University of Bristol
15 December 2016
As the Trump Administration comes into being and defines its priorities, one of the less interesting things to watch will be its actions on NAFTA.
Why less? At first glance, this might seem a fascinating and important question—given that earlier this year Donald Trump called the North American Free Trade Agreement the “worst trade deal ever,” and promised to pull the U.S. out unless Mexico and Canada agreed to renegotiate it. The prosaic reality however is that Trump won’t touch NAFTA, except maybe in the most superficial of ways.
Consider the makeup of his proposed cabinet: billionaires, chief executives, and their friends. These are hardly people who will be inclined to undo an agreement whose contents largely reflect what American business wanted in the relationship with Mexico at the time of NAFTA’s negotiation in the early 1990s. It’s also not at all clear what it would even mean to renegotiate NAFTA in a more “pro-American” way; realistically, reopening the agreement would be a mess.
Or think back to another time of political transition in Washington: 2008. That year, Barack Obama too said “NAFTA was a mistake“, and he promised big changes to international trade agreements, particularly better protections for workers and the environment. Obama railed against corporate lobbyists’ disproportionate influence over trade policymaking. Yet eight years later the Transatlantic Trade and Investment Partnership (TTIP) and the Trans-Pacific Partnership (TPP), both negotiated by the Obama Administration, included shady provisions for investor-state dispute settlement—just like NAFTA. “ISDS” amounts to a quasi-judicial mechanism under which corporations can sue governments for taking actions that can, however tenuously, be construed as expropriation. Serious (and disinterested) experts remain unconvinced that ISDS serves the public interest, yet the U.S. government remains committed to including it in any new international agreements it negotiates. This was about the only policy on which Obama and congressional Republicans saw eye to eye.
Like Obama, Trump will soon find that corporate and bureaucratic preferences weigh heavily against any big deviation from the status quo on NAFTA. At the same time, he has already learned how opposition to trade agreements plays well with voters (at least in the more rustbelty states). Trump has therefore made quite clear that the U.S. will not participate in the TPP; and nor does it seem that TTIP will be ratified anytime soon, if ever.
A more interesting question is why slamming NAFTA and other trade agreements is such good politics. Trump’s economic nationalism makes the Republican Party establishment squirm, but it’s clear it also helped him win several Midwest states, and those victories tipped the Electoral College in his favor. Sociologists know that agreements like NAFTA entrench market and governance rules friendly to business—with the benefits of greater market efficiencies and economies of scale accumulating in the hands of the few—and provide little by way of social protection. In that sense, voters’ hostility to trade agreements is no mystery. But public opinion with respect to such agreements also breaks down in some ways that are not so widely appreciated.
Given how the costs and benefits are distributed, poorer Americans are unsurprisingly less enthusiastic than richer Americans about trade agreements. But despite the fact that the average Democratic voter has a lower income than the average Republican voter, the former are more supportive of trade agreements than the latter. This apparent paradox reflects the fact that attitudes about international trade are less about people’s pocketbook realities than their overall internationalism versus nationalism–and Democratic voters are more internationalist. Nationalists are less open to other cultures, and they tend to be older, whiter, less educated, and more rural.
Given the demographic divides between the parties, then, it’s no surprise that Democrats are more supportive of trade agreements–while the Republican Party is strongly internally divided, between a pro-trade (corporate and libertarian) elite and an anti-trade base. Throughout his presidency, Trump will be squeezed on the issue between his working class rhetoric and his capitalist class milieu. On the other hand, all this makes for an odd convergence of views between sociologists and Trump: the former are unusual Democrats (especially highly educated Democrats), in being hostile to trade agreements, while the latter is an unusual Republican—an economic and now party elite who is not a free trader. Sociologists’ hostility to trade agreements as institutions of neoliberalism outweighs their support for them as vehicles of internationalist collaboration. Trump’s at least rhetorical hostility to their effects on the American economy—framed in national rather than class terms—outweighs his presumable support for them as vehicles of investor opportunity.
The bigger issue here is what the backlash against globalization—embodied by Trump, Brexit, and the popularity of neo-nationalist parties all over Europe—means more broadly. Insofar as agreements like NAFTA represent a corporate globalization project pursued by economic elites, there is little reason to mourn their vilification. But insofar as they represent economic cosmopolitanism, bolstered by the endorsement of policy experts, there is more cause for alarm. There appears to be a growing divide between people who trust both foreign cultures and experts generally, and those who trust neither. If distrust continues to spread, it could take down other kinds of projects, including some far more consequential than either corporate globalization or its reform—most notably environmental protection. If 2016 has been the year of post-fact politics, Trump’s stance on NAFTA—even in the absence of any real action—could be a harbinger of post-expert and post-trust politics with other serious consequences.
2 thoughts on “What will Trump do about NAFTA?”
What are your brief thoughts on what Trump could conceivably execute re: NAFTA, from the superficial to the drastic?
Honestly, there’s not much Trump could do “superficially”, other than perhaps to *deepen* North American integration, such as through better coordination on infrastructure projects in border areas. But making it easier for goods and/or people to get around among the NAFTA countries would hardly be consistent with what he’s *suggested* he would do on NAFTA: renegotiate it in some (undefined) way more favorable (putatively) to the U.S., such as by restricting access for Mexican exports.
On the drastic side, I’m tempted to say that Trump wouldn’t ever pull the U.S. right out of NAFTA (imagine how U.S. big business would feel about that: http://www.truckinginfo.com/news/story/2016/12/fedex-ceo-warns-trump-attack-on-trade-could-be-catastrophic.aspx). But I (and big business in Britain) didn’t imagine that the UK would pull out of the European Union either.
Michael Rushton sent me a series of tweets about this blog post (https://twitter.com/RushtonIU/status/811391277950496768) which I think are right that Trump is an extreme case of the typically mercantilist thinking of politicians on trade, wherein exports are good and imports are bad, and “trade deals” like NAFTA are somehow like deals in the business world, where it’s possible to out-negotiate someone. The reality is that this thinking–which flies in the face of basic economics–doesn’t point to any clear course of action. That’s why I don’t think Trump will actually do anything, and the more important issue is how little Trump understands or respects things that real experts know or recommend.
In an ideal world, just to get this out there, he would do what Trudeau has just done, and remove the requirement for visitors from Mexico to have a visa (www.pm.gc.ca/eng/news/2016/06/28/canada-lift-visa-requirements-mexico). But I’m not going to hold my breath…