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Free Minds & Free Markets

Is the USMCA, the Trade Deal that Will Replace NAFTA, a 'Historic Transaction'? No.

Donald Trump is calling it a big win. That's overselling it.

CARLOS BARRIA/REUTERS/NewscomCARLOS BARRIA/REUTERS/NewscomGive President Donald Trump credit. He said he was going to renegotiate the North American Free Trade Agreement (NAFTA), the trade deal among the United States, Canada, and Mexico. And as Reason's Eric Boehm noted here earlier today, he's just done that, concluding a new three-way agreement called the USMCA (for United States–Mexico–Canada Agreement). It's nice to have a president follow through on campaign promises, especially when they don't involve shutting down the country to immigrants and refugees or spending billions of new dollars on the military.

But this new arrangement, like the one it replaces, just isn't as big a game changer as its critics or champions think. There's slightly over $1 trillion in trade among the United States, Mexico, and Canada. (The U.S. economy alone generates about $20 trillion in goods and services.) The best thing about the USMCA is that it ends the drama created by Trump in the first place. The agreement must be approved by each country's legislature, which is expected to happen, and it will go into force in 2020. At year six the signatories will review it, but its terms are expected to last for 16 years.

The agreement opens up part of Canada's dairy market to American milk producers, and it forces Mexico to pay higher wages to people in automobile factories. (It also makes it easier for them to unionize, at least theoretically.) The biggest effects will probably be felt in the auto industry, where the USMCA has a strong potential to, as Boehm writes, "warp automakers' supply chains [and] increase prices." But the deal also gives U.S. drug companies two extra years in Canada before generics can compete against name brands. There are 60-plus pages of new intellectual property rules, including an agreement to extend Canada's copyright terms from 50 years after the death of an author to 70 years, the current length in the United States.

Canada, which resisted coming to the table until the last moment, received some key concessions, especially regarding Chapter 19, a dispute-resolution system. The Washington Post reports:

Chapter 19 allows Canada, Mexico and the United States to challenge one another's anti-dumping and countervailing duties in front of a panel of representatives from each country. This is generally a much easier process than trying to challenge a trade practice in a U.S. court. Over the years, Canada has successfully used Chapter 19 to challenge the United States on its softwood lumber restrictions.

In the final analysis, there aren't that many more gains from trade to be had among the United States, Mexico, and Canada, especially if the movement of labor isn't part of the deal (which it's not). As Mercatus Center economist and Reason columnist Veronique de Rugy wrote earlier this year, trade was already pretty damn free among the three signatories:

The WTO [World Trade Organization] reports that all non-agricultural U.S. exports to Canada also enter that country duty-free. And for all the talk about that pesky 270 percent Canadian tariff on U.S. dairy, 97 percent of U.S. agricultural exports to Canada are duty-free.

Other countries aren't as lucky when exporting to Canada and Mexico. The weighted tariff that non-U.S. foreign exporters face on their agricultural products sold to Canada is 12.4 percent, and on their non-agricultural products it's 2.3 percent. When non-Americans export to Mexico, agricultural tariffs average 20.1 percent, and non-agricultural ones average 3.5 percent. Other countries would love to get some of the NAFTA treatment.

NAFTA had a positive impact on the U.S. economy. Writing about the risk of withdrawing from the 1994 agreement in The Wall Street Journal a few months ago, Matthew Slaughter, dean of the Tuck School of Business at Dartmouth College, wrote, "In a new report canvassing dozens of academic and policy studies, I find that the U.S. gross domestic product is now 0.2 percent to 0.3 percent larger than it would be without Nafta, a yearly boost of about $50 billion."

Trump's understanding of trade is notably screwy, a fact he makes clear every time he insists that trade deficits are a bad thing. As a candidate in 2016, he excoriated NAFTA, which he said "destroyed this country economically." That is simply false on every meaningful level. What NAFTA did was effectively lower the cost of American goods and services being sold in Canada and Mexico. (Tariffs were already on the low side.) In the United States, unemployment fell and factory wages increased after the passage of NAFTA; the country had been shedding manufacturing jobs as a percent of the workforce since 1943 and, contrary to the prophesy of 1992 presidential candidate Ross Perot, NAFTA generated no additional "giant sucking sound" on that score.

