U.S. Trade Representative Robert Lighthizer and U.K. Secretary of State for International Trade Elizabeth Truss announced today [joint statement] the beginning of a series of fast-tracked trade negotiations toward a new free trade agreement. [USTR Release]

In the foreground is a trade agreement between the U.S. and the United Kingdom. However, in the more strategic background context these negotiations create leverage for the U.K. in their post-Brexit negotiations with the European Union. First from today:

LIGHTHIZER – […] The US negotiating team will be led by Dan Mullaney, Assistant U.S. Trade Representative for Europe and the Middle East; and the UK negotiating team will be led by Oliver Griffiths, Director for US Negotiations at the Department for International Trade. Over 200 staff from U.S. and UK government agencies and departments are expected to take part in the negotiations.

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A very big picture discussion requires a considerable baseline.

The stock market is not the U.S. economy; the stock market is an investment instrument that determines valuations of economic activity company by company. The valuation is considerably arbitrary, based on the determinations of the arbiters (investors). This is empirically true.

However, that said, how would the multinational underwriters, the multinational financial systems, reset all transactional tables (the bookkeeping systems underneath the valuation) …if the U.S. stock market was every forced to re-value economic nationalism over multinational globalism?    Enter “Coronavirus”.

Four years ago CTH first explained a new way to look at the U.S. economic system and how Main Street was/is disconnected from Wall Street.  We presented a metaphor to explain. Before going deeper into the discussion of tomorrow; and at the request of several people who now accept the era of “deglobalization” is upon us,  I first present that prior reference & then will use this as the baseline to describe what could come next.

There is a key phrase at the fulcrum of everything past:

…there had to be a point where the value of the second economy (Wall Street) surpassed the value of the first economy (Main Street).

What we are going to outline in part II is the possibility what happens when this natural truism is reversed.  The objective is to answer: How, specifically would Wall Street reset its evaluative systems if Main Street once again emerged as the priority?

But first, a baseline revisit is needed.

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Canada completes the North American cycle with their ratification of the USMCA to replace NAFTA. Mexico and the U.S. ratified the new trade agreement last year and January respectively.  The Canadian parliament did so yesterday.

CANADA – Canada on Friday formally approved the United States-Mexico-Canada Agreement (USMCA), taking the last legislative step to implementation of the deal to replace the 25-year-old North American Free Trade Agreement (NAFTA).

The trade deal, ratified by the Mexican legislature last June and by Congress in January, was formally ratified by the Canadian Senate Friday, and shortly thereafter received royal assent, the Canadian governor general’s approval.

The deal was passed through the legislature before Parliament shut down for five weeks in response to the coronavirus pandemic.

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Most people are aware the Wuhan coronavirus has become an economic contagion within China. However, the scale of the contraction is only now being quantified and the data doesn’t match the visible reality.
When evaluating the data showing drops in exports from China is worthwhile to consider the lack of visible supply-chain disruption formerly predicted by global economic “analysts”.  According to Reuters; to the extent data can be gathered from within a closed communist system; total exports from China dropped 17.2% in January and February.

The lack of factory production has cut the estimated growth rate within China by half.  However, is that a cause?  – or – Is that a cover?  For decades corporations have moved to a supply chain process known as Just-In-Time (JIT) inventory.
If Chinese component manufactured goods were part of a critical corporate supply chain, and with more than 30-days of source disruption quantified, there would be impacts by now. Where are the crippled customers?  There are no measurable, demonstrable, citations for missing component parts making downstream finished goods impossible.  There are lots of anticipatory declarations, but no shortage has materialized.
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In August of last year federal authorities raided the homes of United Auto Workers (UAW) President Gary Jones who was under investigation in a nationwide corruption sweep.  Today an indictment was unsealed charging Jones with embezzling more than $1 million in union funds.  His former deputy was arrested in September.

DETROIT (Reuters) – Former United Auto Workers (UAW) President Gary Jones was charged on Thursday with embezzling more than $1 million of union funds amid a U.S. corruption probe that has raised the specter of a federal government takeover of the union.
Jones, 62, of Canton, Michigan, was charged in an information, a court document typically used when the government has reached a plea deal with a defendant. J. Bruce Maffeo, a lawyer for Jones, declined to comment. The documents were filed previously and unsealed on Thursday.

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During a mid-afternoon session at the U.S. embassy’s Roosevelt House in New Delhi, India, President Trump met with U.S. and India business leaders. The president cancelled his prepared remarks to the business investors, instead he took questions from roundtable participants.

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Earlier today President Trump traveled to Dana Incorporated, a manufacturing facility for axel housings and machined products in Warren, Michigan, to celebrate the signing of the USMCA trade agreement with American workers.  [Video and Transcript Below]

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[Transcript] – THE PRESIDENT: Okay, let’s get back to work. Come on. (Applause.) I love that song, but every once in a while, we have to get back to work. (Laughter.)

So I am very honored to be at Dana Incorporated, a tremendous company, a plant in Warren, Michigan. We’re very proud of Michigan. (Applause.) Dana has been around — I also like it because we happened to win here, so I was very happy with that. (Applause.) Very happy with that.

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Commerce Secretary Wilbur Ross, the coolest cat in the crew, appeared tonight for a discussion on economics and trade with Lou Dobbs.  Secretary Ross discusses the current status of the economy and how the two trade agreements have established the foundation for a completely restructured U.S. trade relationship for years to come.
Wilburine notes the Europeans are nervous thinking about the wolverine teeth that will soon be heading in their direction.  Good Stuff.  WATCH:

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What makes the Trump economic team so effective is their independence from any influence outside of the America-First agenda.  President Trump, Secretary Wilbur Ross, and Secretary Steven Mnuchin were already independent billionaires -with wealth gained from private industry- before they entered office.  There is no financial influence upon them except to see Main Street USA thrive….
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White House Manufacturing Policy Advisor, Peter Navarro, appears on Fox Business with Charles Payne to discuss the ramification of China ‘phase-one’ and the USMCA for the middle-class blue-collar economy.  Excellent interview, WATCH:

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In advance of the Senate beginning the impeachment trial of President Trump, the upper chamber ratified the USMCA trade agreement with an 89-10 vote.  The agreement now moves to the White House where President Trump will sign it.

The final ratification is the result of two-years worth of renegotiated trade reform, and the outcome gained bipartisan support in both the House and Senate.  The only republican senator who voted against the deal was Pat Toomey of Pennsylvania who is concerned the USMCA will weaken the position of Wall Street multinationals.
Nine democrat senators did not support the agreement because there wasn’t enough verbiage to support their climate change priorities, and the USMCA does not align with the Paris Climate Accord.  [Vote Tally Here]

USMCA gives American producers better access to Canadian dairy markets, and creates a cornerstone for a revitalized U.S. manufacturing base.  The deal has much more strict rules of origination for the auto-sector with 75% of parts and materials must be made in north America.  Combined with the requirement that 40% of those industrial parts must come from plants where workers make a minimum of $16/hr, the U.S. auto-industry will gain significant benefits.
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