NAFTA Renegotiations

KADEL: Hello, everybody. And thanks for joining us today for our program on “NAFTA Renegotiations,” a portion of the Corporate Program of the Council on Foreign Relations.

We’re pleased to have Gordon Hanson, Pacific economic chair in international economic relations and director of the Center on Global Transformation at the University of California, San Diego. And then Anku Nath, director of federal affairs and trade policy at Deere & Company.

I’d like to remind the audience that this call today is on the record. And addition to CFR members, invited members of the press will be present.

So with those administrative items out of the way, we’ll go ahead and get started with our discussion. I think the first thing is just to set the stage a little bit for our discussion. The North American Free Trade Agreement, or NAFTA, entered into force almost 25 years ago. In June 2016, then-candidate Donald J. Trump promised to renegotiate NAFTA or take the United States out of the agreement. According to the USTR’s summary of objectives of the NAFTA renegotiation, the first NAFTA consultations began just a few weeks after the president took the oath of office. And then in May 2017, U.S. Trade Representative Robert Lighthizer announced the Trump administration’s intention to renegotiate NAFTA. 

Anku, would you let our participants what has happened between then and now, and where are we in the NAFTA renegotiations process?

NATH: Sure. Happy to. And thank you for having me as part of the call. A lot has happened between then and now. So I’ll try to cover it at a pretty high level, since there is probably a lot of detail we could get mired into. But NAFTA is being renegotiated under the TPA process—that’s trade promotion authority—which essentially allows Congress to give the president an up or down vote, without any amendments, on the trade agreement. Now, with TPA there are a lot of consultation requirements and timelines that are associated with it.

So in May, when Ambassador Lighthizer sent across his intent to negotiate to Congress, that kicked off a 90-day consultation period, during which thousands of comments were sent in by the public and a hearing with more than 140 witnesses was held. The objectives that Ambassador Lighthizer issued at that time were fairly middle of the road and didn’t really cause too many raised eyebrows. But there were certainly some questions that those who follow these negotiations closely had. And after that 90-day process and the consultations, you had negotiations beginning in August, with a plan to complete them by this past December of 2017. 

For anybody who follows trade agreements, trade negotiations, starting in August and ending in December is essentially going to warp speed. It was a very rushed process at the beginning. That has now slowed a bit. The pace and definitely become a bit more moderated, which I think is a good thing, giving negotiators a chance to really digest what’s happening at any given round and then respond to it with a little more thoughtful approach.

So substantively, since this whole negotiation started the mantra has been really do no harm. That was one that the business community has repeated from the get-go. And slowly, after the business community started, you’re hearing that come from officials as well. So that’s certainly a good thing. You know, the line that folks are repeating tends to be pretty consistent across stakeholder groups. Unfortunately, I think do no harm means different things to different things to different people. 

I can tell you for, you know, ag groups it means maintaining market access that they currently have in either Canada or Mexico. For manufacturers, and the auto manufacturers in—excuse me—particular, it means that rules of origin, which are the eligibility requirements for getting NAFTA benefits, that those are not threatened. And for many others, it’s things that are really foundational to the trade agreement, like dispute settlement or investor protections. And they prioritize those types of issues for do no harm.

So I should say, though, that the U.S. government seems to have a very different interpretation, or at least a somewhat different interpretation on certain elements on what do no harm means. Ambassador Lighthizer and President Trump have made it very clear that their goal within the NAFTA renegotiation is to reduce the U.S. trade deficit with Mexico and with Canada. So you see from the get-go a bit of a divergence on goals, not just between the business community, the farm community, and the U.S. government, but also between Canada, Mexico, and the U.S.

On the one hand, you have the U.S. saying they want to reduce the trade deficit. And on the other hand, you have to imagine that if a trade deficit goes down in one place then it goes up somewhere else. And so the lack of a common set of objectives between the three countries has really hampered progress, I’d say, from day one. That doesn’t mean there aren’t certain areas where progress couldn’t have been made. And in fact, we have seen certain elements, parts of the agreement where many of us refer to as modernization issues are being addressed really quite well. Those are things like digital trade or disciplines around state-owned enterprises—issues that really weren’t taken up by NAFTA 1.0 back in the ’90s, and now there’s more of a consensus around today.