NAFTA is best understood as part of a post-war global movement toward freer trade which made everyone involved wealthier. As Reason's Ronald Bailey has noted,

in 1960, just 22 percent of countries representing 21 percent of the global population had open trade policies. This rose to 73 percent of countries representing 46 percent of world population by the year 2000. [A 2008 World Bank] study compared growth rates of countries before and after trade liberalization, finding that "over the 1950–98 period, countries that liberalized their trade regimes experienced average annual growth rates that were about 1.5 percentage points higher than before liberalization" and that "investment rates by rose 1.5–2.0 percentage points."

The USMCA is, in its way, classic Trump. The new deal isn't particularly different than the old one, but it gives the president a chance to talk up his policies:

Late last night, our deadline, we reached a wonderful new Trade Deal with Canada, to be added into the deal already reached with Mexico. The new name will be The United States Mexico Canada Agreement, or USMCA. It is a great deal for all three countries, solves the many...deficiencies and mistakes in NAFTA, greatly opens markets to our Farmers and Manufacturers, reduces Trade Barriers to the U.S. and will bring all three Great Nations together in competition with the rest of the world. The USMCA is a historic transaction!

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  • sarcasmic||

  • Scarecrow Repair & Chippering||

    "It's not good enough," Trump said of the offer from Brussels during an Oval Office interview with Bloomberg News. "Their consumer habits are to buy their cars, not to buy our cars."

    And Americans buy lots of American cars. The guy is a fuckin' genius! Big league fuckin' genius!

  • Juice||

    Holy shit. I guess he really is tired of winning.

  • loveconstitution1789||

    Tariffs do not cover all trade restrictions.

    High EU trade restrictions are unacceptably too high.

    It negotiation, just like Trump pulled off with managed trade with Mexico and Canada.

  • Scarecrow Repair & Chippering||

    Man that Trump is a GREAT negotiator. Just the best. You'll see! MAGA!!!!

  • TuIpa||

    More worried about giving Trump credit, a bank, or members of Nick's cocktail circuit?

  • LynchPin1477||

    I'll give him credit on this point - he guessed correctly that Canada wouldn't really walk away from the negotiations.

    It doesn't sound like this agreement really moves the needle on freer trade.

  • Last of the Shitlords||

    We will see. Hopefully it is a functional improvement.

  • Mike Laursen||

    "A bank"? Typo?

  • Diane Reynolds (Paul.)||

    The USMCA is, in its way, classic Trump. The new deal isn't particularly different than the old one, but it gives the president a chance to talk up his policies:

    It also appears to be classic Trudeau.

  • TuIpa||

    Nepotism and appearances?

  • Dillinger||

    Doonesbury from the 80s

  • Bearded Spock||

    If you're talking about when Doonesbury was on hiatus during the '80s, then I agree.

    Bloom County >>>>>>>> Doonesbury

  • Dillinger||

    of course. I read today's Bloom County still ... but Breathed can never produce "classic Trudeau" no matter how hard he tries.

  • Scarecrow Repair & Chippering||

    Interesting how many Canadians (I assume!) brag about not buying American dairy even if American dairy is cheaper. Free markets FTW!

  • Bearded Spock||

    I think it was George Will who said that Canadians were indistinguishable from Americans, and the quickest way to tell the difference was to tell that to a Canadian.

  • ||

    Don't pay attention to "those" Canadians. Faux-nationalists who probably on their way to Wal-Mart as they typed that on their iPhone or supporting 'Made in Canada' by shopping on Amazon.

    Canadian nationalism is empty.

  • ||

    by shopping on Amazon

    By shopping on Amazon.ca.

  • ||

    The Liberals are the worst.

    'Growing the middle class' my ass.

  • livelikearefugee||

    What it is, is classic Pigeon Chess.

    https://rationalwiki.org/wiki/Pigeon_chess

  • CDRSchafer||

    Interesting how Trudeau has written an unfunny, boring comic with characters you can't possibly care about, for five decades.

  • John||

    http://reason.com/blog/2017/11.....soho-forum

    In November of 2017 you were calling Trump a lunatic and predicting a trade war and gloom and doom. Now it is "well never mind". But somehow it is Trump who is wrong about everything.

  • Scarecrow Repair & Chippering||

    And you protectionists were all claiming the miracle of the 21st century. What did you get? High auto prices. Fewer American jobs.

    MAGA!

  • TuIpa||

    "As wrong as Tumpaloes" is no way to go through life...

  • Headache||

    Are you saying auto prices haven't more than doubled since 1994?

  • Last of the Shitlords||

    More like a 60% increase.

