Wednesday, February 27, 2008

Obama and Clinton May Want to Hold Their Abrogatin' Horses

Renogotiating NAFTA may be a good idea, but it may not be what Americans really want

In a presidential campaign in which -- depending upon whom you ask -- the Democrats appear poised to seize the presidency (that is, if they can maintain their momentum of the past four years), it was only a matter of time before the North American Free Trade Agreement came up.

And now it has.

During last night's Democratic debate both Hillary Clinton and Barack Obama declared their intention to abrogate NAFTA unless it's renegotiated.

"I have put forth a very specific plan about what I would do. And it does include telling Canada and Mexico that we will opt out unless we renegotiate the core labour and environmental standards," Clinton announced.

"I think actually Senator Clinton's answer on this one is right," Obama agreed. "I think we should use the hammer of a potential opt-out as leverage to ensure that we actually get labour and environmental standards that are enforced."

As noted previously, Obama and Clinton actually have a pretty good point there. NAFTA is in definite need of labour and environmental standards. To this end, it isn't alone: most free trade agreements do.

Solid environmental standards implimented via, and enforced by, NAFTA, could be infinitely more effective in curbing such issues as climate change than dead-end treaties like Kyoto could ever dream of.

And any changes to NAFTA that would make it more difficult for short term profit-seeking corporations from shipping manufacturing jobs abroad into the world's cheapest labour markets would be a boon not only to the American and Canadian middle class, but ironically to those companies themselves (although shortsighted profit-seeking motives blind them to it).

There is, of course, one other excellent reason to renegotiate NAFTA -- one that no American president should be altogether comfortable with. That reason is that the Americans themselves have rarely fully abided by it.

American economic protectionism -- particularly under Democrats -- has long been established. And while such protectionism generally springs from mercantilist modes of economic thought that are actually incompatible with the concept of free trade, that hasn't stopped the allegedly pro-free trade Americans from refusing to abide by their own agreements.

The softwood lumber dispute is the greatest case in point. While the American government accused Canada of maintaining an importing advantage by allegedly indirectly subsidizing Canadian lumber by keeping stumpage fees low.

Various trade commissions ruled in favour of Canada, all while the United States continued to defy virtually every ruling, ocassionally deferring back to their own trade commissions for rulings that -- quelle suprise! -- tended to be in their favour.

Thus, the position that the Americans would find themselves in under the conditions of a renegotiating of NAFTA: their economy desperately needing imports of Canadian resources (lumber, steel, oil and water, amongst a myriad of other items) and simply having not engendered the good will with their trading partners to wrestle any disproportionately favourable conditions out of them.

Of course to pretend that Canada or Mexico should be eager to put a squeeze on the Americans in a NAFTA renegotiation overlooks the undeniable interdependence of our three economies. After all, having resources is one thing -- you have to be able to trade them, and it's a looooooooong (and expensive) boat ride to China.

Which is precisely why we as Canadians -- as well as Barack Obama and Hillary Clinton -- should accept Finance Minister Jim Flaherty's words of caution.

"[They] should recognize that NAFTA benefits the U.S. tremendously," Flaherty warned. "Those who speak of it as helpful to [just the] Canadian or Mexican economies are missing the point."

As are we if we view NAFTA as only benefiting the American economy (and it certainly has).

The idea of renegotiating NAFTA need not necessarily be a non-starter. But both Obama and Clinton need to keep in mind what they need to bring to the table -- greater compliance, not economic protectionism -- in order to get what they want (which just so happens to be what we should want).

If they don't they may find themselves in a very uncomfortable position, even if that discomfort won't be theirs alone.

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