Trump's New NAFTA Deal
Posted: Mon Oct 01, 2018 7:25 pm
Because I know — with something approaching metaphysical certainty — that I will soon be accosted by one or more Trump apologists who will cite the new “United States-Canada-Mexico” trade agreement (thank goodness we’ve jettisoned the unwieldy, Obama-esque term “North America”) as evidence that the president is “getting stuff done”, and because I am supremely confident that said Trump supporters won’t have the foggiest idea what the new agreement contains, nor how it compares to its predecessor, I offer you one libertarian reaction to our new trading regime.
Take it away, Ilya Somin:
“It's a good thing that the 3 countries have reached a new NAFTA deal. Good, relative to the alternative of Trump just dropping out of NAFTA entirely, that is. But new NAFTA is still overall worse than the old, and undermines claims that Trump is just using tariffs to try to promote freer trade. Here's why:
1. By far the biggest change from the old agreement is increased "North American content" requirements for cars. This is a clear increase in protectionism, and will predictably make cars more expensive and the auto industry less efficient throughout North America.
2. The same goes for what is effectively a provision imposing a $16.00 minimum wage for many types of auto workers. That too will increase prices, reduce efficiency, and price out some workers from the market. However, Robots for a $15 Minimum Wage have excellent reason to cheer this part of the agreement!
3. The one good change in the new agreement is greater access for US dairy producers to the highly protected Canadian dairy market. However, Trump could have secured a more complete US exemption from "supply management" simply by signing TPP, which he of course rejected. Moreover, this provision is small potatoes compared to 1 and 2 above (dairy is a tiny fraction of US-Canada trade, while autos are far more important).
4. Trump's new steel/aluminum tariffs against Canada remain in place. That is both harmful in itself, and a refutation of claims that he only adopted them as leverage in the NAFTA negotiations.
5. I won't go through the other, more minor new provisions in the agreement. But, from a free trade/free market perspective, they too (mostly) make things worse rather than better.
6. The agreement would have been even worse if not for Canada's successful effort to preserve the Chapter 19 dispute-resolution mechanism, which makes it harder for protectionist politicians and interest groups to get away with violations. Trump fought hard to junk Chapter 19.
7. As an extra bonus, Trump's bullying tactics towards Canada have deeply alienated Canadian public and elite opinion from the US - to a greater extent than has ever been the case in my adult lifetime. That includes a lot of moderate and conservative Canadians, not just the historically anti-American Canadian left. Don't take my word for it. Check out Canadian media, and public opinion polling of Canadian attitudes towards the US. Alienating our closest ally for no good purpose isn't being "realistic" or "tough." It's just plain stupid.”
https://www.washingtonpost.com/business ... ost&wpmm=1
Take it away, Ilya Somin:
“It's a good thing that the 3 countries have reached a new NAFTA deal. Good, relative to the alternative of Trump just dropping out of NAFTA entirely, that is. But new NAFTA is still overall worse than the old, and undermines claims that Trump is just using tariffs to try to promote freer trade. Here's why:
1. By far the biggest change from the old agreement is increased "North American content" requirements for cars. This is a clear increase in protectionism, and will predictably make cars more expensive and the auto industry less efficient throughout North America.
2. The same goes for what is effectively a provision imposing a $16.00 minimum wage for many types of auto workers. That too will increase prices, reduce efficiency, and price out some workers from the market. However, Robots for a $15 Minimum Wage have excellent reason to cheer this part of the agreement!
3. The one good change in the new agreement is greater access for US dairy producers to the highly protected Canadian dairy market. However, Trump could have secured a more complete US exemption from "supply management" simply by signing TPP, which he of course rejected. Moreover, this provision is small potatoes compared to 1 and 2 above (dairy is a tiny fraction of US-Canada trade, while autos are far more important).
4. Trump's new steel/aluminum tariffs against Canada remain in place. That is both harmful in itself, and a refutation of claims that he only adopted them as leverage in the NAFTA negotiations.
5. I won't go through the other, more minor new provisions in the agreement. But, from a free trade/free market perspective, they too (mostly) make things worse rather than better.
6. The agreement would have been even worse if not for Canada's successful effort to preserve the Chapter 19 dispute-resolution mechanism, which makes it harder for protectionist politicians and interest groups to get away with violations. Trump fought hard to junk Chapter 19.
7. As an extra bonus, Trump's bullying tactics towards Canada have deeply alienated Canadian public and elite opinion from the US - to a greater extent than has ever been the case in my adult lifetime. That includes a lot of moderate and conservative Canadians, not just the historically anti-American Canadian left. Don't take my word for it. Check out Canadian media, and public opinion polling of Canadian attitudes towards the US. Alienating our closest ally for no good purpose isn't being "realistic" or "tough." It's just plain stupid.”
https://www.washingtonpost.com/business ... ost&wpmm=1