The Competitive Enterprise Institute (CEI) today announced its opposition to the USMCA agreement between the United States, Mexico, and Canada.

Statement by CEI Vice President for Strategy Iain Murray and senior fellow Ryan Young:

“While USMCA is not that different from NAFTA, its trade-unrelated provisions and political giveaways set precedents that could harm future trade agreements for decades to come. USMCA’s acronym, which scraps NAFTA’s “F” and “T” standing for “Free Trade,” is more telling than its drafters likely intended.”

Murray and Young make the points that trade negotiations should: 

  • Free trade, not manage it.
  • Set economic precedents, not political ones.
  • Allow countries to compete with one another on setting least-onerous regulations, not standardize a one-size-fits-all regulatory regime for all countries.
  • Focus on trade, not include more than 2,000 pages of campaign bragging points and payoffs to political constituencies. 

Unfortunately, the USMCA:

  • Preserves NAFTA’s near-zero tariffs between its members but raises several non-tariff barriers, from export quotas to sourcing requirements to monetary policy.
  • Is filled with trade-unrelated provisions that do not belong in a trade agreement. Energy and environmental provisions will narrowly benefit politically connected companies and activists but raise consumer prices and reduce their choices. Regulatory obstacles for automobile parts will dismantle supply chains that have taken decades to build and make new cars even more expensive. Labor provisions, aimed at buying union political support, that will reduce access to Mexican products for U.S. producers and consumers.
  • Will influence how upcoming agreements are made with China, the United Kingdom, and the European Union.

CEI opposed the original NAFTA because its non-tariff barriers and trade-unrelated provisions could become entrenched in future trade agreements—fears that proved well-founded.

Related analysis:

Traders of the Lost Ark

The Ideal U.S.-U.K Free Trade Agreement