Ending NAFTA would push U.S. backward

This first appeared in USA Today:

When the United States, Canada and Mexico began talks this month to rewrite NAFTA, the Trump administration was full of its usual bluster. U.S. trade representative Robert Lighthizer lectured his counterparts in public. In private, he demanded that a substantial, though unspecified, percentage of the North American auto industry be based in the USA.

There’s virtually no chance that Canada and Mexico will accept such terms. President Trump admitted as much at a rally Tuesday in Phoenix.

Pulling out of NAFTA would be a grave mistake. It would punish the many innovative U.S. companies and farm interests that have thrived under the 23-yearold free trade agreement. And it would make U.S. industry less competitive by restricting its ability to farm out some less sophisticated manufacturing processes to neighbouring countries.

Gauging the impact of NAFTA is difficult, though it is probably safe to say it has produced losers as well as winners. The United States has a $36 billion trade deficit with Mexico so far this year. That’s a big number. But America is running similar deficits with Germany, Japan and even Ireland, and they’re not party to any trade agreements with the United States. America is running a whopping $171 billion deficit with China, and it also has no deal with the USA.

The much-maligned pact could use some updates to deal with money laundering and the rise of digital industries. But Trump has shown little interest in making these types of improvements to a trade deal that has, on balance, benefited this country.

Moreover, Trump’s fixation with NAFTA has already distracted attention from more pressing trade issues. Take China, for instance.

If he had really wanted to pressure the Chinese, he would have backed the Trans-Pacific Partnership, a proposed 12-nation trade zone that he pulled the United States out of. The pact buttresses protection for intellectual property and limits the use of state-owned enterprises. Most important, it excludes China.

Trump has already abandoned one trade agreement that would have benefited the United States. Tearing up NAFTA would be another great leap backward.