by Mitch Kokai
Senior Political Analyst, John Locke Foundation
There is very good news about the North American Free Trade Agreement. That news is not that the Democrats and the labor unions have reached a deal with President Trump about the U.S.–Mexico–Canada Agreement that is to succeed it, although they have. The good news is that NAFTA will continue much as before if, as looks likely, the USMCA goes through.
On the campaign trail, Trump excoriated NAFTA as an economic disaster for the United States. But the USMCA mostly replicates NAFTA. And it’s a good thing, too, since Trump was never persuasive in his denunciations of an agreement that has had a positive effect on the economies of all three member countries.
The changes that USMCA would wreak fall mostly into two categories. There are updates to NAFTA, so that it now covers such topics as digital trade. On these issues, USMCA largely borrows from the Trans-Pacific Partnership, which included more countries but which Trump junked for no very well-explained reason at the start of his presidency. And there are moves toward greater regulation and protectionism, especially for the auto industry. Even the International Trade Commission, which put out an optimistic projection of USMCA’s effects, expects these provisions to reduce American employment in auto assembly.
Senator Pat Toomey (R., Pa.) has concluded that on balance, the changes to NAFTA are negative and that the USMCA should therefore be rejected. …
… The truth is that while NAFTA needed to be updated, it did not need to be rewritten — and fortunately it has not been.