[inaudible]. Thank you, ken. [laughter]. Its, its a real pleasure to be here this morning, and thanks to weda for organizing this very, very timely session on nafta 2. 0. As someone who has been involved in the trade, war is too strong, debate is too tame, the vigorous trade discussions weve had in washington over the last 20 years, were certainly at, even in scope of those discussions were at an unprecedented moment right now awaiting to see the unrolling of the adminstations new trade strategy. We have been, weve heard a lot from the president when he was a candidate, when he was president elect. Since becoming president weve heard a lot about mexico. We heard a lot about mexicans. Weve heard a lot about nafta. We heard a lot about china. We heard a lot about it. Pp. A lot of things are going to be ripped up. A lot things will be done away with. A lot of things will be changed, yet we have little in the way of actual specifics that have come out. The president s trade team, some of them have been named, formerly named wilbur ross nomination is somewhere on the floor of the senate. They will get to him at some point as they march through a list of cabinet officers. Bob lighthiser, ftr, he hasnt been set up, because he advised a foreign power at some point in his career. That be a block to serving. Peter navarro at the National Trade council. He has very wellknown views that relate to china. Bob lighthiser that has very wellknown views relate to china. Wilbur ross has wellknown views that largely relate to china. What is interesting sitting here at a panel on nafta 2. 0, each of these men has said actually very little about nafta. So how exactly they will roll out and implement a new nafta policy is for the moment, unclear. We have the president s very strong statements, and for the rest of it, were waiting. We know that Rex Tillerson met yesterday with the Mexican Foreign minister. We also know he met separately with chrystia freeland, the Canadian Foreign minister. The three of them did not meet together which is interesting. We know pena nieto canceled a trip to come here and there are no plans for him to come. We know Prime Minister trudeau will come as soon as next week. Kellyanne conway in a slip yesterday on the air let it out he may be here as soon as next week. We know that wilbur rosss name is soon to be on the floor of the senate and up and out. My sources close to the administration tell me that as soon as ross is in the chair, they will begin implementing their trade strategy and that ross will lead it. What were going to do this morning with our really superblyqualified panel, is try to give you an idea, as you walk out of here, both this panel and the next panel, of what the range of options are for what may come out of the new trade policy specifically for nafta. Will it be a slight change . Will it be a total redo . How will it impact various industries. We hope to give you as you walk out today, a set of, a set of benchmarks, a ruler, perhaps, some rules of thumb to look ahead. So that you can advise our clients, advise your companies of the coming impact on nafta. The first panel is focusing on the broader policy issues. The second panel was an industry specific panel. Our broader panel this morning i think youll agree is superbly constructed to give us a variety of viewpoints. To my right is yuri dilush, noted economist, trade policy expert. He has written broadly and deeply about trade and globalization issues over the years. To his right is matt gold, who is, was the Deputy Assistant u. S. Trade rep for north america. So is deeply schooled in the mechanics of nafta, and also is a professor at fordham. So he will give us the legal underpinnings. What is the legal reality of what the president can actually do on his own. For what does he need congress . For what does he need an actual renegotiation. Beyond him is thea lee, who is, for many years has been one of the leading voices from the Labor Movement on interNational Trade and on nafta, and is someone who is extremely thoughtful on the issues affecting the labor community. She will help us understand labors perspective on nafta renegotiation. And then to her right is antonio mena, longtimex can government official. Longtime official here at the Mexican Embassy. Understands the, the u. S. Mexico relationship deeply. And he will give us the mexican perspective and perhaps the mexican responses expected, responses to what President Trump might do. So with that were going down the panel in the order in which were seated here. Each person will speak for five or six minutes. Well get the conversation going up here. And then well turn it to the audience for what i hope will be, i fact i know will be a very, as they say in the legal business, a very hot bench with lots of questions and lots of hands in the air. With that, let me turn it to yuri. Yeah, thank you very much nelson and ken. Honored to be here with you this morning. I see three main scenarios for the new nafta. The first is a kind movedfied nafta with some new features but also other features that are closed, closing down. I called this the nafta 0. 9 scenario. Okay . This is my main scenario. The second return to mfn trade between u. S. And mexico. They stay in the wto you but they trade with each other at arms length. The third is the border adjustment. Would that be the nafta zero model . That would be the nafta zero i guess. There were other scenarios, but that that is the nafta scenario. There are other minus scenarios. That is the nafta scenario as you call it. The third the border adjusted tax you had a event, beautiful event couple weeks ago i which i think has major impact on nafta scenario. So you cant just ignore it. In addition, there is a big north american trade agenda that could also be part of the new agreement such as border of structure, beyond the wall and improvements at the border and communications. Energy collaboration etc. , all of the cement aired so, i would say that nafta 0. 