  • Headache||

    Or do you believe Mexicans deserve to live in poverty so you can save a few bucks on a new car"

  • Fred G. Sanford||

    That sounds like something a Democrat would say. Regardless, the Mexican auto workers whose wages are required to rise to $16 an hour were making about $8 to $9 an hour, which given the much lower cost of living in Mexico is a pretty good wage. Trump essentially set a minimum wage for Mexican auto workers, which makes about as much sense as a minimum wage in the U.S.

  • vek||

    Obviously the whole point was to DISCOURAGE hiring Mexicans. Which I'm pretty sure this will do exactly that. Sooo there will likely end up being more jobs in the auto industry in Canada and the USA. The flip side will be each car will go up in cost some nominal amount.

    We traded some jobs, for some cost increases. Pretty typical of what one expects from fiddling with the economy.

  • Bearded Spock||

    Reason 2017: "Trump is renegotiating NAFTA!!? Human sacrifice, dogs and cats living together, MASS HYSTERIA!!!"

    Reason 2018: "Trump renegotiated NAFTA? Meh, no big deal."

  • Last of the Shitlords||

    It's not about what Trump does. It's about being against Trump.

  • Old Mexican - Mostly Harmless||

    Re: John,

    In November of 2017 you were calling Trump a lunatic and predicting a trade war and gloom and doom.


    But he IS a lunatic, and there IS a trade war going on right now, plus gloom and doom!

    Was the sole purpose of disrupting trade along the Northern Americas to make it easier for dairy farmers to sell milk in Canada and artificially increase wages for Mexican auto workers? Who the FUCK asked DJT for that????

    You... You... Trumpista.

  • Last of the Shitlords||

    You need to go away. Your idiotic bullshit is beyond tiresome.

  • Sarah Palin's Buttplug||

    Shut the fuck up, you stupid redneck.

  • sarcasmic||

    What is tiresome is you attacking people instead of refuting their arguments.

  • gphx||

    Thanks for defining NeverTrumper ad homo for us.

  • ||

    Good point.

    I never thought him a 'lunatic' and find it obtuse a magazine called 'Reason' did.

  • gphx||

    It's interesting when you take people at their word and see what happens.

    When they say Trump is an idiot they're saying they got outsmarted by an idiot. So what does that make them?

    Taking Dr. Ford at her word someone touched the outside of her clothes.

  • Echospinner||

    Trump has been taking mediocre products and sticking a new label on them for years. If we are basically back to the status quo with a new name I could live with that.

  • Headache||

    Trump has been taking mediocre products and sticking a new label on them for years

    For instance?

  • Echospinner||

    Trump wine, steaks, vodka, cologne, ties, his airline, casinos, his USFL team, Trump U...

  • ShotgunJimbo||

    You can't even name one...oh shit that's a lot of crappy products.

    What do they all have in common? Trump got the product, re-branded it, claimed it to be a huge success and the best available.

    What did people think of his product? The product was overpriced, had a tacky gold-plated label, and was worse than the average competing product. Then he lost money on all those ventures. The only people fooled into thinking he made anything classy or of value were low IQ rappers and rednecks.

    Perfect examples to give the rubes when they cry "BUT HE KNOWS BUSINESS!! THE ART OF THE DEAL! HE'S RICH!"

  • Last of the Shitlords||

    In many of those cases, a third party approached Trump's people about a deal to license their product under the Trump name. So Trump has little to do with the product.

    Or think of it this way. After Star Wars came out, there were toys, including action figures. George Lucas did not make any of that stuff. He licensed it out to Kenner, who then manufactured and distributed the end product.

    This sort of arrangement is not uncommon.

  • Juice||

    Damn, should have refreshed. Last of the Shitlords beat me to it.

  • Echospinner||

    No they are not uncommon.

    Michael Jordan has a line of shoes. They are Nike and excellent quality. All of them are original designs which he participated in. Shoes as much as the ball are equipment which he knows about. They sell for about the same price as other Nike products.

    Oprah Winfrey invested in Weight Watchers (now WW) she has been a WW for many years. She is involved in the company and it has been successful for decades. No fad diet, not a diet at all.

    The Star Wars franchise invented stories and characters. It is all fiction. They did sell rights for toys and other things. There are no complaints because they watched over the brand.

    All of those brand things are something ordinary people can use and afford. They are part of our lives. Not so for Trump.

    Donald Trump just took short term profits. He took advantage of the dumb and bought America for nothing. Deal of the century.

