Trade and Force
By Pierre Lemieux
According to the Wall Street Journal of yesterday, the president of the AFL-CIO wants a renegotiated NAFTA to include Canada, but insists that its new (still uncertain) provisions must be seriously enforced. He says:
It doesn’t matter what’s in that agreement. If we can’t monitor it and enforce it effectively, then the agreement will fail for workers and it will fail for the country.
In fact, for the special interests his trade union represents, it does matter. From what we know, the agreement negotiated with the Mexican government includes many of the things the AFL-CIO wants, including a Mexican minimum wage that will reduce competition and erase part of Mexico’s comparative advantage. The Wall Street Journal notes:
Especially important to unions is how labor provisions including minimum-wage requirements are verified and enforced.
Basic free trade, which is unilateral free trade, does not need force except for the enforcement of general, standing laws against theft and fraud. From the viewpoint of a given country’s residents, the most basic requirement is that their own government does not prohibit or restrain their imports. The more numerous are foreign governments who adopt unilateral free trade, of course, the better; but that is partly out of our control, and it should generally stay that way. I have made this argument elsewhere, including in my EconLog article of November 17, 2017, “Taking Comparative Advantage Seriously.” A free trade treaty is mainly useful as a means of restraining one’s own Leviathan.
P.S.: As pointed out by Matthias Goergens in a comment below, I should have written that “From the viewpoint of a given country’s residents, the most basic requirement is that their own government does not prohibit or restrain their imports and their exports” (adding “and their exports”).