Tag: nafta

Senate Approves USMCA

 

On Wednesday, Trump signed “phase one” of a China trade deal that increases agricultural exports to Beijing. Thursday, the US Senate passed the US-Mexico-Canada Agreement by an 89-10 vote.

The House sat on the USMCA for months, distracted as it was by Russia, Trump’s tweets, World War III, Ukraine, Net Neutrality killing the internet, recognizing Jerusalem which destroyed the middle east, Jussie Smollett, the wholesale slaughter of the Kurds (well, those not already dead from Net Neutrality),  and Greta Thunberg’s sailboat. Despite being controlled by Democrats, the trade bill passed the House 385-41. Now it awaits the President’s signature.

The USMCA will replace NAFTA, including stricter rules on labor and car parts and loosens Canadian dairy markets. Canada still needs to approve the agreement once Jussie Trudeau takes off his makeup.

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We recently had a great conversation with trade expert, Clark Packard of R Street Institute. We discuss the lifting of the steel and aluminum tariffs on Mexican and Canadian imports, the prospects for ratifying USMCA, and the tools available to address Chinese trade abuses. Packard lays out his case that the US has more tools […]

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After protracted smashmouth negotiations, the United States, Canada, and Mexico agreed to replace the North American Free Trade Agreement (“NAFTA”) with the new United States Mexico Canada Agreement (“USMCA”) on November 30, 2018. The new USMCA is largely NAFTA with certain positive elements drawn from the Trans-Pacific Partnership (“TPP”). Unfortunately, certain new protectionist provisions unnecessarily […]

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A few weeks back, I threatened promised to tell you the one about the BDAN baño. Due to a clerical error, I find myself needing able to roll out this tale, for your enlightenment this fine fall weekend. It is a tale of three governments, earnest bureaucrats, a rich U.S. NGO, an innovative Arizona policy center, and outside […]

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Last week, the United States and Canada failed to reach an agreement on the ongoing NAFTA 2.0 renegotiation. Going into last week it was widely expected that any NAFTA deal would need to be concluded by the end of August. Nevertheless, Canada and the United States resume talks this week. Instead of closing the deal […]

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Victor Davis Hanson responds to the rhetorical escalation over immigration policy, explains how political dynamics in Mexico are shaping the current migration influx, and reflects on what a sensible immigration policy would look like.

Welcome to the Harvard Lunch Club Political Podcast number 169 (!!!) it’s the Corruption on Campus edition of the show with your hosts radio guy Todd Feinburg and nanophysicist turned artificial intelligence bot Mike Stopa. This week we are happy to invite Mark Bauerlein back to the show with us!

We will talk with Mark about topic number one, which is the Big Lie that takes place on campus regarding racial equality. UPenn Law professor Amy Wax recently remarked (among other things) that “I don’t think I’ve ever seen a black graduate student in the top quarter of the class and rarely, rarely in the top half.” Mark penned a fascinating column in the Weekly Standard about the Penn Law faculty taking up pitchforks and torches and launching a carpet bombing attack on the 65 year old professor (how’s that for a mixed metaphor?!?).

The Looming NAFTA Disaster

 

The North America Free Trade Agreement (NAFTA) among Canada, Mexico, and the United States was put into place in November 1993 with the staunch support of the Clinton administration. A sweeping agreement that lifted major trade barriers among these three nations, NAFTA had its share of problems when it was implemented, including the dislocation of some workers. But the mutual gains from free trade dwarfed any losses associated with the agreement. Now, over twenty years later, NAFTA needs to be updated to take into account new technologies, such as those associated with the digital economy. As the agreement gets renegotiated, all three parties should make as few changes as possible to bring the agreement up to date without altering its fundamental structure. But that might not happen. Each of the three signatory nations has adopted a tough bargaining position that could result in a breakdown of the treaty, which would be the greatest trade disaster in recent years.

The American public seems to be mixed on free trade. On the one hand, during the recent presidential campaign, much of the electorate, including many Republicans, turned against the Trans-Pacific Partnership (TPP), a free trade deal among Pacific Rim nations, while still announcing their support for free trade in the abstract. But upon taking office, Donald Trump proudly but foolishly withdrew from the TPP, and since that time has taken every opportunity to denounce free trade and to express his frustration with NAFTA. Today, his demands on NAFTA, as communicated through his trade representative Robert Lighthizer, have effectively deadlocked negotiations going forward.

Trump’s position is particularly galling because of the total discontinuity between his approach on domestic and foreign economic issues. Just last week, I wrote a column that strongly defended Trump’s efforts to introduce competition and choice into the health care market. The same principles that work to make a domestic economy great apply with equal force to the international one. Giving consumers many choices induces suppliers to provide those goods and services that people want at prices that they can afford; otherwise, the suppliers will lose business to their competitors. To achieve success, firms must not only develop their own workforces, but deal with other firms to acquire the needed inputs, which are often more cheaply purchased than made. Some of these inputs will be acquired from overseas sources, so the objective of a sound trade policy should be a seamless interface between domestic and foreign markets—which is precisely what NAFTA helped achieve when it integrated the economies of its three separate signatories.

Ian Tuttle of National Review and Greg Corombos of Radio America are cautiously optimistic as an amendment to the GOP health care bill gives more power to the states and brings more conservatives on board.  They also discuss President Trump’s willingness to renegotiate NAFTA, and Ian explains why he’s concerned about Trump’s approach.  And they dive into the effort by Democrats in California to bar businesses from future state contracts if they help to build a border wall.

Richard Epstein warns of the dangers of Donald Trump’s position on international trade, and considers controversies about trade deficits, the border adjustment tax, and job losses due to automation.

Richard Epstein analyzes the major initiatives on health care, trade, immigration, regulation, and crime coming out of the first week of the Trump Administration.

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In the wake of Donald Trump’s election, the Mexican stock market and the peso are down. Between fears of increased tariffs and of a renegotiated NAFTA, Mexico’s economy is on hold. Should Trump follow up on his promises to curtail trade between the U.S. and Mexico, expect to see a new flood of immigrants heading north long […]

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If You Think Trade Deals Have Ruined the American Economy, Reconsider

 

TradeIf you think America’s fundamental economic story over the past few decades is a narrative of decline due to bad trade deals — especially the North American Free Trade Agreement — then you must completely ignore economic consensus.

Some key paragraphs from the new CBO study on trade deals:

In CBO’s view, the consensus among economic studies is that PTAs [preferential trade agreements] have had relatively small positive effects on total U.S. trade (exports plus imports) and, primarily through that channel, on the U.S. economy. The effects have been small because the agreements were mostly between the United States and countries with much smaller economies and because tariffs and other trade barriers were generally low when the agreements took effect (see table below). PTAs have had little effect on the U.S. trade balance (exports minus imports) and have slightly increased flows of foreign direct investment, mostly by encouraging additional U.S. investment in the economies of member countries. As a result, the indirect effects of PTAs on productivity, output, and employment in the United States have also been small and positive. Empirical estimates support that view. But those estimates are uncertain and may be understated, because the effects of nontariff provisions are hard to measure and because issues with data keep researchers from identifying how PTAs affect the service sector. Most economic evidence suggests that the total number of workers directly affected by PTAs has been too small to significantly affect labor market conditions nationwide.

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One of my impressions of the Presidential debate was Trump’s disappointing, but unsurprising, opening salvo against free trade. Trade is a major issue for me in this election, because it is the only major area in which I strongly disagree with Trump’s apparent position. Going back and reading the transcript, I see that Trump didn’t […]

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