  • Juice||

    Then he lost money on all those ventures.

    Nope. He made money licensing his name to whoever was dumb enough to actually invest in those ventures.

  • Echospinner||

    Accumulating money and power at expense of the dumb is Donald Trump's genius.

  • MikeP2||

    No. Trump's genius is making 'the other side' lose their minds to such a degree that they have continually void all rational thoughts out of every orifice before they start the day.

    He side job is accumulating money and power and the expense of the dumb. And he does it brilliantly well. There is almost no one else in the goddamn world who was more recognizable BEFORE he managed to get himself elected. He single handedly turned his name into a globally recognized brand and has been referenced in more movies and songs that you have IQ points.
    The Clintons are pikers relative to his abilities to con and schmooze his way to success.

    It is perfectly rational to dislike him and his policies and still marvel at his unfathomable success.

  • vek||

    Honestly, I never really got Trump, or liked him. I don't like flashy sorts most of the time. I'm self employed, so have read my share of business/sales books. I read Art Of The Deal a long time ago. There were some good points in there, mostly just about hustlin', selling the sizzle, and a few odds and ends.

    But he's never been my cup of tea... Until he turned his skillz towards trolling shit libs. Now I kind of love him. LOL He's still not my cup of tea, but so help me god he's a lot more entertaining than President Cruz would have been, and I don't think any other R would have been as good on policy either. They would have had most of his bad tendencies, and probably fewer of his good ones.

  • loveconstitution1789||

    Even funnier is that Lefties keep making the same mistakes over and over.

  • Headache||

    Yes Nick I agree, More is Less, What fucking asshole!

  • ||

    I'm gonna reserve judgment and read this more in detail.

  • Last of the Shitlords||

    Exactly. But for Nick this is important so he can go on Bill Maher, and MSNBC, and well, those cocktail party invites on the beltway don't send themselves.

  • CDRSchafer||

    Yes you don't get to go on those shows if you don't poo poo everything Trump does while hobbing the knob of Obama.

  • Headache||

    What NAFTA did was effectively lower the cost of American goods and services being sold in Canada and Mexico.

    I guess that may have put downward pressure on domestic wages.

  • sarcasmic||

    Good point! Would be better if American goods cost a lot more to foreigners! That way they would buy less, and that would make us rich!

  • Dan S.||

    At least there is truth in naming this deal. There is no longer any pretense that it is a "free trade" agreement; it is simply a trade agreement. Maybe call it NATA?

  • sarcasmic||

    I think NAFTA is still a good name.

    Not A Free Trade Agreement.

  • Headache||

    Matthew Slaughter, dean of the Tuck School of Business at Dartmouth College, wrote,
    "In a new report canvassing dozens of academic and policy studies

    Brookings Papers on Economic Activity · February 1994

    Other economists, such as Edward Leamer and Adrian Wood, have
    recently reached the conclusion that increased internationalization is
    having a substantial effect on U.S. labor market^.^ As these authors
    stress, both the Heckscher-Ohlin-Samuelson (HOS) model and standard
    models of international capital mobility predict that internationalization
    will narrow the gap between U.S. and rest-of-the-world wages
    and widen the gap between wages of skilled and unskilled workers
    within the United States. Moreover, these standard theories predict that
    U.S. manufacturing sectors that are intensive in low-skilled workers
    will shrink in the face of increased integration with developing countries
    abundant in low-skilled workers. Earlier studies by labor economists
    have also reached the conclusion that changing trade patterns have been
    contributing to shifts in the labor market-in particular, to the loss of
    low-skill employment in manufacturing

    Who was closer Slaughter or Leamer?

  • vek||

    This is such a painfully obvious outcome, anybody who isn't a mental midget should have seen it coming... And most people with common sense did. The white collar class knew this would be the outcome, and loved it. Lower cost of goods for them, higher return on investments, and they lost nothing. Working class folks get lower cost goods too, but also lower wages/no jobs at all.

    Everything is a trade off. The one thing about NAFTA vs saaay China, is at least we've had a fair fight with Mexico because of NAFTA. They kicked our ass because they have way lower wages, but they didn't have barriers on us. But even with no barriers lowering wages/lost jobs here are an obvious outcome. Whether cheaper goods and lower wages is a pro or a con largely depends on the person, there have been winners and losers. I don't get why some libertarians are so loathe to accept this obvious fact.