However, there are a number of issues that have been introduced by the U.S. that many are calling poison pills. Those are issues that neither Canada nor Mexico feel they can make any progress on the way that they currently have been proposed by the U.S. Specifically, I’m thinking of things like government procurement, where the U.S. was looking for a—more of a reciprocal approach, almost dollar for dollar. Trade remedies, dispute settlement, the auto rule of origin that I mentioned earlier, and a sunset clause that would automatically terminate NAFTA every five years unless the three countries proactively agreed to reaffirm their commitment.

So from day one in August up until now, we have seen these sort of fits and starts where in the beginning some of the rhetoric was positive. There was talk about making progress on some of those modernization issues. And then at times when the U.S. brought forward these more difficult proposals, we’ve seen a distinct drop in the level of rhetoric. We’ve seen some more contentious press conferences and statements released. Which brings us up to today.

We’re going to have negotiators getting on planes in just a couple days here and heading up to Montreal for the sixth round of negotiations. And we will hopefully see some type of progress coming out of there. We know there’ll be a lot of pressure on negotiators from all three countries to make some progress. We know that there is a congressional delegation that will be there. I expect that there will be quite a long list of representatives from the business community and other stakeholders also trying to make sure their interests are accurately and fairly, I suppose, represented.

So here we are. We’ve got a lot of politically charged issues to handle. But I think there is also a lot of solid substance that has been addressed in a really positive way. So I think that brings us up to today.
KADEL: Great. Thank you very much, Anku. So, Gordon, maybe I can turn to you with a question that sort of builds on what we just heard. And that is although today’s program is primarily focused on NAFTA and the NAFTA renegotiations, it’s clear that trade generally has been a focus of the Trump administration. And there are several other significant trade matters pending as we—as we head into the sixth round of renegotiations in Montreal this coming Sunday. Could you say a few words about those other matters, and whether and how they could influence the timing and outcome of the NAFTA process?
Hello, Gordon?

HANSON: Sorry. Are you—thank you, Eric, for that great introduction. And thanks to Anku for the—giving us a very clear sense of the landscape and the current status of the negotiations. You—as the—you know, moving beyond the technical details surrounding the process through which these negotiations happened, we have the broader political environment to consider. Kind of first point there is the sense in which, coming out of the Trump administration, is that they need a win on trade. Those who supported—those who supported President Trump want him to make good on his campaign promises to take a hard line in negotiating trade deals with our trade partners. So absent alternatives, NAFTA is kind of front and center for the U.S. to—for the Trump administration to make good on those commitments.
There are alternatives out there not nearly as exciting as NAFTA. The U.S. is likely to take trade actions on steel, on washing machines, and on solar panels, in which the Trump administration could say that it is taking a tough line on trade. And those decisions are going to be coming up in a—in a matter of the next few weeks, with China being the primary actor targeted in each of those actions. 
A further backdrop here is the time constraint, mainly coming from the political calendar, that affects the Trump administration’s need to get a win soon. First there’s a sense that the midterm elections in the United States create a constrained period of time in which kind of negotiations can proceed at their normal pace. But something that kind of on the U.S. side I don’t think has gotten enough appreciation is the fact that Mexico has a presidential election coming up in July of 2018. And it’s going to be a momentous one. Mexico’s presidential campaigns are much more contained in time than in the United States. But the calendar during which Mexico can proceed as—through as a—kind of in this normal process of negotiations is not very long. 

So the—we’re facing then a crucial six to eight weeks in which the Trump administration needs to decide which of these actions it can put forward to demonstrate its desire to make good on its commitments to be tough on trade, with the notion that kind of the process will make very little progress once we get into the second quarter of the year.

KADEL: Great. Thank you, Gordon. 

That’s very helpful background leading into our next question, which is probably in the forefront of everyone’s minds. And that is, with the sixth round of negotiations scheduled to start in Montreal on this coming Sunday, January 21, what can we expect? 

Anku, can you give us a preview about what we should expect to come out of round six?

NATH: Well, yes and no. I’m not really sure what we can expect. (Laughs.) I mean, these things have been a little bit unpredictable over the last few months. But I can certainly say that we hope that there will be a lot of progress on a number of issues. We think they’ve made a lot of headway already between formal rounds and intersessional rounds on some of the more technical and less controversial issues. So things like food safety, regulatory best practices. 

There is maybe just a handful of issues that are remaining on those topics—on those kinds of topics. And we think that the negotiators—you know, if they are—if they have the political will at this point, they can probably close out a handful of those chapters. And that would certainly be welcomed by the business community, and I think by the government as well, just to show that there is—that they do have the ability to get passed some of this initial, you know, mountain, I should say, I guess, to—of issues to deal with.

