Ian Welsh

The horizon is not so far as we can see, but as far as we can imagine

Tag: NAFTA

Trump’s Policy on NAFTA Is Mostly Correct

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On November 22, 2017

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Yeah, I know, Trump is wrong on everything.

But I agree with Thomas Walkom on NAFTA. The bottom line is that what Trump wants is what the left should want, and if it doesn’t, it isn’t the economic left.

And Trudeau’s pretty face and lovely abs don’t change that.

Trump wants to:

  • Raise the minimum North American content in autos from 62.5 to 85 per cent.
  • Have 50 percent of autos which qualify for NAFTA free movement be manufactured in the US.
  • Remove Chapter 11, which allows companies to sue NAFTA governments. (This has been horribly abused to stop environmental regulations)
  • A five-year sunset clause.

And Trudeau has said that if Chapter 19 doesn’t stay in, he’ll walk from NAFTA.(Chapter 19 allows us to take the US to court to see if domestic laws are applied. We’ve won such rulings and the US has just changed the law, as with softwood lumber.)

Frankly the changes that Trump wants to NAFTA are mostly good. The sunset clause simply means the deal must keep working, and it is far better than clauses which make it hard to leave deals.

Of course these changes aren’t all great, but they would lead to more jobs in all three countries, and I can’t see why that’s a bad thing. The bottom line is that countries not only have a right to say that access to their markets should benefit their citizens, they have a duty to do so.

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Trump Signals He’s About to Blow His Foot Off

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On March 30, 2017

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As Matt says:

The people who care about this include the marginal voters who put Trump over the edge to victory. If this is true? Wow.

I thought Obama’s bungling of the economy and breaking promises would cost him re-election and it didn’t, instead it cost Democrats 1,000 state seats, multiple Governorships, and the House and Senate. So perhaps Trump will slide on this and download the damage to Republicans.

Mexico threatened to hit American corn, which some think is what caused Trump’s retrograde action to the rear. The funny and sad thing is that American corn devastated the Mexican economy after NAFTA. Millions of farmers lost their land and had to go to the slums (and cross the border to America.) Meanwhile American companies bought up the tortilla manufacturers, downgraded the nutrition of the corn based foods and increased the prices: The result was that Mexico had fewer farmers, more slum dwellers, and worse food that cost more. (GDP might have increased.Forcing subsistence farmers into slums can show up as increased GDP as they have to pay for what they used to grow.)

Mexico would be better off out of NAFTA, quite specifically because of corn. Rolling back the clock on agriculture would be hard, but not impossible, and breaking up foreign owned companies would be good for Mexico if done correctly.

If Donald bails on a big NAFTA renegotiation, he’s not just screwing his supporters, he might well be hurting Mexicans too.

Funny. Sad, but funny.

The results of the work I do, like this article, are free, but food isn’t, so if you value my work, please DONATE or SUBSCRIBE.

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