➃➄➅➆➇➈➉ ➊➇➈ ➋➌➉ ➋➍➎➏
➐➑➒ ➓➔→➒➣↔➒➣
On the Fence
What type of trade agreements are
most beneficial to our local economies?
Bilateral trade agreements are the
most beneficial for Eastern Oregon
Free trade agreements — good,
bad, indifferent ... you decide
The most notable trade agreement
is the United States-Mexico-Canada
Agreement (aka NAFTA 2.0) signed on
November 30, 2018, which aims to re-
place and modernize the North Ameri-
can Free Trade Agreement.
Trade agreements between nations
— even nations run by thoughtful,
experienced leaders — are inevitably
born of compromises between com-
peting political agendas.
Imagine, then, how much more dif-
✁✂✄☎ ✆☎ ✆✝ ☎✞ ✁✂☎ ✟ ✠✡✟✄ ☛☞✡✌ ✞✌✡ ✞✍ ☎☞✡
national leaders involved is unpredict-
able, temperamental and often unin-
formed. Seen in that light, the trade
pacts, NAFTA 2.0, and those with
China unfortunately are less likely to
✎✡✌✡ ☎ ✄✞✁✟✄ ✏✂✏✟✄ ✡✁✞✌✞✑✆✡✝ ✞✍ ✝✁✟✄✡✒
✓✟✔✡ ✌✞ ✑✆✝☎✟✔✡✕ ✆☎ ☞✟✝ ✎✡✡✌ ✠✆✖✁✂✄☎
for negotiators to keep their eye on the
ball on this one.
This updated agreement therefore
should not be mistaken as a revolu-
tionary new trade deal. Pundits have
dubbed it “NAFTA 2.0” for a reason;
apart from the ease of pronunciation,
this deal is simply an updated version
of NAFTA. Only a handful of U.S. in-
dustries will see noticeable changes,
of which Union County interests are
✌✞☎ ✝✆✗✌✆ ✁✟✌☎ ✟✌✠ ✑✞✝☎ ☛✆✄✄ ✁✞✌✠✂✁☎
business as usual. While the changes
in North America are not tremendous,
reaching a deal does add a new dimen-
sion to the ongoing trade spat with
China. Article 32.10 in the USMCA
creates rules against negotiating with
nonmarket economies. This has the
potential to dictate how negotiations
with China work for the U.S., China
and Mexico.
In case someone may not appreciate
☎☞✡ ✡✘✡✁☎✝ ✞✍ ✆✑✙✞✏☎✝ ✟✌✠ ☞✞☛ ☎☞✡✚ ✟✍ -
fect the economy:
Imports are foreign goods and ser-
vices bought by residents of a coun-
try or, in our case, Union County.
Residents include citizens, businesses
and the government. It doesn’t mat-
ter what the imports are or how they
are sent. They can be shipped, sent
by email or even hand-carried in per-
sonal luggage on a plane. If they are
produced in a foreign country and sold
➽➾➚➪➶ ➹➚➘➴
➦➧➨➩➧ ➫➩➦➧➭➯
➵➲➩➷➲➳➼➼➨➬➳➼➮➱➳✃➩➫➲➻➭➼
to domestic residents such as through
Walmart (one of the largest import-
ers), they are imports and controlled
in part or whole by one or more free
trade agreements.
Here are the biggest changes:
Country of origin rules: Automobiles
must have 75% of their components
manufactured in Mexico, the U.S. or
✛✟✌✟✠✟ ☎✞ ✜✂✟✄✆✍✚ ✍✞✏ ✢✡✏✞ ☎✟✏✆✘✝ ✣✂✙
from 62.5% under NAFTA).
Labor provisions: 40-45%of auto-
mobile parts must be made by work-
ers who earn at least $16 an hour by
2023. Mexico has also agreed to pass
laws giving workers the right to union
representation, extending labor pro-
tections to migrant workers and pro-
tecting women from discrimination.
The countries can also sanction one
another for labor violations.
✤ ✥✒✦✒ ✠✟✆✏✚ ✍✟✏✑✡✏✝ ✗✡☎ ✑✞✏✡ ✟✁✁✡✝✝
to the Canadian dairy market.
✤ ✧✌☎✡✄✄✡✁☎✂✟✄ ✙✏✞✙✡✏☎✚ ✟✌✠ ✠✆✗✆☎✟✄
trade: The deal extends the terms of
copyright to 70 years beyond the life
of the author. It also extends the pe-
riod that a pharmaceutical drug can
be protected from generic competi-
tion and includes new provisions to
deal with the digital economy, such as
prohibiting duties on things like music
and e-books, and protections for inter-
net companies so they’re not liable for
content their users produce.