  • Ken Shultz||

    "But this new arrangement, like the one it replaces, just isn't as big a game changer as its critics or champions think."

    I'm not sure the comparison should to the NAFTA deal it replaces. The alternative may not have been going back to NAFTA at all. The alternative may have been the deal with Mexico and excluding Canada altogether.

    My main complaints about Trump are centered around free trade and immigration. I'm not as concerned about free trade as I was before Sunday--but I'd love to see some progress on China. Unfortunately, I suspect heaping tariffs on Chinese imports isn't a means to an end with Trump. I suspect his ultimate goal is just to heap tariffs on China.

  • sarcasmic||

    I suspect his ultimate goal is just to heap tariffs on China Americans who buy stuff from China.

    ftfy

  • Last of the Shitlords||

    *Yawn*

    No, you really didn't.

  • sarcasmic||

    It is really telling that you find the truth to be tiresome. If believing that the Chinese pay that taxes on imports from China makes you feel better, go ahead. I can't stop you from living a life of delusion.

  • MikeP2||

    It's not delusion. Tariffs are first paid by the Chinese importer. Whether or not they can pass that cost onto the US consumer is entirely dependent on the pricing flexibility of the market. In some cases they can, in some they can't.
    The premise of economists favoring increased tariffs from Chinese goods is that it will increase market accessibility for domestic production, putting a downward pressure on pricing and inhibit the importers from recouping the tariff cost. This is essentially the counter effect to Chinese monetary policy that favors exports over domestic consumption, which is a tax on Chinese consumers in support of the state efforts to increase domestic capital investment.
    Economics is complex in a fiat-currency world....not the oversimplified shite that your peddling.

  • Baron Von Weinermobile||

    You have no idea what the fuck are you talking about. Do you think all people who import are foreigners? I have suffered personally from this bullshit "help" the president is giving me. But I guess you've gotta break a few eggs to make an omelette, huh? Ends justify the means? Sacrificing individual rights for the utilitarian "common good"? Sounds pretty fucking un-libertarian to me.
    What gave that fuckstick in the white house the right to manage my fucking trade? Did I ever ask him to help me? And you fucking commies who support him have no right to say it is my interest. You get no say what is in my interest. Fuck government and fuck you.

  • vek||

    The fact that he got elected to do what he's trying to do?

    It may not be libertarian, but most people aren't libertarian.

    But I do agree with the idea that you have to break a few eggs to make an omelette. I don't know what industry you're in, but IF he gets China to crack, which we could if we really wanted to push it, you will guaranteedly benefit as a direct result too. As will every American. If we had open access to their market, we will end up exporting a lot more shit. Maybe hundreds of billions a year. This means more money in Americans pockets, to buy shit, to invest, etc. That will benefit you and everybody else.

    Sometimes short term pain for long term gain is worth it. If you think that the already NON free market status quo should continue exactly as it was 2 years ago just because YOU happened to benefit from the way the market was manipulated then... Well, nobody cares. That status quo was fucking other people. Why are your benefits any more worthwhile than somebody elses?

    If it ain't real bilateral free trade, then it's all a matter of picking winners and losers. If he wins with China though, it will be all winners on the US side, so keep your fingers crossed.

  • MikeP2||

    wow, lighten-up Francis.

    I do know exactly what I am talking about and you can't be bothered to refute one thing.

    But what I most certainly did not do was argue the virtues of tariffs or the current changes. I simply pointed out the oversimplification of sarcasmic's claims.

    And what part of managed trade is new to you? It was here before Trump and it will be here long after Trump. So frankly, your rage is kinda pathetic and misguided. All Trump did was change the deal, and there are plenty of valid arguments for and against. of which you make neither.
    so you suffered personally? yeh, well I have a friend who is benefitting personally. That's life. I suffered personally from a number of Obama implemented policies. So eff you right back.

  • gphx||

    Prior to the institution of the illegal income tax tariffs were the primary source of government income.
    Trump lowered income taxes and instituted new tariffs fairly simultaneously.
    It's great fun watching supposed libertarians support the theft that is income tax in their NeverTrump zeal.

  • Baron Von Weinermobile||

    How about being intellectually honest and admitting that they are both sides are scumbag pieces of shit? How are one form of taxes better than another? How can you honestly defend a fucking leader who is trying to steal money from productive, private citizens at the point of a gun? Even if it is fun to watch him drive the other side crazy? Just once, I want to hear a Trump supporter admit that the guy is a worthless piece of shit, without adding the pointless caveat that "well, he is better than......" Why the fuck should our bar be so low?

