Managing Trade

In his Wall Street Journal column Walter Russell Mead remarks on the incipient revisions to the North American Free Trade Agreement:

In addition to showing that Mr. Trump’s wild tactics can sometimes produce real results, the USMCA should defuse some fears about the supposed radicalism of his agenda. The new trade regime with Canada and Mexico is, like the old one, imperfect, but it is hardly a lurch toward autarky. Trade in North America will remain considerably more open than it was before Nafta went into force. In some ways, such as protection of intellectual property and the inclusion of digital commerce, the USMCA modernizes and extends Nafta rather than dismantling it. Canada managed to preserve Nafta’s Chapter 19 dispute-resolution panels that the Trump administration at first said infringed on U.S. sovereignty.

If the USMCA is a reasonable model of the kinds of changes Mr. Trump wants to make in the world trading system, his goals at the World Trade Organization and elsewhere could be less disruptive—and more achievable—than many fear. He has reset the terms of political debate while leaving the North American trade relationship largely intact. Free-trade proponents should think long and hard about the implications. Future presidents in both parties will likewise need to understand populist perceptions and craft trade agreements that address them.

It’s far too early to tell what impact the new agreement will have. Like the original NAFTA it is not free trade but an agreement for managing trade and not only do I not believe that we have the tools to determine its impact I don’t think we can even determine the directionality of its impact. There are just too many moving parts.

Will Trump be able to come to a new agreement with China using the same playbook? And what will it do? Stay tuned.