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A Bogus Deal on Nafta - By The NYT Editorial Board
President Trump’s agreement with Mexico will hurt American workers, not help them.
The editorial board represents the opinions of the board, its editor and the publisher. It is separate from the newsroom and the Op-Ed section.
Sept. 2, 2018
The North American Free Trade Agreement is a nearly 25-year-old agreement that needs to be modernized 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 antagonizing America’s neighbors.
In the Trumpian worldview, Canada isn’t a friendly neighbor 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, even though no Mexican autoworkers earn $16 an hour, and none will. Otherwise, Mexican-assembled vehicles would be subject to a 2.5 percent tariff.
The logic here is that auto-related jobs would supposedly flood back to the United States as labor costs rise in Mexico. That logic is dubious. Automakers in Mexico would rather pay the 2.5 percent tariff, figuring it would not raise prices enough to hurt sales seriously. If it did, they could stop making those cars for the American market.
Mr. Trump has particular animus for the dairy industry in Canada. There’s no question that protectionist constraints keep milk prices there high and farmers profitable. The Canadians have pointed to subsidies that American farmers get and are resisting Mr. Trump’s no-compromise demand to throw their cows under the bus. Mr. Trump also wants Canada to join Mexico in agreeing to drop Chapter 19 of Nafta, a dispute resolution protocol. Canada has used it to fight off tariffs on its softwood and paper products. Mr. Trump’s softwood and paper tariffs are hurting Canadian industry, but also are raising lumber prices in the United States so much that the housing market has slowed. Isn’t that a great deal?
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https://www.nytimes.com/2018/09/02/opinion/trump-nafta-deal.html
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