✤ ★✑✡✏✆✁✟✌ ✟✂☎✞✑✞✎✆✄✡ ✆✌✠✂✝☎✏✚✩ ✧✌
more than 25 years since the signing of
NAFTA, Mexico’s minimum wage has
increased only slightly, to about $4.70
per day in 2018, while U.S. auto work-
ers have seen their pay increase at a
✝✆✗✌✆ ✁✟✌☎✄✚ ✝✄✞☛✡✏ ✏✟☎✡ ☎☞✟✌ ☎☞✟☎ ✞✍
other countries. Mexico, for this rea-
son and its proximity to the U.S., is a
strongly desired location for manufac-
turers of all types (farm equipment in-
✁✄✂✠✡✠✪✕ ✝✙✡✁✆ ✁✟✄✄✚ ✟✂☎✞✑✟✔✡✏✝✕ ✟✌✠
has directly contributed to the decline
of the U.S. domestic industry. This is
unlikely to change.
The short answer: Bilateral free trade
✟✗✏✡✡✑✡✌☎✝ ✟✏✡ ☎☞✡ ✑✞✝☎ ✎✡✌✡ ✁✆✟✄ ☎✏✟✠✡
agreements for Eastern Oregon. Another
way to state this claim is that a negoti-
ated agreement between two parties with
✑✆✌✆✑✟✄ ✞✂☎✝✆✠✡ ✆✌✫✂✡✌✁✡ ✍✏✞✑ ☎☞✆✏✠ ✙✟✏ -
ties typically results in each party getting
☎☞✡ ✑✞✝☎ ✍✟✆✏ ✟✌✠ ✎✡✌✡ ✁✆✟✄ ✠✡✟✄ ✙✞✝✝✆✎✄✡✒
There are a plethora of reasons for this but
I will put only three to you for consider-
ation now: customization, pliability and
empowerment.
✤ ✛✂✝☎✞✑✆✢✟☎✆✞✌✩ ☎☞✡ ✟✎✆✄✆☎✚ ✍✞✏ ✡✟✁☞
party to directly engage the other in ne-
gotiating the most relevant, pressing,
valuable, responsive and rare or unique
factors that are pertinent between the two
parties. For example, a wood products
manufacturer in Eastern Oregon might
✌✠ ✟ ✬✡✏✚ ✠✆✘✡✏✡✌☎ ✝✡☎ ✞✍ ☎✏✟✠✡ ☎✡✏✑✝ ☎✞
✎✡ ✑✞✝☎ ✎✡✌✡ ✁✆✟✄ ✠✡✙✡✌✠✆✌✗ ✞✌ ☛☞✞ ☎☞✡
✝✙✡✁✆ ✁ ✎✂✚✡✏ ✆✝ ✣✡✒✗✒✕ ✁✂✝☎✞✑✡✏ ✠✡✑✟✌✠✝✕
desired features, sub-uses, etc.) and
whether the buyer is located in Portland,
New York or Shanghai (e.g., transporta-
tion, time to market, applicable laws, etc.).
Negotiating directly allows for maximum
value for both parties to be derived while
preserving the ability to tailor terms for a
✠✆✘✡✏✡✌☎ ☎✏✟✠✆✌✗ ✙✟✏☎✌✡✏✒ ✭☞✡ ✗✏✡✟☎✡✏ ☎☞✡
number of parties involved, the less ability
to customize and the less fair the deal will
be to some of the parties involved. Closely
related to this idea is pliability.
✤ ✮✄✆✟✎✆✄✆☎✚✩ ☎☞✡ ✁✟✙✟✎✆✄✆☎✚ ✞✍ ✡✟✁☞ ✙✟✏☎✚
to be situationally aware, sensitive and
responsive to changes in market condi-
tions, party and counter party needs,
and geopolitical events such as military
actions, diplomatic postures or regula-
tory shifts, that might occur between the
two parties. So, a cattle rancher in Union
County can meet unexpected regula-
tory changes that occur for one customer
without causing operational problems
or negatively impacting other custom-
ers. This factor is particularly important
for long-term relationships as well, by
allowing for easier accommodation or
renegotiation when factors inevitably
change (e.g., political leadership, natural
resource utilization, population/cultural
demographics, etc.) for one or both par-
ties. Lastly, is empowerment.
