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To What Standard Should Foreign Governments Be Held On Trade-Related Matters?

Summary:
My latest column for AIER is inspired by my correspondence last week with the great libertarian philosopher Eric Mack. In this column, I ponder reactions in the home country to less-than-saintly activities by foreign governments. A slice from my column: Protectionists are clever at devising superficially plausible excuses for their obstructions of people’s freedom to trade. A recent instance in the United States is Democrats’ and progressives’ demand that the “new NAFTA” — called “USMCA” (for “U.S.-Mexico-Canada Agreement”) — “protect” the “rights” of workers in Mexican auto plants by effectively requiring that many of these workers enjoy wages and workplace conditions similar to the wages and conditions workers enjoy in the U.S. and Canada. But because Mexico is a much poorer country

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My latest column for AIER is inspired by my correspondence last week with the great libertarian philosopher Eric Mack. In this column, I ponder reactions in the home country to less-than-saintly activities by foreign governments. A slice from my column:

Protectionists are clever at devising superficially plausible excuses for their obstructions of people’s freedom to trade. A recent instance in the United States is Democrats’ and progressives’ demand that the “new NAFTA” — called “USMCA” (for “U.S.-Mexico-Canada Agreement”) — “protect” the “rights” of workers in Mexican auto plants by effectively requiring that many of these workers enjoy wages and workplace conditions similar to the wages and conditions workers enjoy in the U.S. and Canada.

But because Mexico is a much poorer country than are its northern neighbors, Mexicans cannot afford to have wages as high, and workplace conditions as nice, as now are commonplace throughout the U.S. and Canada. And so by insisting that auto production in Mexico be conducted similarly to how auto production is conducted in wealthier countries, protectionists in the U.S. prance publicly as champions of the downtrodden while they understand privately that their demands, if met, will simply shift more auto production from Mexico to the U.S. American auto workers will be artificially enriched at the larger expense of Mexican workers (who will be harmed by the resulting loss of capital investment in that country) and of auto buyers throughout North America (who will suffer from the resulting higher prices of automobiles).

Actually, in this case the American public is so uncritical of protectionists’ excuses that the Democrats and progressives pushing for what they know to be unrealistic labor “rights” in Mexico can risk revealing their true motives. In making the case to include these unrealistic provisions in USMCA, American protectionists often mention that these provisions will also protect workers in the U.S. — by which these protectionists mean workers in U.S. auto plants. Yet no one to my knowledge has pointed out this inconsistency: to the extent that the provisions demanded in USMCA protect workers in America from losing employment to workers in Mexico, those provisions will reduce the demand for auto workers in Mexico and, thus, harm workers in that country.

By admitting that their goals include preventing auto workers in America from losing jobs, protectionists in the U.S. reveal that, far from being — as they claim — enlightened and compassionate champions of Mexican workers, they are in reality venal and cruel enemies of those workers.

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Don Boudreaux
He is a professor of economics at George Mason University in Fairfax, Virginia. Previously, he was president of the Foundation for Economic Education.

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