The new North American trade agreement negotiated by the Trump Administration is slightly better than the original NAFTA, former Clinton Treasury Secretary Lawrence Summers admitted, but the negotiating techniques used to achieve it were too risky, he said.
Earlier this month, the United States, Canada, and Mexico agreed on a sequel to the North American Free Trade Agreement struck in 1994 under President Clinton, while Summers was a top economic aide. President Trump called the revised NAFTA deal “the most important trade deal we’ve ever made by far,” but the new terms only specifically improved conditions for U.S. companies in a handful of areas, like pharmaceuticals and dairy products.
Summers, who subsequently served as Harvard University’s president, agreed that the revised deal would help some parts of the U.S. economy such as the dairy sector in the Midwest, while downplaying its overall impact.
“The new NAFTA’s the same as the old NAFTA—there’s no important difference between the new NAFTA and the old NAFTA,” Summers said, speaking at the Fortune Global Forum in Toronto on Wednesday. “What we’ve had is 14 months of drama to be in the same place that we were in before.”
Making an analogy about Trump’s strategy, Summers compared the president’s threatening trade rhetoric to “kind of a nut playing a dangerous game that didn’t blow things up this time.”
Challenged by Fortune’s Alan Murray about the improvements for dairy farmers in Wisconsin, Summers agreed the deal was beneficial “for a certain number of people,” though adding “even for them the impact has been exaggerated. But we are not talking about 1% of GDP. We are not talking about one-tenth of 1% of GDP. We are not talking about one one-hundredth of a percent of GDP.”
The cost of the small gains, however, was alienating U.S. allies Canada and Mexico, Summers said, while showing the rest of the world that “we’re very erratic.”
“This is a big nothing achieved with huge drama,” he said.