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New Hampshire primary results prompt questions on NAFTA


 

MANCHESTER, N.H. – The North American Free Trade Agreement doesn’t have a champion among either of the winners of the New Hampshire primary, who both say they want to scupper the deal should they win the presidency.

That stated objective faces monumental political and legal obstacles, starting with the fact that Donald Trump and Bernie Sanders are still far from winning their respective party nominations, let alone the White House.

But they’ve served notice that they want to end the 1994 agreement that had wide-ranging consequences on trade between Canada, the U.S., and Mexico.

“We will either renegotiate it or we will break it,” Trump told CBS last fall, panning the deal as a disaster. “Every agreement has an end.”

He says he likes free trade in theory – but the current deals are no good. Much like Trump’s proposal to ban Muslim travel to the U.S., and kicking out illegal migrants, he’s rather stingy with the specifics.

Sanders has been consistent. He’s been a staunch opponent of the trade deal since it was first signed, and once staged a memorable protest against NAFTA early in his congressional career.

He introduced a bill that would have severely cut the salary of American politicians – to harmonize them with Mexico, so that lawmakers could feel the impact they were imposing on workers.

“The essence of NAFTA is that American workers will be forced to compete against the desperate and impoverished people of Mexico who earn a minimum wage of 58 cents an hour,” Sanders told the House of Representatives, which he sat in before entering the Senate.

“It is only appropriate that we, the Congress, lead by example… (Mexican politicians) earn the equivalent of $35,000 a year… If we’re going to ask American automobile workers, and dairy farmers, and truck drivers to be competitive with counterparts in Mexico, then the salaries of the U.S. Congress should be competitive with the Mexican Congress.”

Unsurprisingly, his 1993 bill failed. NAFTA, on the other hand, passed.

Now Sanders’ presidential election platform promises to “reverse” trade policies like NAFTA. One trade lawyer says his legally trained ears detect a little wiggle room there – he says reversing trade policies could mean any number of things.

Mark Warner says he’s skeptical either candidate would cancel the deal.

It would be mind-bogglingly complex, he said. Even if a president provided six months’ notice that the U.S. was pulling out, elements of NAFTA have since been embedded in the World Trade Organization agreement.

Another problem that other trade experts have identified is that tariffs couldn’t just snap back into place. The U.S. Congress would have to re-impose them. It would be no easy task getting tariffs through both chambers – including the Senate where they’d need 60 per cent of the vote.

“It strikes me as very unlikely that you’d do it,” the Toronto lawyer said in an interview.

Then there’s the final hurdle: modern economic reality. Warner said businesses have become increasingly international and now build a product with different bits shipped in from different countries.

“You would see businesses going nuts,” Warner said.

“How do you reverse those supply chains now?… Reversing NAFTA would be like closing the barn door after everybody’s gone. The changes that have been made have been made.”

As for the effect of NAFTA, a 2015 report by the U.S. Congressional Research Service said it’s difficult to measure it precisely because it didn’t occur in isolation – other technological and economic factors were already increasing trade.

It cited previous studies that suggested NAFTA had a small, positive overall effect on economic growth – while helping some Americans and hurting others.

Trump’s most ardent supporters include people struggling in the modern economy. A New York Times exit poll from New Hampshire found Trump’s biggest victory margins were by far with those making less than $30,000, and with those claiming they’re falling behind financially.

In an interview with three Trump supporters, neither complained about or even seemed aware of the earlier 1987 Canada-U.S. free-trade agreement. But they did complain about jobs going to Mexico later.

“NAFTA – that changed our country. Everyone’s moving out,” said Bridget Trepsas.

“Everything went out.”

Warner suspects a future president who promises to fix NAFTA would probably follow Barack Obama’s example: In his first presidential campaign, Obama promised to reopen NAFTA to add labour and environmental provisions.

Obama says he’s kept that promise by negotiating these issues in the new, as-yet-unratified Trans-Pacific Partnership. Labour unions say the new deal doesn’t go nearly far enough.

Warner said it would be difficult for the next president to reopen TPP – but a piece of cake compared to cancelling NAFTA.


 

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