Thursday, November 10, 2016

Why Justin Trudeau Is Ready to Renegotiate NAFTA

"If the Americans want to talk about NAFTA, I’m more than happy to talk about it." So said Canada' Prime Minister, Justin Trudeau, thus proving that Canada's current Prime Minister is a very sensible pragmatist. 

Canada, like the US, has lost a large number of jobs in both manufacturing and services to Third World jurisdictions such as Mexico, where people are happy to take the job of a Canadian for the payment of mere pennies an hour. 

In its heyday, the Canadian autoparts industry was the biggest foreign supplier to the United States. After NAFTA, Mexico became the largest autoparts supplier to the United States — until China took the title from Mexico. 

Trump's objective in renegotiating NAFTA is to establish a balance of trade among the North American nations that are beneficial to all. That is to say, beneficial to the majority of the people of all nations. That means Mexico's share of the US market for manufactured goods will be adjusted to balance America's share of the Mexican market for whatever America sells to Mexico. 

Under a revised NAFTA agreement, Canada will seek similar terms to the United States, meaning an increased Canadian share of the US market for Canadian goods and services, this to be balanced by greater American exports to Canada.

The net result of such adjustments would be:

(1) increase jobs and wages in both the US and Canada

(2) increased prices of tradable goods and services in the US and Canada

(3) lower prices and wages in Mexico.

To many liberals, the idea that the prosperity of Canadian and American workers should not be sacrificed to benefit Mexicans and the shareholders of international corporations that benefit from unrestricted free trade is, to quote Hillary Clinton, deplorable, raaacist, xenophobic, etc., etc.

However, the contention that Canadians should make shoes and shirts and computers and car parts for one another as the used to do, rather than putting one another out of work by purchasing from the world's cheapest and most exploitive sweatshops, seems pretty reasonable. 

As for the Mexicans, well they have many successful billionaire entrepreneurs, people like Carlos Slim, Mexico's cell phone monopolist and owner of a large piece of the lying New York Times. He could surely help out at home by investments in industry, education and research that would enable Mexicans achieve a first world standard of living, providing goods and services to one another at ever increasing wages as the productivity of their labor increases. 

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