✤ ✯✑✙✞☛✡✏✑✡✌☎✩ ☎☞✡ ✙✡✏✝✙✡✁☎✆✬✡ ✍✞✏
SUBSCRIPTION INFORMATION
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♣✵✹❡✷ t② ✿✾✈✾✶✿ ✸♣❡✸✵✾❄ ✵✶❄ ❃✵✾❀ ✷✳t✷✴♣✾t❡♣✷ ✺◆ ❄✵②✷
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❬❪▼❏◆❅ ⑥✳t❀✾✷✽❡❄ ⑦♦✶❄✵②✷❖ ⑧❡❄✶❡✷❄✵②✷ ✵✶❄ ❫♣✾❄✵②✷
⑨❡⑩✴❡✸✹ ❶❡✴❅ ❩❏❷ t② ⑧❡✷✹❡♣✶ ❈♦❃❃✳✶✾✴✵✹✾♦✶✷ ❸✶✴❅❖
▲✻◆❭ ❫✾❢✹✽ ❙✹❅❖ ❴✵ ❵♣✵✶❄❡❖ ❤❝ ❬❪▼❏◆ ⑨❯❙⑥❙ ❩❬❬❁❩❭◆❷
COPYRIGHT © 2019
A division of
❞❣✐❥❣❦❧ ♠♥qqr❧s✉①❥s♥❧✐ ③❧✉④
each party to operate from the strongest
respective position it is capable of having
when engaging the other party, which
✑✟✚ ✎✡ ✬✡✏✚ ✠✆✘✡✏✡✌☎ ✎✡☎☛✡✡✌ ✝✡✙✟✏✟☎✡
counter parties (e.g., you are dealing with
Idaho vs. China). Additionally, bilateral
free trade can work extremely well with
an interest-based bargaining negotiation
strategy. This is a strategy where the par-
ties are operating and negotiating with a
focus on achieving their and the counter
party’s interests instead of their respec-
tive positions only. Interest-based ne-
gotiation typically leads to substantially
✑✞✏✡ ✬✟✄✂✡ ✞✏ ✎✡✌✡ ☎ ☎✞ ✡✟✁☞ ✙✟✏☎✚ ✬✝✒
when another strategy (like distributive
negotiation) is used. Inevitably, when
there are a greater number of distinct
✝✡☎✝ ✞✍ ✆✌☎✡✏✡✝☎✝ ☎☞✟☎ ☞✟✬✡ ☎✞ ✎✡ ✝✟☎✆✝ ✡✠✕
the less likely interest-based approaches
✁✟✌ ✎✡ ✂✝✡✠ ✡✘✡✁☎✆✬✡✄✚✒ ✭✚✙✆✁✟✄✄✚✕ ✟✌ ✟✙ -
✙✏✞✟✁☞ ✞✍ ✌✠✆✌✗ ✰✁✞✑✑✞✌ ✗✏✞✂✌✠✱ ✞✏
“what is good for most” of the parties is
✟✠✞✙☎✡✠✕ ☛☞✆✁☞ ✄✡✟✬✡✝ ✄✡✝✝ ✆✌✫✂✡✌☎✆✟✄
parties at an unnecessary disadvantage.
Questions like who decides what com-
mon ground is and what “most” means
can also become problematic, again,
placing some parties at a disadvantage.
✲✌✡ ✁✟✬✡✟☎ ☎✞ ✡✘✡✁☎✆✬✡ ✡✌✗✟✗✡✑✡✌☎ ✟✌✠
success in bilateral free trade is that any
party coming to the table must have done
their homework, be prepared and other-
wise be “smart cookies.” Critical thinking,
situational awareness, cultural awareness,
technical perspective and clear expecta-
tions are minimum mandates to par-
ticipate. Fortunately, our folks in Eastern
Oregon have these features in abundance
✟✌✠ ✁✟✌ ☎✟✔✡ ☎☞✡ ✡✄✠ ☛✆☎☞ ✁✞✌ ✠✡✌✁✡✒
We need state and federal leaders to un-
derstand and support this perspective as
well if we really want to rapidly acceler-
✟☎✡ ✑✞✬✆✌✗ ☎☞✡ ✌✡✡✠✄✡ ✞✌ ✡✘✡✁☎✆✬✡ ☎✏✟✠✡
agreements and obtaining available value.
In short, the most advantageous,
value unlocking and empowering type
of trade agreement for Eastern Oregon,
America and any sovereign interest, is
bilateral free trade.
STAFF
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✸♣✾✴❡ ❂✾✹✽ ✽♦❃❡ ❄❡❀✾✈❡♣②❅
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❙✹♦✸✸❡❄ ✵✴✴♦✳✶✹ t✵❀✵✶✴❡✷ ❀❡✷✷ ✹✽✵✶ ■❏ ❂✾❀❀
t❡ ♣❡❢✳✶❄❡❄ ✳✸♦✶ ♣❡❜✳❡✷✹❅
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THE OBSERVER
❛✽❡ ❤t✷❡♣✈❡♣ ♣❡✹✵✾✶✷ ♦❂✶❡♣✷✽✾✸ ✵✶❄ ✴♦✸②♣✾✿✽✹
✸♣♦✹❡✴✹✾♦✶ ♦❢ ✵❀❀ ✷✹✵❢❢❁✸♣❡✸✵♣❡❄ ✶❡❂✷ ✴♦✸②❖ ✵❄✈❡♣✹✾✷✾✶✿
✴♦✸②❖ ✸✽♦✹♦✷ ✵✶❄ ✶❡❂✷ ♦♣ ✵❄ ✾❀❀✳✷✹♣✵✹✾♦✶✷❅❛✽❡② ❃✵②
✶♦✹ t❡ ♣❡✸♣♦❄✳✴❡❄ ❂✾✹✽♦✳✹ ❡⑩✸❀✾✴✾✹ ✸♣✾♦♣ ✵✸✸♣♦✈✵❀❅
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