  • vek||

    Well, as far as things go, taxes suck. They should be lower overall. But, I don't have a problem trading income taxes for tariffs dollar for dollar. I'd want them to be broad based so as to not pick winners and losers though, in a perfect world that is.

    Taxes suck... But shifting the type of taxes isn't the end of the world. Also different taxes have different effects. If we lowered income taxes by saaay 200 billion, and raised tariffs by that, it would actually stimulate the US economy to produce more goods here, which would create more jobs, a broader tax base, and lower the trade deficit. Pros and cons of course, but wouldn't be such a bad deal IMO.

  • XM||

    I don't like the idea of a president pressuring another a nation to pay a certain amount to its workers. That's like Trudeau telling us to pay 20 bucks an hour to baristas.

    We defend people getting paid like 5 dollars an hour abroad, because in their society that might be decent pay. Will Mexican workers lose jobs when American automakers realize the competitive advantage of outsourcing work there has been reduced? Mexico might have to use more American parts, which will be more expensive. I guess their cheap real estate is still a plus.

  • MikeP2||

    What's the best way to reduce migration from Mexico to the US?
    A) build a wall
    B) arrest them all
    C) increase Mexico's domestic economy to reduce the economic pressure to migrate.

    It's a problem when 20% of Mexico's workforce is in the US, and a comparable amount of their GDP stems from those workers sending cash back to family.

  • Baron Von Weinermobile||

    why is it a problem? i like cheap labor and prefer to hire illegals over citizens. Citizens are lazy and pampered as fuck.

  • vek||

    Oh, you're such a piece of shit.

    I'm an evil, greedy, business owning, capitalist pig... And that just burns my ass.

    It's not like the number of illegals has REALLY obliterated the country or anything... But you sound like the kind of fuck wad who would be perfectly happy if we had shanty towns in every US city because we imported 100 million illiterates from the 3rd world just to suppress wages. Honestly, you may want to live in a 3rd world country... But I don't. I'd rather pay a couple bucks more to have my lawn cut, versus have to live in a toilet of a country. Most other Americans agree. The lowest wages possible, at a certain point, become not worth the trade offs in having a nice society to live in.

    If you want to live in a 3rd world shithole, why don't you just moved to the other 90% of the world that is already like that?

  • AustinRoth||

    Let me summarize Reason's opposition to the new trade deal: TRUMP! HATE TRUMP! TRUMP BAD, BAD!!

  • Mike Laursen||

    Where in the above blog post did The Jacket oppose the new trade deal? He just called it "meh" and hinted at the (valid) question of why Trump disrupted NAFTA in the first place if all that was going to come of it was a new agreement not much different from NAFTA.

  • Last of the Shitlords||

    Essentially, Trump got enough of a win that Nick can't get away screaming 'Bad Trump'. So the alternative is to dismiss it like he didn't really get anything useful done.

  • Mike Laursen||

    But he didn't.

  • James Pollock||

    What on Earth led you to refute a Trump fan's argument with facts?

    That's like countering an atheist with Scripture. They're just not interested.

  • CDRSchafer||

    Yes those "facts" were awful facty. They won.

  • Old Mexican - Mostly Harmless||

    Late last night, our deadline, we reached a wonderful new Trade Deal with Canada, to be added into the deal already reached with Mexico.


    It's wonderful in the sense that it fills my mind with wonder how is it any different than the deal that existed before, except much worse?

  • Last of the Shitlords||

    "It's wonderful in the sense that it fills my mind with wonder "

    Filling your mind.........

    That's setting the bar pretty low.

  • buybuydandavis||

    "Trump's understanding of trade is notably screwy, a fact he makes clear every time he insists that trade deficits are a bad thing."

    I want to sell the country to Emperor Xi too!

  • DRM||

    What parts of the country, exactly, are you claiming we're selling to the Chinese?

    Last time I checked, the Chinese sent us literal parts of their country dug out of the ground and manufactured into high-value forms as tribute, and in exchange we sent them receipts, as in printed paper the US government can make at extremely low effort.

    If they were then trading those receipts for our stuff, well, there wouldn't be a "trade deficit". But instead, they tend to trade those receipts for mere promises to give them more receipts later.

  • Baron Von Weinermobile||

    This. A million times.