And while that’s important, I think a lot of the eyes that are following this are going to be set on the more controversial issues—things like the autos rule of origin and investment protections. The auto rule of origin issue has been getting a lot of press over the last few months. The U.S. proposal that was made last fall would dramatically increase the North American content requirement needed in any given auto or—auto or other manufactured goods that are classified as autos, in order to get NAFTA tariff benefits. But in addition to just increasing the North American content, it includes a U.S.-specific content of 50 percent. 

As you can imagine, neither Canada nor Mexico are really thrilled with that type of proposal, to have 50 percent U.S. content, and so that proposal has been considered quite controversial. Neither Canada or Mexico at this point have put forward a counterproposal. And if press reports are to be believed they likely will not put forward a specific counterproposal in this round either, though we understand there probably will be some discussions, maybe something short of a—of a formal proposal put out there. But we do hope to see at the end of this set of—of this round of negotiations that there is some statement made about progress on that particular issue.

I think it’s worth noting that just in the last day the timeline for the negotiation next week has actually been lengthened by a couple of days. I, for one, would read that as a positive sign for real engagement, that some of these issues that do require quite a lot of discussion, of analysis, will have the time—the appropriate time given to them to have that type of analysis and discussion. So I am hopeful that by the time this all concludes about 10 days from now or so we will have a statement out of the three trade ministers saying that they have been able to close a couple of chapters, that they have made progress on some of these more difficult issues, and that perhaps that leads into an even more productive seventh round.

KADEL: Great. Well, although there’s hope for progress, what about this? If the round six talks don’t go well, for whatever reason, what could be the next steps?

NATH: Well, I think that’s something that a lot of us are also preparing for. We all know well that President Trump has not been shy about saying that he is willing to terminate NAFTA if he doesn’t get what he wants out of the negotiation. And for those of you on the call who don’t follow this, if the president were to decide to terminate NAFTA, which he could do—most believe he could do unilaterally by invoking Article 2205 of the agreement, that would set off a six-month clock during which—during which the president believes Canada and Mexico will come back to the negotiating table and perhaps be a little bit more flexible in their approach.

Now, Canada and Mexico have said that during that six-month process before the U.S. has formally withdrawn from the agreement that they would not negotiate. So if these talks don’t go well, if the president decides that he feels he needs to terminate the agreement, we basically have six months before the United States is out.

It is a real threat. I know in the last several weeks there’s been a lot of talk in the press about how various senators and governors have had the ear of the president and have been able to illustrate to him the benefits of NAFTA, and perhaps that threat has lifted a bit. I’m hopeful that that is true, that the president is beginning to perhaps soften his desire to terminate the agreement. However, I think the threat is still there, that we all need to be vigilant that if these talks don’t go well, if we are unable to make progress on some of the more controversial issues, we could see that threat of termination becoming more imminent, especially because we’ve got the State of the Union address coming up in just a few more days. And I would imagine that, given the many promises the president made during his campaign and throughout the presidency now about doing something on trade, there is—there must be some pressure for him to show that type of progress before the State of the Union address.

Now, whether that pressure comes—is relieved on NAFTA or if he finds another trade issue, many of which Gordon just mentioned, to address, you know, I couldn’t tell you. But I do think that the way this round six goes could impact what we see in the coming few weeks in terms of trade announcements from the White House.

KADEL: All right. Well, Gordon, maybe we could turn to just one last question before we open it to the floor. And that is, suppose that the Trump administration does indeed choose to exit NAFTA. How certain is the legal foundation for exit? And if we witness the demise of NAFTA, what rules would govern trade among the three countries?

HANSON: Well, the legal foundation for exit is very much an open question right now. And if you read the text of NAFTA, as Anku just said, the president can notify Mexico and Canada of the intent for the U.S. to withdraw in six months, and the agreement itself makes it appear that the—that the president of the United States could unilaterally withdraw. However, a trade agreement involves the setting of tariffs, and tariffs are one form of taxes, and the Constitution reserves the right to set taxes to the U.S. Congress. And so there is—there are a number of theories running around that the U.S.—having the executive branch initiate the withdrawal from NAFTA is actually unconstitutional.

Now, we’re not going to get a sense of what the legal ramifications of the president deciding to withdraw until it actually happens. But let’s just suppose for a moment that the Trump administration did decide to withdraw and completed that action. What trade rules would North American trade revert to?

