Canada pummels poor Mexicans
The Trump administration wants to write into the North American Free Trade Agreement the very measures that made the Trans-Pacific Partnership ( TPP) questionable from a free-trade viewpoint: labour and environmental standards. The Canadian government agrees wholeheartedly. Using the TPP as a model in this way could turn NAFTA, which is on the whole favourable to free trade, into a managed-trade hodgepodge.
Surprised to find Prime Minister Justin Trudeau and his foreign minister, Chrystia Freeland, in the same camp as President Donald Trump and his cohorts? You shouldn’t be. Both camps avowedly want to replace free trade with “fair trade.” They don’t exactly agree what fair trade is ( typically, nobody can), but they at least agree that it includes trade rules for labour and environmental standards. The objectives revealed by the office of the United States Trade Representative ( USTR) in July made robust use of buzzwords frequently deployed by the fair- trade crowd, such as “the right to collective bargaining,” “stakeholder,” and “sustainable.”
The Trans-Pacific Partnership’s labour provisions were officially inspired by the standards of the International Labour Organization, a UN agency that promotes the agenda of big unions. What a small world: Trump’s NAFTA-renegotiation demands also pay their respects to the International Labour Organization. Under the TPP, signatory states would have guaranteed “acceptable conditions of work with respect to minimum wages, hours of work, and occupational safety and health” — a formulation repeated word-forword by the U. S. Trade Representative’s new NAFTA demands. If seriously enforced, the TPP’s labour regulations would have attenuated the main advantage of poor countries: their relatively low price of labour. But more on that in a minute.
The website of Barack Obama’s USTR boasted that the TPP contained “the strongest labor and environment provisions ever included in a trade agreement, and they mark a sea-change from earlier trade agreements like NAFTA.” Some might have assumed that’s what Trump disliked about t he TPP, which he killed. But lo and behold, it seems to be the only thing he loved ( assuming he read it).
The TPP’s environmental standards were weaker than its labour standards — probably because the environmental rules were mostly driven by political correctness, and not the full force of government- supported organized labour. But they would have been a mission creep waiting to happen.
Neither labour nor environmental standards were included in the main text of NAFTA. They were instead the object of side agreements with much less punch. Adding stronger such standards inside a renegotiated NAFTA would undermine one of the main reasons for the benefits of tree trade.
Consider carefully what higher l abour standards would do to NAFTA. By increasing the cost of labour in the poorest of the three partners — Mexico — they would remove part of what economists call its “comparative advantage.” Wages are lower in poorer countries because labour there is less productive, which is exactly the reason why these countries are poor. For certain goods, productivity will be even lower than the low wages, and, for those goods, the poor country has no comparative advantage. But in sectors where productivity is higher than low wages — for instance, in Mexico’s case, manufacturing semiconductors — the goods are produced at prices attractive to foreign buyers, and the poor country is said to have a comparative advantage. A poor country can compete internationally where it has a comparative advantage, and get progressively richer.
What international labour standards do is to slow down or stop this process, by raising the cost of lowwage labour until it overcomes productivity. These standards thus protect rich workers in rich countries ( like the U. S. and Canada) from the competition of poor workers in poor countries (like Mexico). Where are the social justice warriors to attack this ignominy?
The tragedy is that the Mexican government accepted labour standards in the stillborn TPP, so it may have to yield to them in the NAFTA renegotiation.
Ms. Freeland says she also wants to add “gender” to the regulatory standards in the renegotiated NAFTA. Why not? And why not simply write that all politically correct “rights” are protected? But for Gaia’s sake, this is supposed to be a free- trade agreement! ( It all brings to mind an article published l ast year in t he j ournal Progress in Human Geography, written by serious academics, titled “Glaciers, Gender, and Science: A Feminist Glaciology Framework for Global Environmental Change Research.” The authors claimed that “stereotypical and masculinist practices of glaciology” are linked to “imperial and hegemonic capitalist agendas,” and thus that “Ice is not just ice.”)
There is much ignorance and political stupidity in the world. The project of adding to NAFTA politically correct regulations — or “standards,” as we’re supposed to call them — is yet another illustration.