World

Trump Really Shouldn’t Kill NAFTA

Trucks line up to enter the United States at Nuevo Laredo, Mexico. (Reuters photo: Daniel Becerril)

President-elect Donald J. Trump. It’s for real, but it’s still hard to believe.

While I’ve expressed concerns about Trump’s candidacy, I’m taking a wait-and-see approach with his new, impending role. If he’s ultimately able to work well with the GOP-controlled Congress, it could turn out to be a successful presidency.

There’s one Trump campaign promise that I would strongly suggest he drain from his personal swamp: tearing up the North American Free Trade Agreement.

Trump has been exceedingly critical of NAFTA over the years. In the first presidential debate, he actually called it “the single worst trade deal ever approved in this country.”

What’s Trump’s beef with it?

A not-so-insignificant number of Americans, especially in the Rust Belt region that decided this year’s presidential election, have been hit hard by NAFTA. Cheap, non-unionized Mexican labor in the auto sector, steel industry, and agricultural community, have cut into the American dream. Jobs have been lost, families have been struggling, and people have lost hope.

These are Trump’s voters, the so-called “forgotten men and women.” When he speaks about putting America First, and bringing jobs back to the U.S., he’s talking directly to these folks. In turn, they firmly believe this billionaire businessman and political enigma truly understands them and is going to help make their lives better.

Trump’s NAFTA strategy is, and has always been, to make the personal political and utterly demonize deals like NAFTA.

Yet nothing could be further from the truth. NAFTA, which superseded the Canada-United States Free Trade Agreement in January 1994, has been economically beneficial to the U.S., Canada, and Mexico.

If you need proof, look no further than an April 2015 Congressional Research Service paper, written by M. Angeles Villarreal and Ian F. Fergusson.

The two authors, both specialists in international trade and finance, noted that “NAFTA was controversial when first proposed, mostly because it was the first FTA involving two wealthy, developed countries and a developing country.” Many of those fears were never realized, however.

“In reality,” Villarreal and Fergusson wrote, “NAFTA did not cause the huge job losses feared by the critics or the large economic gains predicted by supporters. The net overall effect of NAFTA on the U.S. economy appears to have been relatively modest, primarily because trade with Canada and Mexico accounts for a small percentage of U.S. GDP.”

That’s true. America’s total combined trade with Canada and Mexico was less than 5 percent of U.S. GDP before NAFTA was signed, and a 2003 U.S. International Trade Commission study suggested that full implementation would only result in a total GDP increase of between 0.1 and 0.5 percent.

At the same time, significant trade barriers (mostly tariffs) between the three nations have been reduced or eliminated. The North American electronics and automobile markets have been transformed, but are much larger than ever. New business opportunities and jobs have been created, too.

No one is suggesting that NAFTA is perfect — no trade deal is. President Trump could try to adjust some sections and eliminate others, on a point-by-point basis. That’s acceptable, and part of the give and take of economic arrangements. But ripping up the entire document would be an unwise decision.

It should also be noted that, while some moderate Democrats and Republicans have opposed NAFTA, the fiercest critics have been left-wing nationalists in the U.S. (Ralph Nader, Jesse Jackson) and Canada (Maude Barlow, Mel Hurtig) who despise the concepts of free trade and market-based economies.

Even though Trump really isn’t a conservative or a Republican — or a political ideologue, for that matter — does he really want to be associated with this fringe element?

Finally, while there’s no doubt that Trump has mostly singled out Mexico as the biggest thorn in NAFTA’s side, tearing up the agreement would hurt Canada-U.S. relations. Canada and the U.S. are strong friends, allies, and trading partners. While your country is certainly larger and stronger than mine, NAFTA has been to our economic benefit (and Mexico’s).  

My hope is that Trump’s NAFTA threats have been nothing more than campaign rhetoric. There are far better ways to create more private sector jobs — including lower taxes for individuals and businesses and tax incentives for new businesses — than tearing up successful trade agreements and killing good jobs in the process. 

Instead of musing about an “AFTA NAFTA” strategy, Mr. Trump, please strive to make  sure that NAFTA remains great, as it already is. 

— Michael Taube, a Troy Media syndicated columnist and Washington Times contributor, was a speechwriter for former Canadian prime minister Stephen Harper.

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