism, solely because of me…I knew nothing about NATO. I mean, I knew very little about NATO… But you watch what’s going to happen. They’re paying. They’re paying big league…They owe a lot of money. Many countries owe a lot money.” -Donald Trump, February 23, 2017, interview with Reuters [15]
It essentially boils down to Trump insulting the deals we do have and making it harder for the United States to forge new deals in the future. For a man so clearly obsessed with the need to be liked and to leave a legacy on the world beyond a five-letter stamp on buildings, steaks, a university, and lawsuits he is alienating the people who actually want or need to work with him and who could help him to solidify a reputation. Instead, his legacy might end up as being the reason other countries decide to form arrangements that only nominally include the United States because we have simply become too unreliable. Attempting to push his nationalistic agenda in international agreements in the name of American exceptionalism might just end up pushing us back toward a path to American isolationism.
Photo by Ludovic Toinel on Unsplash
References
Halperin, Mark , and John Heliemann. “Complete Donald Trump Interview: NATO, Nukes, Muslim World, and Clinton.” Bloomberg.com. March 23, 2016. https://www.bloomberg.com/news/videos/2016-03-23/complete-trump-interview-nato-nukes-muslims-and-hillary.
Cornwell, Susan. “U.S. stops UNESCO funding over Palestinian vote.” Reuters. October 31, 2011. https://www.reuters.com/article/us-palestinians-unesco-usa-funding/u-s-stops-unesco-funding-over-palestinian-vote-idUSTRE79U5ED20111031.
Foreign Relations Authorization Act, Fiscal Years 1994 and 1995, § 410: Limitations on Contributions to the United Nations and Affiliated Organizations (1994).
Foreign Relations Authorization Act, Fiscal Years 1990 and 1991, § 414: Membership of the Palestine Liberation Organization in United Nations Agencies (1990).
“US loses Unesco voting rights after failing to pay its dues.” BBC News. November 08, 2013. http://www.bbc.com/news/world-us-canada-24871100.
Gwertzman, Bernard. “U.S. is Quitting UNESCO, Affirms Backing for UN.” The New York Times. December 29, 1983. http://www.nytimes.com/1983/12/30/world/us-is-quitting-unesco-affirms-backing-for-un.html.
Foreign Relations Authorization Act, Fiscal Years 1990 and 1991, § 408: Policy on UNESCO (1990).
Krieg, Gregory. “Jeff Flake’s 9 toughest hits on Trump.” CNN. October 25, 2017. http://www.cnn.com/2017/10/24/politics/jeff-flake-senate-speech-lines/index.html.
Trade Act of 1974, § 102: Barriers to and Other Distortions of Trade, § 203:Action by President After Determination of Import Injury (1974)
Trade Act of 1974, § 102: Barriers to and Other Distortions of Trade, § 203:Action by President After Determination of Import Injury (1974)
Epstein, Richard A. “Trump’s demands for renegotiating NAFTA will prove disastrous.” Newsweek. October 25, 2017. http://www.newsweek.com/trumps-demands-nafta-will-prove-disastrous-692769.
Shepardson, David. “Auto industry tells Trump ‘We’re winning with NAFTA’.” Reuters. October 24, 2017. https://www.reuters.com/article/us-trade-nafta-autos/auto-industry-tells-trump-were-winning-with-nafta-idUSKBN1CT1FJ.
Gray, Rosie. “Trump Declines to Affirm NATO’s Article 5.” The Atlantic. May 25, 2017. https://www.theatlantic.com/international/archive/2017/05/trump-declines-to-affirm-natos-article-5/528129/.
Hunt, Katie. “Trump rattles NATO with ‘obsolete’ blast.” CNN. January 17, 2017. http://www.cnn.com/2017/01/16/politics/donald-trump-times-bild-interview-takeaways/index.html.
Liptak, Kevin, and Dan Merica. “Trump says NATO no longer ‘obsolete’.” CNN. April 12, 2017. http://www.cnn.com/2017/04/12/politics/donald-trump-jens-stoltenberg-nato/index.html.
“Highlights of Reuters interview with Trump.” Reuters. February 24, 2017. https://www.reuters.com/article/us-usa-trump-interview-highlights/highlights-of-reuters-interview-with-trump-idUSKBN1622RG.
