The North American Free Trade Agreement signed by the Presidents of the three negotiating nations (Mexico, the United States, and Canada) on December 17, 1992 came into force on January 1, 1994.
Most US/Canada trade was already duty free at the time, but the deal brought an immediate end to tariffs on more than one-half of Mexico’s exports to the U.S. and more than one-third of U.S. exports to Mexico, and created schedules for the elimination of the remainder.
President Trump, during his campaign, referred to NAFTA as “the single worst trade deal ever approved in this country.” Though the news cycles of the first half year of the Trump administration have been very crowded, attention is turning now to the question of what, if anything, President Trump can or will do about the alleged badness of that deal.
In mid-May, the administration notified Congress of its intent to begin talks with Canada and Mexico on the renegotiation of terms.
Now those talks are getting underway, and the U.S. administration has outlined its objectives. The Big Issue on the list is the Treaty’s Title 19, on dispute resolution. Disputes over whether one country is “dumping” unfairly cheap products into another country will be settled, says this title, not by either of the national court systems involved but by a binational panel of experts on international law. Canada is likely to prove stubborn in defense of this private arbitration system, since the system has helped define favorable terms for its profitable export business in softwood lumber.
Left Wing View
Disputes over international trade don’t break down well along party lines or along left/right philosophical lines either. NAFTA itself was negotiated (on the U.S. side) by the Reagan and elder Bush administrations. But it became law under, and with the approval of, the Clinton administration, and President Clinton took some intra-party heat on this point, from Rep. Dick Gephardt (D-MO) and others who might broadly be considered to his “left.” The issue also fueled the centrist/populism of the Ross Perot campaign.
In 2008, HuffPo, citing David Sirota, an activist to the left of the Clinton family, tweeted, “NAFTA and Iraq … NAFTA and Iraq … repeat it and say it louder.” This was his/their explanation for Obama’s defeat of Hillary Clinton in the Democratic Primaries of that year.
David Sirota: NAFTA and Iraq…NAFTA and Iraq…Repeat and Say It Louder…: A series of new polls.. http://tinyurl.com/65lp44
— HuffPost (@HuffPost) September 11, 2008
The Clinton family, then, is still taking heat both for its support of NAFTA and for former Senator Clinton’s vote in support of the younger President Bush’ war in Iraq.
Despite the various caveats one might enter, the usual left-of-center positon seems to be that multilateral pacts are better than bilateral (or trilateral) trade pacts. The more participants the better, because the more parties to a deal there are, the less likely it is that a particular region is trying to beggar the rest of the world for its own benefit, or that one dominant country is exploiting a small group of satellites.
Donald Trump pulled out of a broader pact, the Trans-Pacific Partnership, in one of his first acts as President.
According to some liberals, this signified that his opposition to NAFTA is the wrong sort of opposition, regressing toward U.S. unilateralism rather than toward a more global perspective. (Since Mexico and Canada were part of the deal, TPP Itself would have in some respects supplanted NAFTA.)
This view is sometimes reinforced by more ad hominem observations about Donald Trump’s own practices as a businessman or, more broadly, about the fact that his “economic advisors come from the same pool of financial interests that negotiated NAFTA for their own benefit….”
Right Wing View
The issue of free trade was part of the motivation behind the #NeverTrump movement within Republican ranks in the weeks when Donald Trump was clinching the Republican nomination for President a year ago.
Those conservatives who back Trump whole-heartedly still reproach the NeverTrumpers on exactly this point, as the below tweet illustrates:
— REV. JAMES LAKE (@jamesplake721) July 17, 2017
Those who favor free trade, and who see themselves as the true conservatives, are of course happy to return fire. This is why one “Sb51antinomy,” addressing liberals, assured them that “conservatives hate Trump more than you do.”
Conservatives hate Trump more than you do. Trumpkins lost conservatism when they stood against free trade.
— Sb51Gorl (@Sb51Antinomy) July 12, 2017
To libertarians, and to those conservatives most influenced by libertarians, consumer price is a big consideration in the discussion of trade barriers and/or trade agreements. If a charge is imposed upon Canadian timber as it enters the U.S., then this charge will hit the bottom line of home buyers. Or, to the extent demand will not accommodate a price increase it will force U.S. construction industry to eat the higher cost of their supplies. The result is a bad one, either way.
Similarly, if U.S. based companies can cut production costs by shifting their production overseas, or can “insource” by hiring inexpensive immigrant labor, this will benefit a broad base of consumers via the lower prices of goods.
But Darren Beattie, in a recent commentary on trade issues written for the National Review, says that conservatives should update their understanding of economics, and that Trump is ahead of most of them in this. Beattie writes that “the ‘free market’ of Goldman Sachs … [is not] the same as the ‘free market’ of the family small business or the neighborhood lemonade stand.”