“Progressives” should be pleased by President Donald Trump’s new U.S.-Mexico trade deal designed to replace NAFTA.
This deal explicitly addresses the need to raise wages and uses the carrot of free trade to do so — an intelligent, free market way to achieve more of what demagogues like Bernie Sanders demand.
In the new NAFTA, between 40 percent and 45 percent of the content of autos must be produced by workers earning at least $16 per hour — or they won’t qualify for tariff-free treatment.
The provision is designed to force manufacturers to source more of their production in the U.S. or Canada or to raise wages in Mexico — either way a desirable goal.
It also will require Mexico to take specific steps to recognize collective bargaining, driving up wages in our neighbor to the south.
The most important provisions for our economy are its measures to stop NAFTA from being a backdoor for tariff-free Chinese imports into the United States.
Beijing has used the trade agreement to send its goods into American disguised as Mexican or Canadian products.
The new NAFTA cuts China out of the free trade zone in North America.
Now, 75 percent of the content of cars must be sourced in North America to qualify for tariff-free treatment.
And, as The Wall Street Journal reported, “new rules will be in place for industries like textiles, chemicals, steel-intensive products and other industrial goods to qualify for tariff-free treatment, creating an incentive for more of that production in North America.” No more backdoors.
The deal also requires that steel and aluminum in cars must be sourced in North America.
The trade agreement is good for Mexico, good for the United States, but bad for China.
Finally, concluding a trade deal with Mexico puts tremendous pressure on Canada to reduce the flow of Chinese-made “Canadian” cars coming into the U.S.
Formerly, a car made in China with one bolt added in Mexico gets free trade treatment if it is sold in the US.
Now, by implicitly threatening to cut Canada out, the American leverage over our northern neighbor increases dramatically.
The new NAFTA keeps Trump’s promise to put America first through a variety of subtle and sophisticated provisions.
Good for Trump!
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