Will the New NAFTA and Future Trade Deals Serve US Interests?

Ahead of this week's annual meeting of the world's wealthiest nations at the G20, the Center for Economic and Policy Research (CEPR) offers some insights into US goals in the new trade pact with Mexico and Canada, and the Trump trade wars more generally.

"A Progressive Trade Policy," by CEPR's senior economist Dean Baker, looks at three key points that are important to transforming US trade policy to benefit the vast majority of people in the affected countries.

This paper addresses provisions in the United States, Mexico, and Canada Agreement (USMCA) that attempt to save jobs in the US auto industry. Raising the domestic content requirement of every vehicle and requiring at least 40 percent of the value-added to each vehicle to come from workers earning at least $16 an hour will have a very limited impact on employment in the US auto industry.

However, there are important rules established in the USMCA for the Internet and e-commerce that are of concern here and in future trade deals. These rules are largely designed to further the dominance of US giants like Google, Facebook, and Amazon. They limit the ability of countries to regulate these giants and the Internet more generally. If trade deals block countries from being able to protect themselves from the bad practices of the Internet giants, this is a very serious problem.

Finally, the USMCA will not reverse the damage from trade deficits and the resulting loss of manufacturing jobs that has helped redistribute income upward over the last four decades. But, going forward, a more balanced trade policy rests on reversing the protections for patent and copyrights monopolies and highly paid professionals, such as doctors. A large trade surplus on intellectual property means a large trade deficit on everything else. Increased trade in highly paid professional services offers a great opportunity for reversing a big chunk of the income distributed upward.