  • vek||

    Other than those trillions of dollars of ACTUAL assets they have purchased... Like real estate, stocks, bonds, entire companies, etc.

    Of course all the income from those assets now go straight to foreign owners. Oh sure, it's denominated in US dollars, but ownership is ownership. Without making it overly complex: Who owns assets IS IMPORTANT. Being an owner, versus a renter matters.

    If we inflate our way out of this mess because we have a fiat currency, fine I guess... We're scamming our trading partners, which is unscrupulous, but okay. However if we don't, then it's going to hurt even worse for us long term. The whole "it doesn't matter who owns stuff!" argument is so retarded it's beyond belief. It matters.

  • chemjeff radical individualist||

    So let's see what Trump considers "free trade", shall we?

    The agreement opens up part of Canada's dairy market to American milk producers

    Okay, not bad. At least the dairy trade got a little freer, even if this particular segment was a bit one-sided. Was there any sort of reciprocal freeing of the American market to Canada? No? Oh, hmm.

    it forces Mexico to pay higher wages to people in automobile factories.

    Wait, a "free trade" deal that mandates higher wages in a foreign country's labor market? That doesn't sound very free to me.

    the deal also gives U.S. drug companies two extra years in Canada before generics can compete against name brands

    More protectionism for Big Pharma? That really doesn't sound very free. But what about intellectual property?

    There are 60-plus pages of new intellectual property rules...

    Huh, that doesn't sound very free either.

    Gee, it really sounds like Trump's idea of "free trade" is "tilt the playing field in America's favor". Which is just a modern day version of mercantilism.

  • Sarah Palin's Buttplug||

    There is almost nothing "libertarian" about this new trade deal.

    But the Trumptards will swarm in to tell us how great it is.

  • sarcasmic||

    Gee, it really sounds like Trump's idea of "free trade" is "tilt the playing field in America's favor". Which is just a modern day version of mercantilism.

    Occasionally Trump supporters have brief moments of honesty in which they admit they want "fair" trade, not "free" trade.

  • DRM||

    By the standards of Canadian "supply management", the US market is already anarchically wide open to Canadian dairy.

    Interestingly, the IP stuff is all stuff we'd have gotten from Canada as part of the Trans-Pacific Partnership, and was the nominal excuse for many Canadian objections to the TPP. Trump accordingly probably made it easier for one of his successors to revive the TPP, even if Canadian dairy farmers are going to remain opposed to the further weakening of "supply management" that the TPP would entail.

  • Echospinner||

    Canadian cheese is not at all an issue for me.

    There is so much cheese and milk we cannot eat it all. Even in Wisconsin where cheese is on everything. Canada has more than they need.

    We give it away. We heavily subsidize the dairy industry. Why? I do not know. We do not seem to be running out of cows.

    If this is a victory then it is a perfect one for trumpists to hang on to.

  • gphx||

    Questioning dairy subsidies. Relevance at last. Thank you.

  • vek||

    AFAIK the pharma and IP stuff doesn't sound bad... IIRC Canada had one of the shortest terms for drug patents in the world... So bringing them closer to the norm isn't a horrible thing. IP is important, and they were basically free riding. The extension of copyright likewise. Not sure what else they tweaked, but neither of those are anti freedom... They're more just in line with increased international respect for IP that has come about in recent decades.

  • gphx||

    Reason is becoming like a Penthouse letters forum where every submission consists of:

    'Teh Drumpf Teched Meh!'.

    Maybe they're hoping if they rub a stick long enough they'll get a fire.

  • CDRSchafer||

    "I used to think all those comments to Reason were fake until 37 or 35 or XXIX years./months/days ago I was dry humped by a prospective Supreme Court Justice".

  • M.L.||

    Remember when Trump was a lunatic that was going to wreck everything with his loony trade agenda?

    Oh, he just renegotiated NAFTA and got a freer trade deal. Oops. Who's the lunatic now?

    "Trump's understanding of trade is notably screwy, a fact he makes clear every time he insists that trade deficits are a bad thing."

    Almost as screwy as the sophists who insist that trade deficits are a good thing, or that trade deficits can't possibly ever mean anything at all. These are the same sophists such as Gillespie who offer profoundly deranged support of open borders policies, touting theoretical increases in GDP as a reason for mass immigration of millions of unskilled workers to drive down wages . . . while ignoring GDP per capita and all distributional effects of such policies.

