The Trump administration is having a fierce internal debate over precisely how to tear NAFTA asunder. The president talks about renegotiation, but proposals like border adjustment taxes and import tariffs don’t exactly seem terribly NAFTA-compliant. On Thursday, White House press secretary Sean Spicer floated a very confusing border adjustment tax to pay for the wall, but then walked that trial balloon back. Oh, and the Mexican president canceled his planned visit to meet with President Trump.
Then there are the random presidential tweets:
Mexico has taken advantage of the U.S. for long enough. Massive trade deficits & little help on the very weak border must change, NOW!
— Donald J. Trump (@realDonaldTrump) January 27, 2017
Trump’s immigration jab is flat-out wrong, but the big thing is that NAFTA looks to be in jeopardy. This has prompted a debate among economists about the trade deal’s relative value to the U.S. economy. Over at Vox, Brad DeLong argues that NAFTA has been accused of a lot of things — like the gutting of American manufacturing — that it did not affect all that much. On his own blog, Dani Rodrik agrees with DeLong on that point, but counters that the distributional effects of NAFTA were huge compared with the modest welfare gains of the deal.
That exchange is well worth reading, but the hard-working staff here at Spoiler Alerts confesses to some frustration, because the debate misses a rather important dimension. As economists, it’s understandable that DeLong and Rodrik focus on the economic aspects of NAFTA. But economics was not the only, or even the primary, reason for negotiating the deal. The Wall Street Journal’s story on the effects of NAFTA finally gets at this point in its closing paragraphs:
Nafta advocates say the economic debate misses the bigger point of the deal, which has been to ameliorate long-standing tensions across the border and turn Mexico into a more steadfast U.S. ally. By that standard, they say, the pact has been a great success, fostering more bilateral cooperation on issues from crime to the environment — and keeping Mexico from following the path of left-wing Latin American countries or drifting closer to American rivals like China.
It is that immeasurable gain that Mr. Trump seems most skeptical about, and most willing to put at risk.
To use the parsimonious language of social media: this this THIS!!
An increasing fraction of America’s voting population has no memory of pre-NAFTA Mexican American relations. It would be safe to describe them as “prickly.” The biggest reason for negotiating NAFTA was for the Mexican government to lock in domestic economic reforms that rejected import substitution policies and integrated the country into the global economy. One of the knock-on effects was for Mexico to transform from a one-party state to a real democracy. The result is a country that views itself as North American.
Most policymakers intuitively understand this next point, but let’s spell it out for President Trump: This is the orientation you want Mexico to have. A friendly Mexican government across the Rio Grande is a heck of a lot better for American interests than a hostile Mexican government.
Don’t take my word for it, though, take Mark Krikorian’s word for it. Krikorian really doesn’t like Mexican immigration. And yet here’s what he told Politico On Thursday:
Krikorian has advised Trump on immigration policy but worries about actions that could damage the broader relationship between the U.S. and Mexico. “I’m uncomfortable because Mexico is the most important country in the world to us next to Canada. They’re not an ally, but they’re not an enemy. They cooperate with us a lot.”
A U.S. diplomat familiar with Mexico warned that it is critical not to view the country solely through the lens of trade or immigration. Mexico is a vital partner on many fronts, including counterterrorism and counternarcotics …
Or read the National Review’s Jose Cardenas, who correctly diagnoses the political blowback Trump will generate inside Mexico:
Economic trouble in our southern neighbor should be on the radar screen of any U.S. president, but what makes the current situation that much more dangerous is that the person who stands to gain most from the turmoil is Mexican opposition politician André Manuel López Obrador, a left-wing populist rabble-rouser in the mold of the late Venezuelan president Hugo Chávez. López Obrador is running for the Mexican presidency (for the third time) in 2018.
In the past, AMLO, as he is known, has tested the patience of Mexicans with his demagoguery and penchant for mobilizing people in the streets, disrupting daily life. However, his strident rhetoric, appeals to nationalism, and rejection of politics as usual in Mexico may represent just the kind of leadership that Mexicans want to confront the Trump phenomenon …
An unfriendly government on our southern border could significantly complicate issues important to the U.S., on everything from border security, counterterrorism, and drug-war cooperation to deportations and restricting Central American migration — the main source of illegal border crossings — bound for the U.S. Continuing economic hardship, the likely result of AMLO’s state-centric approach, would also likely revive outward-migration pressures from Mexico to the United States, which have abated in recent years.
Or read Slate’s Joshua Keating, who concludes, “there’s been a bipartisan consensus in Mexico for decades that the country should bet on economic liberalization and a close political and economic relationship with the United States. That commitment has now been thrown back in their faces in the most humiliating way possible.” The knock-on effects in the rest of Latin America, which had been rejecting populist strongmen as of late, will be equally bad.
The Trump administration assumes that the benefits of unilateral action — building the wall, slapping import tariffs on Mexican goods — will be more effective than bilateral cooperation with the Mexican government. This bet is consistent with the foreign policy blinders that Trump has always displayed: He cannot perceive the benefits of a relationship unless they are tangible and directly in his line of sight.
Trump supporters tend to think that there’s no way things can get worse along the Mexican border. It would appear that the 2018 Mexican election will prove to be a great natural experiment in whether that assumption is correct.