Trade: The Decay of Democracy


It will be of little avail to the people that the laws are made by men of their own choice if the laws be so voluminous that they cannot be read, or so incoherent that they cannot be understood. 
—The Federalist Papers

Prescient fellows, those founding fathers. Voluminous and incoherent are words that almost seem coined to describe this year's North American Free Trade Agreement (NAFTA). (Actually, so do monstrous and fraudulent, but we'll get to that later.)

What the public is told about NAFTA sounds fine, if you accept that free trade between individuals and companies is ethically correct and redounds to the benefit of all in the long run. NAFTA will, or so the media and the Bush administration tell us, eliminate, over the course of many years, barriers on goods traded between the United States, Canada, and Mexico and create a free-trade zone from "the Yukon to the Yucatan."

Of course, most likely none of you has actually seen NAFTA, much less attempted to read it and judge if it says what we're told it says. No, we lazy and weak Americans are all too busy playing miniature golf, not valuing our families, and spending profligately so as not to achieve an optimal national savings level.

But once you cast your eyes on these laws in their naked splendor, you begin to realize that this public-policy ignorance is more than just rational on our part—it's planned by those trade bureaucrats and business interests who are actually crafting these laws. (At least, I assume that NAFTA's tortured and torturous prose is the product of an actual human mind.)

Some old fellow who probably had three names once compared the process of lawmaking to the process of sausage-making, with lawmaking coming out on the raw end of the comparison.

Indeed, when you look at the finished result of the lawmaking process, well, I think you'd be more entertained and delighted staring at the viscous, green-gray glop at the bottom of the old black skillet after a morning rush at Cracker Barrel when everyone ordered a couple of links on the side.

Because of some sort of karmic imbalance I'm working hard at setting right, I've had the misfortune to thumb my way through the winding chapters, annexes, and appendices of NAFTA. I should have listened to one Washington policy analyst, who regularly tries to explain the ins and outs, benefits and pitfalls of NAFTA to the media (and understandably prefers to remain nameless), when he said, "I'm not gonna bother to read it—nothing in there could change my mind." Someone who could have their mind changed by NAFTA should definitely avoid walking within blocks of a Dianetics counseling center. NAFTA's twisted, lawyerly prose, endless cross-referencing, huge lists of marginal differentiation of hundreds of different kinds of cotton yarn, etc., doesn't even approach the (minimal) inspirational value of Bush's alliterative yammer about the Yukon, etc.

Just seeing NAFTA should be enough to set off anyone's bullshit detector. The ideal, platonic NAFTA, the NAFTA that merely did what we're all told it's meant to do, could be one sentence long: "The undersigned countries agree to eliminate all tariffs, laws, and regulations that discriminate against the goods, services, and investment from the other undersigned countries by [date]."

The NAFTA that we must contend with in the phenomenal world, however, is 1,061 pages, seven pounds and 14 ounces of language like this: "For the purpose of determining the origin of a good of this Chapter, the rule applicable to that good shall only apply to the fabric which imparts to the good its essential character and such fabric must satisfy the tariff change requirements set out in the rule for that good. If the rule requires that the good must also satisfy the tariff change requirements for visible lining fabrics listed in Note 1, such requirement shall only apply to the visible lining fabrics in the main body of the garment, excluding sleeves, which covers the largest surface area, and shall not apply to removable linings."

And math like this: "When making projections of its net production surplus, each Party shall consider adjustments, in appropriate circumstances, to such projections to take into account a change in stocks for the current marketing year exceeding an upper bound calculated in accordance with the following formula [Schedule 704.2(I)(B)(3)(e)]":

I'd like to call some congressman who supports NAFTA and ask him, voice quivering with outrage, how he can possibly defend the provisions of Schedule 704.2(I)(B)(3)(e); can't he see that our domestic industry is doomed to be overrun by Micronesians so fast we won't even notice our infrastructure collapse unless we realize that B should equal:

The sad thing is, years of political humor have almost trained us to expect this sort of nonsense. Sure, we all know that what passes for representative government in the United States today is, by necessity and design, almost entirely the work of self-interested bureaucrats and special interests obfuscating any attempt at oversight or understanding on the part of the citizenry—or even our elected representatives—with niggling, complicated, picayune, over-involved legislation that is both overly broad in its reach and overly specific in its grasp.

I challenge any citizen who is not a trade bureaucrat or practicing trade lawyer to grapple with NAFTA's mysteries and emerge sane. Come on, I dare you. I double-dog dare you. Any takers?

Didn't think so. So most of us are not aware—and will never become aware—of some of NAFTA's provisions.

