SHARE
Donald Trump | Wiki­media Commons

Mere hours before the acti­vation of the Trump administration’s arti­ficial deadline on trade nego­ti­a­tions, the U.S. and Canada were able to reach an agreement. Months of tense nego­ti­a­tions and warlike rhetoric resulted in a broad framework for a trade deal on Sunday, intended to replace the North American Free Trade Agreement, which the pres­ident has repeatedly called “the worst trade deal in history.”

The new deal is ten­ta­tively labeled the USMCA, or the United States, Mexico, Canada Agreement, and includes the North American trading block, which is iden­tical to the pre­ex­isting part­nership NAFTA pro­tected. As expected, the new agreement drew praise from offi­cials in all three coun­tries as a pos­itive step forward and an aversion of a poten­tially dis­as­trous trade war that had been looming over the North American political land­scape for more than a year. With that said, what does this deal mean for the U.S.? Iron­i­cally, more than two-thirds of the pro­vi­sions found in the USMCA agreement are nearly iden­tical to those in the recently demo­nized Trans-Pacific Part­nership, or TPP. Other than that, most of the minutia of the agreement is business as usual for the three coun­tries, with a few sig­nif­icant por­tions with­standing.

First, the new agreement opens up heavily pro­tected indus­tries in both the U.S. and Canada. Within the broad USMCA framework, the U.S. gains sig­nif­icant access to the Canadian dairy industry which cur­rently receives pro­tective tariffs as high as 300 percent, as well as import quotas. Under the new deal, American com­panies will be able to export four times as many dairy products to Canadian con­sumers.

Other than dairy, Mexico and Canada have also agreed to lower quotas on food products, including turkey, eggs, and wine — all of which will help farmers in the U.S.

Finally, the new deal includes a pro­vision pro­hibiting tariffs on any new tech­nologies that may emerge during the life of the agreement. But the con­tents of the new trade deal are not all pos­itive.

Most of the major flaws in the new agreement stem from a fun­da­mental mis­un­der­standing of the nature of trade. First, the U.S. insisted upon a “sunset clause” of 16  years for the new deal, with scheduled meetings every six years between the coun­tries to discuss if the agreement needs updating.

Second, the USMCA includes a clause that requires the U.S., Mexico, and Canada to man­u­facture 75 percent of car parts and 45 percent of truck parts, and they must be made by workers earning more than $16 an hour.

The new deal also neglects the dispute over alu­minum and steel tariffs, thrust onto Canada by the Trump admin­is­tration.

Again, these flaws stem from a mis­un­der­standing of trade. The Trump admin­is­tration has con­tin­ually empha­sized pro­tec­tionist policies to benefit the U.S. over other nations, but it forgets the fun­da­mental prin­ciple of free trade: The U.S. does not trade, its cit­izens do. The Trump admin­is­tration insisted on a “sunset clause” because it sees foreign trade as some­thing that needs to be managed, since its con­di­tions con­stantly change. This mer­can­tilist assumption ignores the fact that indi­viduals, not coun­tries, make deci­sions in the market and they make them in ways they believe will benefit them­selves to the greatest degree, based upon their localized knowledge. Inter­fering with this process will hurt more Amer­icans than it will help.

This pro­tec­tionist attitude dis­re­spects the agency of human beings to interact and exchange with whomever they please — without tyran­nical gov­ernment inter­ference.

Amer­icans residing in the “Rustbelt” might benefit from the arbi­trary man­u­fac­turing quotas and wage floors laid out in the trade agreement, but it will be at the de facto tax­ation of any citizen who pays a higher price for a car or truck. The glob­al­ization of the auto­motive supply chain, while not without costs, is a net pos­itive for U.S. cit­izens. Low wage workers in Mexico are not stealing jobs from blue collar Amer­icans, they are pur­suing their own goals as human beings and doing so by pro­viding us con­sumers with cheaper products than we oth­erwise would have access to through the process of vol­untary exchange.

The economy is not a business that needs to be micro­managed — it’s a catallaxy of diverse humans pur­suing infi­nitely diverse ends, and it neces­si­tates the utmost degree of freedom to serve each indi­vidual to the fullest extent.

Regardless, there’s no doubt the USMCA is a step in the right direction. While it did institute some harmful policies based upon flawed eco­nomic logic, it also remedied many of the flaws found in NAFTA. This new deal still con­tains tariffs and quotas, but the tariffs are few and far between, and the quotas are much higher than the current rate of export and will likely be of no con­se­quence. The USMCA is a mixed bag, but we cannot sac­rifice what is good in the present for a futile pursuit of what is perfect.

Erik Halvorson is a senior studying eco­nomics.