So one thing to keep in mind is that all three countries are members of the World Trade Organization, and that means they have a set of trade barriers that they have agreed to that they apply to all other WTO members. And so this is important because if you think about the $1.1 trillion in trade that the U.S. undertakes with its NAFTA partners, about two-thirds to three-quarters of that involves manufactured goods, and manufactured goods are covered by the World Trade Organization. So that would mean that U.S. tariffs on Mexico would go from zero to an average of about 3.7 percent. Mexican tariffs on U.S.-manufactured goods would go from zero to an average of about 7.4 percent. And if you go through standard models of trade, what that suggests is that what—the U.S. is then going to shift some of the goods it’s currently importing from Mexico to other trading partners. Mexico’s going to do the same. Since WTO tariffs—most-favored-nation tariffs for the U.S. are relatively low, a standard analysis would suggest that U.S. imports—U.S. exports to—imports from Mexico would fall by about 15 percent. U.S. exports to Mexico would fall by more, somewhere in the 20 to 25 percent range.

Now, an important feature of that trade is about half of U.S. trade with Canada and Mexico is just in four products: machinery, electrical machinery, vehicles and other transportation equipment, and plastics. And those are industries in which supply chains are a fundamental aspect of North American trade. And by imposing tariffs, all of a sudden we call into question the whole supply-chain model around which North American trade has been constructed, and that could lead Mexico and Canada to think about alternative partners in some of its key industries.

Important to keep in mind there is that Mexico has free-trade agreements with 46 other countries, and Canada has free-trade agreements with 40 other countries. The U.S. has free-trade agreements with a smaller number of countries, and none of those involve trading partners of the size with which Mexico and Canada has agreements.

So, when you think of something like agriculture, right now Mexico charges the U.S. zero percent on—tariffs on the import of yellow corn. Without NAFTA, those tariffs could rise to as high as 37 percent. Mexico then faces the prospect of being able to import maize from Brazil and Argentina, with which it has a free-trade agreement. And as we move outside of manufacturing to agriculture, now we’re not talking about a sector that’s governed by the WTO. And here we could see much more substantial reductions—increases in trade barriers, and consequently reductions in trade between the U.S. and its—and its NAFTA trading partners.

Now, agricultural trade isn’t a huge part of North American trade. It’s about 7 percent of U.S. exports to Mexico and it’s about 10 percent of U.S. exports to Canada. But that trade is very important for a bunch of states in the Plains, in the Midwest of the U.S., for which Mexico and NAFTA are their number one or number two trading partners.

Services is a third sector that would be affected. That’s somewhere between 10 to 20 percent of U.S. exports. There, a big part of U.S. service trade with its NAFTA partners is travel and transport. We wouldn’t expect those to be severely disrupted by the cessation of NAFTA. But you have important, growing trade in telecommunications and finance that is covered by NAFTA, and the future expansion of trade in services in those areas, which are a key part of U.S. global service-trade export growth, would be put very much at risk.

KADEL: Great. Well, thank you very much for that very thorough and comprehensive discussion.

We will now open the floor for questions. I want to remind all participants that the call is on the record.

Operator, would you please give instructions for asking a question.

OPERATOR: (Gives queuing instructions.) 

KADEL: Great, while we’re—while participants are queuing, let me get us started with the first question.

And, Gordon, you touched on the sectors in your answer to the last question, but do we have any sense—either Gordon or Anku—of particular sectors that are very nervous about the situation with NAFTA and what might happen in the event that there is a failure of the talks and that the U.S. does seek to withdraw from the agreement?

NATH: Sure. I’ll just say, you know, we at John Deere, we work with our agricultural customers quite a bit and we’re hearing a lot of nervousness from them. And, you know, it’s become apparent in Washington that the ag sector is really quite engaged and, I would say, alarmed about where things are going right now. They’ve been very prolific in writing various letters to officials in the administration and to Congress and to governors and stated repeatedly that this could be a real threat to their ability to export and it would be a hit to farm GDP.

I was just looking at some numbers and one study actually states that there could be a drop of $13 billion in farm GDP if NAFTA is terminated, and 50,000 jobs lost in the food and ag sector alone. And, you know, going commodity by commodity, a lot of these groups have done the analysis, and you hear numbers like potentially 150 million-bushel drop in corn production, $800 million lost in corn if NAFTA is terminated. You can go into other groups as well. For instance, you know, Mexico and Canada currently receive 40 percent of U.S. exports of pork, so that would be jeopardized. So I think the ag community has, you know, despite only being 7 percent, as Gordon said, of U.S. trade with Canada and Mexico, it is certainly for them a pretty big export market to put in jeopardy.

