New NAFTA


Post #27, Bob McKnight's Subscription Commentary

"The new deal will...make the final products less competitive world wide."

The Wall Street Journal

President Trump announced the replacement to NAFTA in the Rose Garden, asking that it now be called the U.S.-Mexico-Canada Agreement. It will take a while for many to get used to the name change. Also, upon closer look, it is not apparent that this is an improvement from a "free trade" standpoint.

Here are some observations from The Wall Street Journal on the new Agreement:

  • "The new deal strips protections against predatory government behavior for most foreign investors.

  • The new deal also takes a giant step toward politically managed trade by imposing new rules of origin and labor regulations...This will add costs and complexity to building cars on the continent, and make the final products less competitive world-wide.

  • Worse, the deal opens the door for using trade deals to dictate a minimum wage and labor policy in Mexico."

Trump supporters are quick to point to a spike in the stock market signalling pleasure with the new NAFTA. Critics say it is a spike because the damage could have been worse, much worse. It is also said that the Agreement is much like North Korea Deal with Trump--"Just trust me on this one."

Now the ball moves to the Congress. Trade Agreements must receive Congressional approval and it is not certain this legislation can pass a Republican Senate and House. If not, Trump's only remaining shot will happen after the mid terms, which are expected to return at least the Democrats in the House to power. Maybe Senator Warren will not be called Pocahontas any more.


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