Tackling the Complexities of Trade

Attila the Hun and the Nazi regime and New Coke represent brands that have been relegated to the darkest bowels of history, possessing no possible chance for redemption.

Since its inception 22 years ago, the North American Free Trade Agreement (NAFTA) may be on the trajectory to receive a similar fate. If we judge NAFTA by sound bites, the jury in the court of public opinion has largely rendered its verdict -- it is an abject failure.

But is that the sum total of a trade agreement that was originally sold as lowering tariffs between the United States, Mexico and Canada?

One of the reasons the NAFTA brand is poor is because its two-plus decades in existence have been largely defined by it opponents. In Political Speak 101, if you're defined by your opponent, you're probably losing. On that score, it's safe to say NAFTA is losing badly.

One need only listen to the presumptive Republican presidential nominee Donald Trump or Democratic second-runner Bernie Sanders to conclude that because of NAFTA, America's economic sky is falling under the weight of a horrific policy.

NAFTA is, in part, the reason Trump advocates for steep tariffs on Chinese and Mexican imports.

The NAFTA brand is why Sanders is opposed to the Trans Pacific Partnership (TPP). He sees it as nothing more than a NAFTA redux. To counter this scenario, Sanders makes clear he is not opposed to free trade but insists on fair trade.

That sounds good, but it is nothing more than a soothing non sequitur. As a good friend constantly reminds me, fair is where they sell cotton candy and corn dogs. Fair may be the place where one can see "where are they now" rock acts from the 1970s, but public policy is not necessarily the place where its egalitarian impulses are experienced.

In this context, advocating for higher tariffs and so-called fair trade become euphemisms for protectionism. It is unrealistic to believe the U.S. can impose large tariffs on Mexico and China and there not be repercussions. Can demands for fair trade, which may lead to no trade, suffice in the age of globalization?

Like many other important issues in our public discourse, the natural impulse for oversimplification conveniently conceals reality. NAFTA is neither the dark plague that left many American communities in ruin nor is it the Shangri-La of economic bliss.

According to a report several years ago by the Congressional Research Service, under NAFTA trade has grown by 400 percent; it supports some 5 million jobs; and the partnership among the United States, Mexico and Canada has the region more competitive globally, specifically with China, which leads many economists to conclude that on balance NAFTA has been good for the U.S. economy.

It is not, however, an intellectual leap to conclude employees representing industries such as textile, apparel, agriculture and automobiles do not see NAFTA in a similar light. They see it as an agreement, from their perspective, producing, as billionaire Ross Perot warned in the early 1990s, a "giant sucking sound" taking jobs and opportunity with it. It has placed downward pressure on wages for working-class people.
Rather than NAFTA, Perot's forewarnings may have been better suited toward China. The entry of China into the global economy, facilitated by the decision to bring it into the World Trade Organization, granting it most-favored-nation trading status, has cost more U.S. jobs than NAFTA.

There are justifiable concerns with trade agreements going forward. As with NAFTA, in addition to the economic concerns, the environment, labor standards and the devaluation of the currencies that the U.S. has entered into agreements are also problematic.

But the failure to engage is to forgo any leverage to modify the above-mentioned concerns. Therein lies the rub: Candidates pontificating protectionist tariffs or fair trade that equates to perfect trade, which is tantamount to no trade.

Trade is a complex issue that possesses little room for preconceived absolute ideas. It requires negotiations and compromise -- something that has been lacking in the U.S. ethos for some time.

As with most complex issues in our contemporary public discourse, identifying a portion of the problem and offering a simplistic and reactionary response is preferred over struggling with the difficulties that exists on both sides of the equation.

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