KADEL: All right.

HANSON: And just to add to what Anku said about wheat and corn, automobiles, commercial aircraft, electronics, flat-screen TVs being at the top of the list, are all ones that for, you know, for different reasons are very much at risk if NAFTA goes down.

KADEL: All right, thank you.

Operator, do we have anyone in the queue for questions?

OPERATOR: Yes, sir. Our first question will be from Michael Kalavritinos with Bank of New York Mellon.

Q: Yes, good afternoon. A question for you regarding the U.S. government’s position and how it might negatively influence the Mexican elections. I wonder if you could comment on that and whether that’s factoring in, being factored in by the administration and maybe there’s some posturing here as opposed to really threatening to pull out of NAFTA, which would obviously help, you know, someone like an Obrador.

HANSON: Really good question and something I’ve spent a lot of time asking my political science colleagues and folks who very much have their pulse on the Mexican presidential campaign. And I think the sense right now is it’s not clear which presidential candidate in Mexico would benefit most from the United States pulling out of NAFTA.

I think there was initial concern that Andrés Manuel López Obrador, Mexico’s populist candidate, would benefit most because he is seen as the person who could stand up most forcefully to Donald Trump who is a universally unpopular person in Mexico. 

At the same time, many Mexicans see NAFTA as having been an important part of the modernization of the economy. And the candidate of the—of the PRI Party, a former finance secretary, Meade, is someone who has tremendous technocratic confidence. And in an environment of heightened economic uncertainty, he would benefit. 

So I think right now the political commentators are seeing this as something of a draw. And which candidate does better depends on whether there’s economic uncertainty coming out of the U.S. pulling out of NAFTA. If the peso were to plunge, that’s going to make the appeal of a technocratic candidate more important. If, on the other hand, you have demonstrations in the streets and people calling for Donald Trump’s head down the Paseo de la Reforma in Mexico City, that would play into the hands of a populist candidate like López Obrador.

KADEL: Thank you, Gordon.

Operator, do we have any other questions at this time?

OPERATOR: Yes, sir. Our next question will be from Alex Israel from Ernst & Young.

Q: Hi. Thank you very much.

I’m wondering if you can tell me the effect that the Canadian complaint to the WTO about U.S. trade policies in general had on this whole discussion and whether really that was an ill-advised move or poorly timed move, at least from the U.S. administration’s perspective.

NATH: Sure, I’ll—you know, I think from the get-go, there have been a lot of trade irritants between Canada and the U.S., even though so much attention has been on the Mexico relationship. I don’t think that the timing of this particular complaint to the WTO helps the environment in Montreal at this particular round or perhaps rounds thereafter. 

But at the same time, you know, I’ve heard some say that, well, you know, a WTO complaint can take years to resolve. So while this is now just recently filed, we’re probably not going to hear a whole lot about it substantively for many months, if not a year-plus from now. So it’s unclear to me just how much of an impact that complaint will have on the negotiations. Like I said, I don’t think it helps, but we have a lot of other trade irritants between the two countries that are also driving that difficult relationship.

From the U.S. perspective, you know, officials have said that Canada is slow-walking the negotiations and not really responding seriously to proposals. The U.S. also says that Canada is unwilling to negotiate on key asks, like market access in the dairy sector. There’s also the softwood lumber trade case that’s been ongoing for quite some time. This Boeing-Bombardier case is not helping either. So there is—there’s quite a lot of—quite a lot going on in the trade relationship between Canada and the U.S. that I’m not sure that any one aspect of it is going to necessarily drive the negotiations one direction or another. 

KADEL: All right. Thank you, Anku.

Operator, next question, please.

OPERATOR: Thank you. Our next question will be from Michael Brown from Moody’s.

Q: Hi, thank you very much for the talk today.

One of the questions that I would be interested in is having to do with the timeline for the renegotiation of NAFTA. So we have TPA expiring on July 1st, and then that 90-day notification of intent to sign would then track back to April 1st. So I would like to know, in your view, does that make April 1st a critical deadline for the renegotiation of NAFTA? What’s your take on that?

NATH: You know, three countries have stated that March is their goal to have everything completed. I think that’s still a pretty aggressive timeline between now and the end of March to have everything done. That, of course, would get us to that April 1 date that you stated.

There has been quite a bit of talk in Washington about how these timelines all match up. We’re frankly not clear, we haven’t gotten a good answer from anyone at this point about how this is all going to transpire under TPA, under all the various timeline requirements. 

