Print Edition - 2018-09-06 | Oped
A bogus deal on Nafta
- Trump’s agreement will hurt workers
Sep 6, 2018-
The North American Free Trade Agreement is a nearly 25-year-old agreement that needs to be modernised to address new technologies, update intellectual property rights and protect American industry and workers from unfair competition. Instead, President Trump has proposed replacing Nafta with something worse, a vague agreement that could hurt American workers and raise prices for American consumers while antagonising America’s neighbours.
In the Trumpian worldview, Canada isn’t a friendly neighbour but a frosty enemy bent on ruining our steel, auto and dairy industries while cutting down forests in British Columbia and trucking the lumber across the border. Fiends! Likewise, as he sees it, Mexico ships tequila, produce and people north, and imports our higher-paying manufacturing jobs. Desperados! Yet his solutions would simply add complications with few benefits.
Under the revised, don’t-call-it-Nafta bilateral deal with Mexico that he awkwardly announced last week, 75 percent of the value of vehicles exported to the United States would have to come from North American-made parts, up from the current 62.5 percent. And 40-to-45 percent of the value would have to be made by workers who earn at least $16 an hour. Otherwise, Mexican-assembled vehicles would be subject to a 2.5 percent tariff.
Auto companies have developed global supply chains since Nafta began in 1994, costing thousands of manufacturing jobs in the United States, as low-value work shifted to Mexico and other lower-cost countries. Auto companies have also built plants here using the same supply chain rationale, though, partly because labor costs in those American plants have decreased in the aftermath of the Great Recession. Mexico, in turn, is becoming less dependent on the American market every year —meaning the deal is covering fewer and fewer jobs. So Mr. Trump’s deal isn’t going to be getting jobs back from Mexico.
We will not be better off. Nor is Congress planning to cede its authority in treaty making. The president can and should expect a bipartisan pushback against an unnecessary and abusive bad “deal.”
Published: 06-09-2018 07:29