For example, while the language of NAFTA recognizes that export subsidies are inimical to free trade, it doesn't even begin to eliminate them—it merely commits the parties to keep on plugging in the endless and mostly ineffectual General Agreement on Tariffs and Trade (GATT) talks in an attempt to eliminate them on agricultural goods.

Antidumping laws, among the most easily abused of the anti–free trade laws, designed to protect Americans from being fooled into paying too little for a desired item, are not affected by NAFTA.

NAFTA requires all importers and exporters to keep endless records to prove the local origin of any exported good (in any language the importing state prefers), even if the exporter is not the producer of said good. In that case, the exporter can complete and sign the requisite Certificate of Origin based on the "producer's written representation that the good qualifies as an originating good" or even "a complete and signed Certificate for the good voluntarily provided to the exporter by the producer"—though thankfully nothing in this statute should be "construed to require a producer to provide a Certificate of Origin to an exporter."

For five years after signing these certificates, the exporter or producer must retain records of the "purchase of, cost of, value of, and payment for" any good exported, and all materials, including "indirect materials," used in the production of the exported good. Whatever nation has a comparative advantage in producing filing cabinets will certainly come out the winner in the NAFTA game.

After thumbing through NAFTA, my advice to all college-bound students is, go for the B.A. degree in trade bureaucracy—there'll be no shortage of jobs after NAFTA passes.

The bulk of NAFTA's sections begin with the announcement of the creation of some new subcommittee or council, consisting of representatives of all three nations, to hash out endless bureaucratic details under this soi-disant free-trade pact. You've got your Land Transportation Standards Subcommittee, your Telecommunications Standards Subcommittee, your Automotive Standards Council—and what free-trade pact would be complete without a Subcommittee on Labelling of Textile and Apparel Goods?

Then try not to let your Inner Bureaucrat drool when it spies Annex 1901.2, which sets forth the standards for the establishment of generic "binational panels" to settle disputes. Seventy-five plumb openings here, and remember, a majority must be lawyers in good standing.

And if the thought of all the unrestricted and wild free trading that NAFTA is sure to trigger (chortle) worries you, well, a quick look at Article 801 should set your mind at ease. This doozy guarantees that (and forgive my quote) "if a good originating in the territory of a Party, as a result of the reduction or elimination of a duty provided for in this Agreement, is being imported into the territory of another Party in such increased quantities, in absolute terms, and under such conditions that the imports of such good from that Party alone constitute a substantial cause of serious injury, or threat thereof, to a domestic industry producing a like or directly competitive good, the Party into whose territory the good is being imported may…suspend the further reduction of any rate of duty" and "increase the rate of duty on such good." This rise is restricted to the most- favored-nation applied rate of duty at the time. Still, in essence this article announces that we'll cut tariffs only until the point where it starts to have useful effects in redistributing resources to their most efficient and valued uses, and then it's back to business as usual.

NAFTA is certainly full of much more of this kind of counterproductive nonsense. I couldn't really tell you. Like everyone else—from congressmen and the president to reporters and pundits—I haven't read the whole thing. I suspect I've probably read more of it than most of the above, however; and I think it likely that there's not a single individual on the planet who has read and understood it in its entirety.

Something has gone dreadfully wrong with representative democracy when it is patently obvious that neither our elected representatives who vote on laws or the elected members of the executive who enforce them have read or understood them. Who does understand them? The unelected bureaucracies who enforce them and the private industries who can benefit or be harmed by them. The "fast-track" negotiating authority Bush got for these trade deals was supposed to prevent Congress from adding tons of special-interest detritus; lawmakers are now permitted only to vote yes or no, not amend.

But from the evidence on the page, NAFTA has all of the special considerations, geegaws, whistles, and bells that the fast track was meant to prevent. But all the special-interest pleading was done directly with an unelected bureaucracy, leaving the people and their elected representatives out of the loop entirely. And we don't even have a public record of how it was done.

Nor, even, do we have a useful public record of how it turned out. The campaign rhetoric and newspaper stories don't get beyond the basic, and misleading, representation of NAFTA as eliminating all trade barriers between the North American nations, plain and simple. Nothing about NAFTA appears simple, and if it really is, you couldn't tell, because it certainly isn't plain.

Despite all this, is NAFTA as it stands better than the status quo? Reluctantly, one has to say yes. While it is obviously not ideal, it will reduce or eliminate certain tariffs. And it may have long-term positive effects on the political psychology of the United States. Freeing up trade with an essentially Third World country such as Mexico might soften the enemies of free trade for the next necessary step: unilateral tariff eliminations by the United States. That's the only way to ensure that future trade liberalization isn't bogged down in the trilateral political maneuverings that contaminated NAFTA.

Brian Doherty is a contributing editor at Liberty magazine.