As part of his campaign, President Trump stated time and time again that he wanted to either renegotiate trade agreements such as the North American Free Trade Agreement (NAFTA) involving Canada and Mexico or withdraw from negotiations involving future agreements such as the Trans-Pacific Partnership (TPP). Well, Trump withdrew from his predecessor’s signature TPP trade deal on his first full weekday in office, leaving the 11 other countries that had negotiated the pact to wonder if years of work had just gone down the drain. Currently, NAFTA negotiations are taking place with a ridiculous December 2017 deadline to complete a new deal.
The problem is that trade today involves a global economy with integrated production and services of multinational corporations around the world. Trump’s attempt to introduce protective policies is most likely going to hurt American corporations as much as foreign enterprises and workers. In order to be competitive, American corporations now rely heavily on goods, services and component production found in other countries. In the case of NAFTA, those in the U.S. vastly underestimate the important trading relationship most of the 50 states hold with Canada. Indeed, 35 American states trade more with Canada than any other country. Currently, some 70 percent of Canada’s trade is with the U.S. — the majority of which benefits both countries. NAFTA has also benefited Mexico economically in various ways and those American states bordering Mexico.
American, Mexican and Canadian consumers benefit through access to more and cheaper goods and services, as evidenced by the number of American retail outlets operating in Mexico and Canada. With NAFTA, we have evolved into a continental economy, with improvements for labour and the environment — particularly in Mexico as a result of side agreements. What’s interesting is that the Republicans have always been the defenders and promoters of free trade in Congress and the White House, as were leaders of the Conservative Party in Canada. Ironically, we now have a Liberal Prime Minister, Justin Trudeau, who is promoting the benefits of free trade for all three countries.
Yes, there are things that can be improved in NAFTA since its implementation almost thirty years ago. World economies have changed a lot since then, particularly with new technologies. However, most experts believe that its benefits to all three countries far outweigh its costs. Other factors, such as new innovations in communications, energy and robotics have had a greater impact on the labour market and the environment than trade agreements. Simply introducing more protective policies will not change or stop the consequences of rapid innovation in the manufacturing, service, finance and other sectors. Punishing countries through protective policies will simply hurt everyone involved. Such policies don’t only go against the changing realities of our times, but also against common sense.
FROLITICKS 