President Trump disrupted conventional Republican politics with his recognition that the so-called free trade deals of the 1990s and 2000s were a disaster for American workers in many ways. The disruption and surprise to pundits came when they discovered that GOP voters agreed with him. In fact, a March 2016 poll by Patrick Caddell conducted on behalf of the Americans for Limited Government Foundation showed that Republican voters opposed the Trans-Pacific Partnership (TPP) by a 66-15 margin — far greater than Democratic voter opposition.
Much of the angst about the TPP can be laid to concerns that the North American Free Trade Agreement (NAFTA) turned into exactly what 1992 third-party presidential candidate Ross Perot claimed it would be when he said it would produce a “giant sucking sound” of U.S. jobs heading south. And NAFTA was not spared by candidate Trump, as he now pillories the agreement as needing to be renegotiated with promises to strictly enforce it.
{mosads}NAFTA, like all trade agreements, lays out a series of rules to govern trade between agreeing nations, in this case between the United States, Mexico, and Canada. These rules typically include a lowering of tariffs that can be rescinded or changed if the terms of the agreement are breached. When Canada was recently found guilty of illegally dumping softwood timber into the U.S., the Department of Commerce increased tariffs against Canadian timber to punish the offenders. The tariff increases can be modest or more punitive depending upon how flagrant the violation.
Mexico is now in the bullseye with Commerce Secretary Wilbur Ross deciding whether to impose sanctions based upon an egregious case involving the dumping of Mexican sugar into the United States over the past few years. In 2015, the U.S. International Trade Commission determined that Mexico is in violation of NAFTA, but the rogue country continues its dumping anyway. On top of the current sugar case, the Commerce Department is currently enforcing 10 dumping and subsidy cases against Mexico on everything from tomatoes to clothes washers and steel pipe.
The consequences of Mexico’s sugar rush have been felt in the United States, as the last sugar producer in the state of Hawaii closed its doors earlier this year, and a major sugar beet factory in Wyoming is scheduled to go belly up soon. But it isn’t real competition that killed them, instead both have been unable to compete with the flood of Mexican sugar that has engulfed and distorted U.S. markets.
In fact, the federal government price floor program covering sugar was triggered directly due to the Mexican sugar dumping costing taxpayers millions of dollars. Speaking at the 47th Washington Conference of the Americas, Secretary Ross earned praise when he staked out a tough position on NAFTA enforcement, saying, “We are going to implement stricter enforcement than any recent administration. We will be diligent in pursuing violative imports and in collecting anti-dumping and countervailing duties.” He went on to state that negotiations with Mexico on the sugar dumping issue have stalemated, making the looming June 5 sanctions decisions all the more important.
While the Canadian timber and Mexican sugar dumping issues are merely the starting point of a comprehensive review of NAFTA, it is crucial that Secretary Ross demonstrate that cheating by our trade partners will not be tolerated through the imposition of stiff tariffs to ensure that any future negotiated deal is taken seriously by our negotiating partners.
The Trump administration may choose to fix or nix NAFTA, but in the weeks ahead it is imperative that they vigorously enforce it. The June 5 Mexican sugar sanctions deadline will provide Secretary Ross the perfect opportunity to make just that point to the Mexican and the Canadian governments, and set the tone for one of the most important economic renegotiations in our nation’s history.
Rick Manning is president of Americans for Limited Government.
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