Arthur I. Cyr: U.S., Mexico and Canada reconfirm free trade
Sir Arthur Conan Doyle’s alter ego and fictional hero Sherlock Holmes greatly raised the prestige of previously lowly detective stories. Sherlock, like Shakespeare, had acute insight. One of Holmes’ most brilliant inductions concerned evidence which was not present. In “The Silver Blaze,” a dog’s failure to bark in the night pointed to the guilty party.
Media attention regarding international trade focuses on the complicated, tense and high-stakes economic and wider political conflicts with China. In Washington, the ongoing developments regarding presidential impeachment preoccupy attention.
Meanwhile, the United States Congress comparatively quietly has updated the historic North American Free Trade Agreement - NAFTA. The U.S.-Mexico-Canada Agreement - USMCA - was passed in the U.S. Senate on Jan. 16 by 89 to 10, an overwhelming victory for supporters and a notable example of bipartisan cooperation in the midst of often rancorous partisanship. Last month, the House of Representatives passed the agreement by the equally impressive margin of 385 to 41.
The agreement is hardly an uncompromised statement for free trade. There are new national content rules designed to protect the jobs of American workers in the auto and other vehicle industries. This likely will have at most only short-term benefits.
As Sen. Pat Toomey (R-PA) persuasively argues, this provision will raise auto prices for consumers while spurring the enormous, long-term movement of corporations to automated manufacturing processes. This is a much more profound trend than the often-cited, controversial movement of American manufacturing facilities overseas.
Toomey was the lone Republican among the 10 senators who voted against the bill. Those voting no included Bernie Sanders (I-VT), along with Cory Booker (D-NJ) and Kamala Harris (D-CA), both of whom recently withdrew as candidates for the Democratic Party presidential nomination, and minority leader Chuck Schumer (D-NY).
The sizable votes in both houses of Congress in favor of the agreement shows the significant amount of support in the Democratic Party in both houses. This argues that protectionist sentiment is influential but not politically decisive, in contrast to public attitudes in the decades before World War II and, especially, during the Great Depression.
The agreement hammered out among negotiators for the three nations contains other important provisions that are not so clearly nationalist in purpose. There is protection of intellectual property, which will foster international commerce, reduction of barriers in agriculture and protection of workers in Mexico to organize new independent unions.
A specific section of the agreement is focused on encouraging trade by small businesses in service industries. This is where most jobs are created in the U.S., and services rather than manufacturing increasingly is where employment opportunities are to be found.
The 1994 NAFTA accord dramatically lowered trade and investment barriers between Mexico and the rest of North America. An essential predecessor was the Canada-U.S. Free Trade Agreement of 1988, in turn facilitated by the successful Uruguay Round of multilateral trade negotiations. Another important element was the historic Canada-U.S. Automotive Parts
Agreement of 1965.
Such cooperation in promoting international community has deep roots reaching back to World War II. During that desperate time, U.S. President Franklin D. Roosevelt and British Prime Minister Winston Churchill met for their first summit on naval warships off the coast of Newfoundland. The August 1941 meeting occurred several months before the attack on Pearl Harbor. The conference led to the United Nations and associated international economic institutions.
Trade remains a vital element in discouraging war.
Arthur I. Cyr is Clausen Distinguished Professor at Carthage College and author of “After the Cold War” (NYU Press and Macmillan). Contact email@example.com.