KRWG | Jerry Pacheco: Over the past 25 years, I have taught business classes including economics, international management, and marketing at various universities. Many a student has expressed skepticism and doubt about ethics in business. I always tell him/her that while there might be a few dishonest businesspeople, the majority are honest, or they don’t stay in business too long. It’s true that in business, contracts are executed that offer some protection when dealing with another party. However, there has to be some semblance of trust between the parties agreeing to a deal that each will carry through with the agreement.
Witnessing the U.S.’s recent withdrawal of the Joint Comprehensive Plan of Action (JCPOA), also known as the Iran nuclear agreement, makes me wonder how the rest of the world views and will trust the U.S. in the future. The objective of the JCPOA was to rein in Iran’s drive to develop nuclear weapons, thus reducing the threat to its neighbors in the region. The deal was reached in July of 2015 and signed by Iran, the U.S., France, the United Kingdom, Russia, and China – the last five countries are permanent members of the United Nations Security Council. The Obama administration represented the U.S. at the negotiating table, and the negotiations were often difficult and controversial. However, the U.S. decided that it was in our nation’s best interest to agree to the plan.
Not even three years later, President Trump called the JCPOA, “the worst agreement ever,” and withdrew the U.S. participation, intimating that a better plan might be able to be negotiated. The signatories to the agreement are determined to carry on without U.S. participation, and have been in talks to discuss the future.
Many Americans did not support the U.S. entering into the agreement, due to suspicion of Iran and the benefits it would accrue by decreased sanctions that were part of the carrot for that country to agree to the JCPOA. However, the U.S. agreed to this treaty, and it was executed. Now, we have changed our minds and left our partners twisting in the wind. This is exactly the opposite of how I tell my business students that an honest businessperson with integrity would behave when party to an agreement.
As the North American Free Trade Agreement (NAFTA) continues to be renegotiated between the U.S., Canada, and Mexico, I can’t help but wonder if our neighbors think they are negotiating in vain with a country that might agree to a reworked NAFTA, but in a year decide that it doesn’t want to keep its agreement anymore. Multi-lateral agreements such as JCPOA and NAFTA take a tremendous amount of preparation and energy. They also require the participants to trust that if points are negotiated, they are respected and honored. Otherwise, what good is it to expend the effort to negotiate with a party that you ultimately feel will not honor their end of the bargain?
The U.S. and Iran have had a rocky relationship since the 1979 Iranian Revolution and the formation of Iran as a republic. It is understandable that the U.S. and Iran suffer a lack of trust of each other. However, this is precisely why other major political powers were negotiators and signatories to the JCPOA. And it wasn’t just Western allies that were on one side of the negotiating table and Iran on the other. China and Russia, world powers more friendly to Iran than the other signatories, decided that a denuclearized Iran was in their best interests also, and therefore signed the agreement. While the JCPOA was signed by President Obama, and it may be argued that his policies were significantly different than President Trump’s, I doubt that the world views the JCPOA as having been signed or withdrawn by a U.S. president. Rather, it is viewed as having been signed and withdrawn by the United States of America.
The U.S. pullout of the JCPOA stands to make our country less trustworthy to the world in the future if other agreements, primarily trade agreements, are negotiated and signed. However, this may be the intent of the Trump administration to signal to the world that “America First” can be used to unravel or pull out of agreements in which the U.S. is a party. This may make future trade agreements impossible to negotiate, and this may be the underlying objective. When, or maybe if, NAFTA finally is renegotiated and signed, will our allies be wondering whether it is worth the paper on which it is printed?
Jerry Pacheco is Executive Director of the International Business Accelerator, a non-profit trade counseling program of the New Mexico Small Business Development Centers Network, and the President/CEO of the Border Industrial Association.