Zoellick’s five main points about NAFTA

October 5th, 2017

Former U.S. Trade Representative and World Bank President Robert Zoellick spoke yesterday at the Atlantic Council to stress how transformative NAFTA has been for the United States, Mexico, and Canada. Zoellick focused his discussion on the ongoing NAFTA renegotiations and the significant risk that Trump administration objectives, such as new rules of origin requirements for automobiles, pose to critical U.S. industries, national security, and our nation’s global competitiveness.

Zoellick’s five main points about NAFTA are:

  1. NAFTA is a vision of North America in a global system. By respecting sovereignty while still pursuing deeper integration, NAFTA brought together three democracies with over 500 million people to have more secure borders; integrated infrastructure; energy self-sufficiency; stronger manufacturing, agriculture, and transportation industries; and closer cooperation on regional issues.
  1. The belief that bilateral trade deficits are like negative net income is economic nonsense. It is far more fruitful to guide U.S. policy based on economic growth, prosperity, productivity, employment, income, and inflation – all of which have benefited from NAFTA.
  1. The administration’s stated negotiating objectives will not produce greater U.S. exports. For example, the U.S. rules of origin proposal is essentially centralized economic planning – proven to not work by the Soviet Union. If the U.S. demands that a certain percentage of goods are made in America, those goods will cost more and Mexico and Canada would will demand similar provisions. This could prove disastrous for key U.S. export industries like agriculture and energy which depend on markets in Mexico and Canada.
  1. President Trump’s treat to withdrawal from NAFTA is serious. This will not accomplish the President’s goal of eliminating the bilateral trade deficit, but if Trump views trade as a zero sum game the prospect of doing more harm to Mexico and Canada than to the U.S. could be enough for him to take this fateful step.
  1. If Trump decides to withdrawal the United States from NAFTA, Congress needs to assert its constitutional power to delay and stop this self-defeating action.

NAFTA renegotiation needs to be focused on modernizing and enhancing the agreement, not adding barriers to free trade. From cooperation on immigration and anti-terror to manufacturing, NAFTA has brought undeniable benefits to all three NAFTA partners. The agreement is critical to the success of the United States and North America as a whole. As Robert Zoellick said at the end of his discussion, “…we’re at risk of destroying a strong, 30 year-bipartisan policy to make a stronger [North American] neighborhood and the question is why?”