Trump’s North Amer­i­can trade tri­umph

Pros­per­ity ad­vances de­spite Demo­cratic trade hyp­ocrites in Con­gress

The Washington Times Weekly - - Commentary - By Stephen Moore

For those on the left and right who were cer­tain that Don­ald Trump’s pres­i­dency meant the end of global free trade … think again. Though Pres­i­dent Trump’s crit­ics have dis­missed the sig­nif­i­cance of the new Mex­ico and Canada trade deal, it’s hard to deny it’s a wel­come ad­vance for the econ­omy on the en­tire con­ti­nent.

The pact will ex­tend for years a (mostly) tar­iff-free North Amer­ica trade zone. This was Ron­ald Rea­gan’s vi­sion nearly four decades ago — and that legacy will now live on for hope­fully many years to come.

Here’s just one ex­am­ple of the im­por­tance of this agree­ment. In the area of en­ergy pro­duc­tion the in­te­gra­tion of our economies and the freer flow of en­ergy in­vest­ment cap­i­tal across our south­ern and north­ern borders means more pipe­lines, more LNG ter­mi­nals, more oil re­finer­ies and more ex­plo­ration. North Amer­ica is now poised to be the new Mid­dle East for en­ergy pro­duc­tion for the next 50 years with all the re­lated eco­nomic ad­van­tages that con­fers on our re­gion.

One of the most fa­vor­able out­comes of the new trade pact is the pro­vi­sion that locks in 10 years of patent pro­tec­tions for new phar­ma­ceu­ti­cal drugs and vac­cines. While some crit­ics are por­tray­ing this as a sell-out to the big drug com­pa­nies, the op­po­site is true. Patent pro­tec­tions for drugs in­vented in Amer­ica re­duce costs for Amer­i­can con­sumers by forc­ing for­eign coun­tries to help pay for the re­search costs (about $1 bil­lion for each new drug brought to mar­ket) and stop free rid­ing on our in­no­va­tion.

As Univer­sity of Chicago pro­fes­sor To­mas J. Philip­son, puts it in a 2018 study on the drug in­dus­try: “There is no free lunch. If nei­ther Amer­i­cans nor for­eign­ers pay for the R&D to de­velop new drugs, then soon no­body will re­ceive new treat­ments.”

One re­search team that found that price con­trols and in­ad­e­quate patent pro­tec­tions will pre­vent the de­vel­op­ment of six new block­buster drugs each year by 2020 and more than a dozen a year by 2050. (See chart.) No one can ben­e­fit from a drug to cure cancer, MS, Alzheimers or epilepsy at any price if it hasn’t been in­vented.

The U.S.-Mex­ico-Canada Agree­ment (USMCA) will both save lives by ac­cel­er­at­ing med­i­cal re­search and re­duce drug prices at home by en­sur­ing that for­eign­ers no longer en­joy en­joy med­i­cal in­no­va­tion with­out pay­ing their fair share.

De­spite these virtues, Democrats in Con­gress are threat­en­ing to vote as a bloc to pre­vent pas­sage of the trade pact. These are the same peo­ple who just a few months ago were com­plain­ing that Mr. Trump’s “reck­less and dan­ger­ous” trade poli­cies were harm­ing the econ­omy and alien­at­ing our al­lies. Now he has a deal that helps the econ­omy and uni­fies our neigh­bors — and they are against it. They have ex­posed them­selves as free trade hyp­ocrites.

Op­po­nents of the new trade agree­ment on the left and right have nit­picked about cer­tain hard-to-de­fend fea­tures of the plan — such as fool­ish wage re­quire­ments for Mex­i­can auto work­ers. But this misses the big­ger point. USCMA means that free trade is alive and well across the borders of North Amer­ica.

Con­grat­u­la­tions to Don­ald Trump and his trade team for de­liv­er­ing an agree­ment that will pro­mote pros­per­ity across all three na­tions. Stephen Moore, a colum­nist for The Wash­ing­ton Times, is a se­nior fel­low at the Her­itage Foun­da­tion. His new book, “Trumpo­nomics,” will be re­leased later this month.

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