  • Baron Von Weinermobile||

    Yeah, sophists such as pretty much every economist on earth. Much better to follow the well-known wisdom and knowledge of politicians, culture warriors, and celebrity TV show hosts. Fuck off statist cunt.

  • M.L.||

    See below post which should have been a reply to yours.

  • vek||

    If you want to import as many unskilled workers to push down the standard of living, have the balls to make that argument dude! Supply and demand doesn't stop working when the market is in labor!

    Likewise, who owns assets doesn't magically stop mattering when it's foreigners selling us stuff. If who owns assets doesn't matter, then why don't we just start handing out printed money to poor people? Or redistributing it from the rich to the poor, or the poor to the rich? It doesn't matter, so fuck it! Right???

    STFU, and GTFO. You can make principled arguments about shit, but that doesn't mean you can ignore the real world repercussions of the policies you advocate. If you want 100 million illiterate workers to push down American wages, convince Americans why they should reduce their standard of living to increase overall GDP while lowering GDP per capita.

  • M.L.||

    GDP Growth Per Capita has been destroyed since the 1965 Immigration and Nationality Act of 1965.

    "Although Gross Domestic Product, or GDP growth has been slowing since the 1970s, it doesn't look that bad—until you factor in population changes.

    America's population is growing fast (because of immigration, not natural births), and this dilutes our GDP growth per capita...

    GDP growth per person has been 0.147% since 2012—it was 0.34% during the Great Depression. That's twice as bad."

    Link

  • vek||

    Oh yeah, I already know all of this stuff. As with a few other purist libertarian positions, I give NO FUCKS about open borders. It's a HORRIBLE idea in the real world. The only possible outcome is balancing out all countries on the earth to being equally poor. Every incremental step you take in importing uneducated foreigners is an incremental step closer towards that.

    If we had not taken in 10s of millions of low skill people in the USA, I can only imagine what an awesome country it would be today compared to what it is. Poverty would be dramatically lower, we probably wouldn't have nearly the deficit, or the push for socialism we have now, lower crime... One could go on for days about the ripple effects from allowing in so many unskilled people.

    Alternatively, if we had allowed in just as many people, but ONLY highly skilled people, that would have juiced things to probably be EVEN BETTER than having little/no immigration. How this stuff eludes people is beyond imagination. It may not be libertarian, and it is a bit social engineering-ey, but so effing what. Who doesn't want a richer, lower crime, more prosperous country to live in??? Libertarian purist morons I guess...

  • M.L.||

    I don't follow either, actually. Are you able to form a coherent, substantive comment of your own? What is your contention, precisely?

  • Robert||

    Chronic large overall trade deficits by a country are a bad thing. They are not the cause of a problem, but a symptom of one. & it's a problem for the whole world when that country's a big one, i.e. USA.

  • M.L.||

    "Whatever may be the abstract doctrine in favor of unrestricted commerce, [the necessary conditions, reciprocity and international peace ] have never occurred and can not be expected… [reality] imposes on us the obligation to cherish and sustain our manufactures [through tariff protection]."

    James Monroe

  • vek||

    Haha you losers! Apparently Donald J. Trump just increased the value of assets I own, because I own IP that will now have its copyright length extended in Canada!

    SUCK IT BITCHES!

    LOL

    But seriously, winners and losers people. This is what managed trade does. I just won by no action of my own, and some other schlepps will lose. *shrug*

  • M.L.||

    "The country has acquiesced in the wisdom of the protective-tariff principle. It is exceedingly undesirable that this system should be destroyed or that there should be violent and radical changes therein. Our past experience shows that great prosperity in this country has always come under a protective tariff."

    Theodore Roosevelt

    "For centuries England has relied on protection, has carried it to extremes and has obtained satisfactory results from it. There is no doubt that it is to this system that it owes its present strength."

    Ulysses Grant

    "The free trade system is destructive. It breaks up old nationalities and pushes the antagonism of the proletariat and the bourgeoisie to the extreme point. In a word, the free trade system hastens the social revolution. It is in this revolutionary sense alone, gentlemen that I vote in favor of free trade."

    Karl Marx

  • M.L.||

    "[O]ur trade deficit has greatly worsened, to the point that our country's "net worth," so to speak, is now being transferred abroad at an alarming rate. A perpetuation of this transfer will lead to major trouble."

    Warren Buffet

  • Window Cleaning WA||

    Sure, I'd rather pay a couple bucks more to have my lawn cut, versus have to live in a toilet of a country. Most other Americans agree.

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