9 would have several of these, but clearly there will not be enough to satisfy the objectives for the us negotiators. What are these objectives . They are to reduce the 60 billion trade deficit with mexico, design for exports to the United States whether its by american or foreign companies, and make it at least look like mexico is paying for the wall. This was this is what i would assume is the negotiations behind the scene. To achieve these objectives without lifting nafta rules and us laws. The main option available, apparently is to make the rules more rigid as to prevent [inaudible] also, safeguards, but that is tinkering of the margin. Even that may not be so easy to do in negotiations. Contrary to the common view, this will not be a onesided negotiation. Mexico depends on the United States in crucial ways, but the United States depends on mexico, also. Industry such as automotives instate like mexico is very dependent on mexico. A 40 of us imports from mexico consist of products originating in the United States in the us trade balance is just one aspect of the relationship with large affiliate sales and mexico. Theres a hundred billion dollar plUs Investment in mexico. All of this could be targeted in retaliatory situation. So, let me move to the second scenario. Trade negotiations right now, then the us could raise its wto means producing a 3 tax on average. Mexico could stay within the wto rules with a percent on average and very importantly raise its tariff on agriculture to 20 hurting a lot of people. I think its clear that mexico hurts the United States as much as the United States hurts mexico in the second scenario. That takes me to my last scenario be patient. On the border adjustment tax, you cannot ignore and say we had an effect event last week so we wont discuss this. The border adjustment tax has many attractions politically because its a measure that looks like its might be trying to consistent like a value added tax, but it actually is not at all trying to consistent. Im an economist. It is not at all wto consistent. It does give the us cover for staying in the system while education takes place. Lets me say unequivocally that the border adjustment tax is worse in economic terms then scenario number two. It effectively implies a 20 tariff on canada and mexico and on everyone else in the world and it applies a 20 export subsidy on canada against canada mexico and everyone else in the world. This is a massive discussion of the us economy. Proponents say the changes will adjust. My experience from having tried to forecast Exchange Rates for 40 years is that no one knows how foreign exchangers will adjust. Whats of the border adjustment tax might do is to allow the administration to say that mexico is paying for the wall and the jobs are coming back to america and so thats why you cannot rule out the value. Good. Thank you. Now im to to gold to talk to us about what the actual law is. Thank you and speaking of actual law i agree that there is no possible way it can be done it has been described wto consistent and would violate both export subsidy rules and rules relating to National Treatment for internal taxation, but getting back to nafta. I think with respect to all of President Trumps trade proposals in the proposal to renegotiate nafta the first question you have to ask yourself is if it were that easy why hasnt it been done already and on the campaign trail the application was because every administration before was either incompetent or corrupt. If youre someone who knows thats not true and i think most of the people in the room no thats not true guilt as yourself wait a minute, if its this easy then why hasnt been done before. As was mentioned i can tell you mexico, canada and the United States have all wanted to change a certain things in nafta and although there have never been formal negotiations we have been in impasse or 23 years and there are things of mexico would like to change a things canada would like to change. No American Administration have been prepared to give them concessions and they are not prepared to give us hours and thats why theres never been negotiations to renegotiate nafta. Enter President Trumps and the question then is what has eat introduced that will change that dynamic. Of the answer is he is threatened to withdraw from nafta does that change the dynamic . If its credible it does. I would argue that there is not credible and although the population of a free country believe hes serious i dont believe he serious and i would be surprised with the leadership of mexico or canada or their trade official believe hes serious and as a consequence i dont think the dynamic has changed. I think they will be very diplomatic with President Trump and our administration is they have to be, but i dont think there will be a serious negotiation of nafta. The United States and canada have the largest trading agreement and mexico is our second largest export market and we have so misapplied change that would be severely disruptive that it almost sends one had trying to wrap your brain around it. The in the short run the disruption would be worse. We have not had a huge public outcry. Weve had a lot of nervous sectors and other groups, but we have not had a huge public outcry because everyone has been rolled into this feeling that he wont really pull out of nafta and he is just saying to renegotiate, but that has up to the threatened to renegotiate not be incredible. If or when the talks to read goucher it are fully stuck in the mud and President Trump is actually withdrawn from nafta i think there will be a public outcry that wont only shape the administration, but