A couple of weeks after Donald Trump took office, Todd J. Gillman penned an article for the Dallas News—“Trump Wants an Extra `F’ in NAFTA, and Texans Fear That Could Be Foul For the State”—and it attempted to address some of his concerns of what a NAFTA-less Texas would look like. Twenty plus years after the creation of NAFTA, it still is a topic of some controversy, with both passionate supporters and opponents, all who have their own cost-benefit analysis of the trilateral treaty. Now that the U.S. has a President that is anti-NAFTA, the agreement is once again thrust into the public spotlight. Should Texas support or oppose renegotiating the North American Free Trade Agreement? Would a renegotiated trade agreement harm or benefit Texas?
The extra “F” that Gillman refers to represents “fair”—as in the “North American Free and Fair Trade Agreement”—because Trump wants a “fair” trade agreement. According to Gillman, “More than a million jobs in Texas rely on exports, and Mexico accounts for roughly 37 percent of all Texas exports …” Because NAFTA reduced or eliminated many import and exports tariffs with Mexico, Texas businesses saw their opportunities to the south expand. At the same time, Mexican businesses also benefited from the reduced barriers to trade, as U.S. manufacturing moved across the border to maquiladoras. It is not clear to me, reading Gillman’s article and his references, whether Texas would benefit or not. However, let’s be clear: the existing “F” in “NAFTA” is a bit of Orwellian new-speak for “managed,” as in “managed trade.” While laws often employ euphemisms in their titles (i.e. a bill designed to take kids away from their parents might be called the Making Happy Families Act), let’s not mistake the freedom in this agreement to mean that individuals are free to make their own business deals, unencumbered from the many requirements of Washington or the international community.
Free Trade Versus Managed Trade
A true free trade agreement would unilaterally remove all trade restrictions between the people and businesses of their respective nations. Billy Bob would be able to buy from (and sell to) José Cleto or Jean François, whenever and in any quantity of his choosing. However NAFTA, like the other trade agreements based upon the World Trade Organization framework, is a managed trade agreement that places restrictions on Billy and José and Jean, stacking the deck in favor of one or the other. It is that deck stacking that Trump opposes because he sees Mexico as the prime beneficiary of the existing agreement.
Should Trump be buying U.S. jobs with your retail and grocery dollars? No. But this would be the net effect if he succeeds in raising import tariffs on Mexican manufactured goods and agricultural products. Trump was elected, in part, on the promise of bringing manufacturing jobs back to the U.S. If accomplished through de-regulation and corporate income tax reduction, great! If done at the expense of middle class shoppers Mr. and Mrs. Smith, not so fast!
Despite its flaws, a benefit of NAFTA has been the reduction or elimination of many import and export tariffs. This has expanded the Mexican market for Texas businesses. A renegotiated NAFTA that protects U.S. jobs at the expense of Texas exports would be a bad deal for Texas. The trick about these negotiations is protecting and/or improving on what was previously there, yet if President Trump renegotiates a deal that benefits the east coast over Texas, creating jobs in the U.S., but losing them in the Lone Star state, how does that help us?
In the final analysis, this is not about Trump’s negotiating skills or keeping NAFTA because we’ve become accustomed to it. What we need to be concerned with is what’s best for Texas, her workers, and her businesses. Texas should not have to suffer so that Pennsylvania can prosper. Picking winners and losers, even between states, wasn’t fair under Obama and it won’t be under Trump. When Texas is once again a sovereign nation, she will negotiate her own trade agreement with Mexico, and the United States. When that happens, hopefully Texas will have her priorities straight, championing Liberty and sovereignty, balancing it with the concerns of our would-be trading partners, be they Mexico, Canada, the United States, or any other country.