James Root: ‘Major reality check’ in order with trade agreements

With all the pressing issues in the news since the 2016 national election, it has been easy to overlook the relatively dry but critical trade treaty issue. This is ironic since the hollowing out of our economy — through the outsourcing of core manufacturing jobs — by the North American Free Trade Agreement(NAFTA) and similar “bad globalizing” agreements determined, in large part, the results of the presidential race in said election.

It is also ironic in that these so-called trade agreements are the shadowy subtexts for so many fiercely partisan economic issues.

After taking office, President Trump followed up on bipartisan activist pressure (and his campaign promise) and withdrew the U.S. from the Trans-Pacific Partnership — which is, in effect, an even larger NAFTA “on steroids.” (Other countries went ahead with this agreement). Although Trump has shown signs of backtracking on his TPP withdrawal, he has continued to push for a renegotiation of NAFTA with a stated aim to ameliorate its well established erosive and corrosive effects on US economy.

Thus far, the U.S. and its trade representative, Robert Lighthizer, have been on the right side of the central NAFTA facet of “Investor State Dispute Settlement” (ISDS). This is the bureaucratic gimmick, pioneered in NAFTA, that allowed multinationals to gut national economies by intimidating national, sovereign governments with costly litigation, through an international tribunal of corporate lawyers, if their profits (current and/or future) were adversely affected by any new national legislation and attempts by governments to re-circulate their own tax dollars in their own countries by awarding contracts to their own companies (i.e. no Buy American policies by D.C.).

Canada and Mexico have resisted this change to ISDS, probably viewing it as an equalizer with the big, bad U.S., while pushing us for more concrete protections for labor and the environment — on which Lighthizer is less enthusiastic.

One could argue we might be better off without any NAFTA as there is still a residual trade regimen for North America under the World Trade Organization. To reiterate, NAFTA is hardly a trade agreement per se, but a multinational money sucker punch of the good aspects of national government.

But, even conceding its status as some sort of “trade” treaty, NAFTA, TPP and others might be evaluated in the light of under-appreciated 19th century economist Simon Patten’s sentiment on the trade issue: “Protectionists do not desire to destroy foreign trade [the problem is that free traders put the horse before the cart]. Foreign trade is the effect, not the cause, of national prosperity, and protection increases foreign trade by increasing national prosperity.”

Granted, we live in a much more interconnected world, and real trade treaties reduce the chance of large scale war, but obviously, in light of the NAFTA result (certified 34,000 manufacturing jobs lost in Connecticut alone) a major reality check is in order. That reality manifested, in Western Connecticut, with many companies leaving or cutting employees directly as a result of NAFTA. A few who received certified Trade Adjustment Assistance (i.e. grudging concession of NAFTA damage by feds) were Crown Risdon, Dupont Photomasks, and Watson Laboratories. This means they had to let employees go directly as a result of NAFTA. We, the taxpayer, pay the cascade of social costs that can begin with unemployment. (It was also no picnic for those terminated.)

The Trump administration is entering a time crunch in bringing a NAFTA re-negotiation before Congress for an up or down vote — before the policy paralyzing midterms in November. We must take this opportunity of the renegotiation and the time window to press our federal representatives, here in Connecticut and over the New York border, to push the administration to stick to its guns on ISDS and hear out Canada and Mexico on their labor and environmental concerns — which benefit all in the long run.

We in Connecticut could also take advantage of the state election year and press all the state parties to adopt fair trade language in their platforms. This has been done already by the national Democratic party. For more information, check online for Public Citizens Global Trade Watch and the Connecticut Fair Trade Coalition.