congress. Last thing i will say on that subject, even if President Trump were to withdraw from nafta, which he has the authority to do hes only pulling out of the agreement. Unless Congress Repeals the nafta implementation act not much happens on the ground and congress will have constituents throughout the country screaming. I just zero see happening and back to the more complex i went to sharpen that because that i think that is something that was really highlighted in our discussions that i want to be sure everyone in the room understands, your perspective on this is that if a present withdraws from nafta and Congress Takes no action, in effect nothing changes for the companies that have relied on nafta in their crossborder trade because everything remains the same. The supply chain issues import quotas all remain the same. Is that correct . Initially everything remains the same. Initially nothing. Unless congress acts. By the mere withdraw from the agreement. Congress obviously can change anything revising the statute. Of the president himself has some delegated authority by which he could roll back some of the now implementation, but feel a part of it the authorities are questionable in different areas and its a complex area, but congress issued a report in december 2016 which lays out the different authorities. They only really for a small tariff, not to any of the nontariff areas which are 300 pages of commitment we have a nafta and his authority and tariff is i could go into it in great detail, but we dont have the time. The point is that if congress declined to act and mexico and canada declined to come to the negotiating table, no matter what President Trump does other than the Tariff Authority, which is limited, the rules of nafta that remain for north American Companies that have benefited from it. Is that your perspective . Correct, i mean, again if President Trump did commit and use the Tariff Authority and raise tariff there would probably be a reaction mexico. And thats part of the scenario we are doing here . Yes, but just majority from the agreement itself, that act alone changes nothing on the ground. Thats why we are still fulfilling every one of the terms on nafta including the main terms and the other 300 pages of terms as well. We are still doing all of those and its highly likely mexico and canada would continue to do those in reference with us. If everyone could keep the discipline and also the president did not use is limited authorities that could save face to the end of the president s term. Anyway, to finish up, all of this leads me then to the fact for the lack six months ive been predicting that the renegotiation of nafta is more of a fantasy than reality and might never be more than a reality. Look at what happened in the last two weeks because i see a lot of things going on diplomatically and i infer whats going on by the seas and i see a different picture with whats going on in the last two and a half weeks. First, no trilateral work no one seemed to notice that. Nafta can only be discussed trilateral summit or mr. Uriel or talks. Its not even remotely possible to do it in a bilateral level and even if President Trump wants to negotiate bilaterally hes not at that stage. Key west to try first to renegotiate nafta, but apparently mexico and canada have not agreed to a bilateral summit and keep in mind every year we have a trilateral summit and its round this time year and we also have a mysterious nafta Free Trade Commission and it neither of those are scheduled that im aware. All we have are to bilateral summits planned for the first month of the presence office. Second. Whats on the agenda . These staffers are negotiating the agenda in a joint statement for the summit. Thats the leaders communicating through the staffers. I would have predicted mexico would not have agreed to put any particular provision of nafta on the agenda for the meetings that was supposed to happen this month, nor would they agree to put any provision on the joint statement in terms of agreement to negotiating the different positions of nafta Going Forward. What are we actually publicly . First, as we got close to the senate with mexico the president answered a question about the agenda and he said Border Security and immigration. In other words no nafta issues. Second of all, then there was no summit. Now, if you think the president of mexico made that decision then you are not paying attention. President trump made a statement that he knew would cause mexico to pull out to. I think when he answer the question about the agenda he was floating the reality that he would be embarrassed that nafta would not be on the agenda to see what the reaction would be and i think whatever feedback he decided he did not want to have the summit and i think he then engaged in typical misdirection and in the summit make it look like mexico pulled out and look like there was nothing to do about nafta and the fact that hes never had the power to renegotiate it and hes finding it out for the first time. Sort of a non reality . Yeah and now comes canada. January 23, sean spicer announced Justin Trudeau would be here 30 days or so, but they didnt have a dates. If you dont have a date for a summit than you dont know there will be a summit. Second, since that time we havent heard a word about dates for the summit. Third, mexican president backs out. This is the first leader that stood up to donald trump, so now what will Justin Trudeau do . This is a classic bully scenario. Is the first kid that stands up to bullies and suddenly has the other kids coming to his help, the dynamic changes for the rest of the presidency. Justin trudeau is really seriously at a Tipping Point now and all the sudden we dont hear about when the summit will be. Now its widely reported Justin Trudea