I believe there was another notice sent to Congress about intent to change certain aspects of, I think—I believe, if I’m getting this correct—trade remedies. And that is another piece of the timelines puzzle that would have to play into all of this. So I think my answer is really a non-answer, which is I don’t know. 

There has been enough pressure on the administration to get this done quickly, you know, not just for these TPA type of timeline issues, but politically. But even then, they’ve been unable to really get the progress I think they thought they were going to be able to achieve. So it is very, very unclear at this point how they’re going to run this through TPA, which they now say they will request a renewal of. And also, by the way, not let this get in the way of the U.S. midterm elections.

Q: Thank you. Do you think it’s possible—sorry, to follow up here—to pass a revised agreement without TPA?

NATH: No, I would be quite surprised. I don’t want to say it’s impossible, but, you know, NAFTA is obviously a charged—politically charged-enough negotiation, it was 24 or 25 years ago, and that remains true today, that to get a clean up-or-down vote out of Congress on this without TPA I think would be next to impossible. 
So I would say that, you know—and I will also add that repeatedly members of Congress, whether through hearings or independent statements, have made clear that they expect Ambassador Lighthizer and expect the president to follow the TPA process, so I think everyone has committed to following that process. But to your earlier point, what does that really mean for timelines, given that the current TPA is set to expire just in a couple of months from now, three months from now? But I don’t think we can do this without TPA.

Q: Thank you.

KADEL: Operator, the next question, please. 

OPERATOR: I’m showing no further question in the queue at this time.

KADEL: All right. Well, maybe let me ask one question if we—while we wait for others to queue. And that is, in the context of a renegotiation that does not result in a revised agreement prior to a U.S. withdrawal, do you see much hope for the parties to come back to the table and start fresh, whether that be in a new NAFTA three-way agreement or in bilateral agreements? Is there any indication that that is a possible outcome here? Or does that seem unlikely, given what we know today?

HANSON: It just—it would—it would be extremely unlikely for several reasons. One is that, you know, the likelihood that we’re going to have a new political regime in Mexico that takes a much dimmer view of free trade agreements. Two is that the U.S. will have poisoned the water. It will have attacked its trading partners, making demands on them that they saw as entirely unreasonable, which is going to create very little desire to come back to the negotiating table. 

And three, it reinforces the increasing view of the U.S. as an unreliable negotiating partner. Pulling out of TPP at the last minute has created tremendous amount of concern about the ability to trust the U.S. to handle negotiations as they—as they transmit from one presidential administration to the next. So this is, you know, our chance is now. We wait, we try and come back and redo NAFTA, that is a long, long process.

NATH: And I would just add that we already did redo NAFTA. And I would, you know—that’s called TPP. The Trans-Pacific Partnership was essentially a rewrite or a refresh or a modernization of the original NAFTA. Canada and Mexico are still a party to TPP, assuming it’s signed, which could happen shortly. 
So I think, you know, more broadly speaking, certainly the remaining TPP countries are hopeful that at some point in the future the U.S. will rejoin that agreement. And under those auspices, I could—you could probably see a, quote/unquote, “new NAFTA,” but really a TPP.

KADEL: All right, thank you.

Operator, any further questions at this time.

OPERATOR: Yes, sir. We have a question from Patrick Lortie with Oliver Wyman.

Q: Yes, good afternoon. Thank you for this discussion.

I have a comment or a question around the transportation service sector. You said that it should not be so impacted. So would—could you expand on this? I mean, I’m talking about the trucking and the railroads and the air transportation industry.

HANSON: Oh, you know, a very good follow-up question. What I had in mind there was the—was the fact that you’ve got—the U.S. and Mexico have spent a fair bit of time developing infrastructure which allows expanded trade. With the cessation of NAFTA, you know, there’s this fitful process of integrating trucking between the two countries would come to an end. Rail transport would be increasingly complicated. But if we think about the broader process of shipping and air travel between the two countries, there’s no obvious reason to see barriers appear there. So in terms of land transport, there you see lots of clouds on the horizon in terms of air and shipping, less problematic.

Q: OK, thank you.

KADEL: Operator, any additional questions at this time?

OPERATOR: No, sir. I’m showing no further questions.

KADEL: All right. Well, I’d like to just give a thanks to Gordon and to Anku for this great discussion.
Thanks to all the participants for listening to us over this hour. And thank you very much. 
All may disconnect now. 

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