The Second Battle of NAFTA

theamericancause.org ^ | March 03, 2008 | Patrick J. Buchanan

[USFRIENDINVICTORIA]

“I'm all for *Fair trade Free trade is a codeword for wealth redistribution.”

You've got your terms backwards. So-called “fair-trade” is just a socialist invention for managed trade designed specifically for wealth redistribution. Free trade (I will agree that we have never achieved this ideal — because of the vestiges of protectionism in every real-world trade deal) creates wealth, by allowing nations to concentrate on what they do best. The benefits of free trade is the one thing that (almost all) economists — from Adam Smith onward — agree upon.

[ari-freedom]

a global market buchanan and liberals want to destroy

[Paleo Conservative]

Sorry but, oil is traded through a Global market at Global prices. It’s the same everywhere thanks to Globalization.

Unless we supply 100% of our oil and ban international trade in oil, US oil prices will be determined by global energy markets. Of course if we did only buy domestic oil, our energy prices would have to be much higher than the world prices.

[org.whodat]

Unless we supply 100% of our oil and ban international trade in oil, US oil prices will be determined by global energy markets. Of course if we did only buy domestic oil, our energy prices would have to be much higher than the world prices.

That is why I told him to try bigger BOO's.

[ari-freedom]

and if buchanan had his way, we wouldn’t be able to buy anything not made in America

[Paleo Conservative]

and if buchanan had his way, we wouldn’t be able to buy anything not made in America

Didn't Buchanan get into political trouble for driving a Mercedes?

[org.whodat]

I never said anything about buchanan, nor do I know what he has said about anything in the last four are five years.

But my statement stands, NAFTA was sold on the ideal it could be renegotiated and it will not kill anyone to renegotiate it.

[ari-freedom]

what happens when protectionists get their way:

[ari-freedom]

is there a solid reason to renegotiate it? It is a problem to renegotiate just for the sake of messing around

[org.whodat]

Didn't Buchanan get into political trouble for driving a Mercedes?

Yes and no. Yes he owned a mercedes, but questions about buchanan go much deeper than his car. I never read his statement. My statement was about NAFTA in general, I don't understand the fear of a redo!

[wolfcreek]

Back when we made everything we needed in this country, was that such a bad thing?

[org.whodat]

It is a problem to renegotiate just for the sake of messing around

"sake of messing around" that is way beyond my eduction, what is the definition for sake of messing around??

[USFRIENDINVICTORIA]

I'm well aware that oil is a fungible commodity.

You should read Chapter 6 of NAFTA -- it was the prize that Reagan sought, and it was important enough that it enticed even W.J.Clinton to sign the deal. Here's a link:

http://www.sice.oas.org/Trade/NAFTA/chap-06.asp

In the absence of Chapter 6, Canada or Mexico could sell their energy products into their domestic market at far less than world prices. This is bad economics -- but, it's also a common practice amongst oil-rich nations. With NAFTA, we are required to offer oil (and other energy sources) to the U.S. at the domestic price. Therefore, our domestic price tends* to be the world price. I'm happy with this arrangement -- because it's good economics. There are a large number of Canadians (and, I suspect Mexicans too) who would rather be able to buy their fuel at a lower-than-world price.

* The energy products include electrical energy -- which is not a global commodity. Canada sells a large amount of hydro electric power to the U.S. at a much lower price than it would cost you to generate it yourselves. You could expect these prices to rise to "market" levels instantly upon ripping up NAFTA.

[Grumpy_Mel]

People treat the concepts of Free Trade and Protectionism too much like religion and too little like the pragmatic tools they should be.

Free Trade is only universaly good if you run a multi-national corporation and protectionism is only universaly desirable if your a union boss.

For most of the rest of us, we want our nation to be economicaly competitive and we want to have a reasonably good quality of life.

The way to achieve that is a smart combination of open trade agreements and strategic, limited protectionism.

Believe it or not, there are instances when protectionism can enhance long term economic competitiveness not stifle it (for instance when an industry suffers a momentery crisis or when trying grow a new industry sector that’s not quite upto competing with the rest of the world from birth.... but could be if given a little space and breathing room to grow before facing competition, or buffering resources from the results of an overly volatile market).

[USFRIENDINVICTORIA]

If NAFTA were torn up, the "nationalists" and "environmentalists", who want to shut down the Alberta oil sands might prevail -- with a great deal of support from American "environmentalists", I might add.

Just as the U.S. isn't drilling in ANWAR, or various offshore fields, or developing oil shales; because of "environmental" concerns -- there are several known energy sources that have already been closed to development in Canada for "environmental" reasons.

The international environmental lobby has it's sights set on the Alberta oil sands. NAFTA is important to keep them open -- because, without NAFTA, we could simply shut down the oil sands, and remain self-sufficient for oil and gas. We would do that by completely cutting off exports to the U.S. -- something that Chapter 6 of NAFTA prevents us from doing. Consider that U.S. oil imports from Canada equal those from Saudi Arabia and Iraq combined.

http://www.eia.doe.gov/pub/oil_gas/petroleum/data_publications/company_level_imports/current/import.html

[wolfcreek]

Thomas Jefferson wrote: “The Central Bank is an institution of the most deadly hostility existing against the principles and form of our Constitution...if the American people allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all their property until their children will wake up homeless on the continent their fathers conquered.”

I post this because IMO, this is where the real problems lie.

The Fed is nothing more than a group of the richest banking families in the world who manipulate the world economy at their pleasure. They caused the 1929 stock market crash and subsequent world depression and made a fortune doing it.

“The Council on Foreign Relations was incorporated as the American branch in New York on July 29, 1921. Founding members included Colonel House, and “...such potentates of international banking as J.P. Morgan, John D. Rockefeller, Paul Warburg, Otto Kahn, and Jacob Schiff...the same clique which had engineered the establishment of the Federal Reserve System,” NAFTA, Open Borders, cheap labor are all ideas hatched within CFR. Funny how the top frontrunners for POTUS are either members or married to members of that organization.

[USFRIENDINVICTORIA]

You're right that there are times when some protectionism can be helpful; including the "nascent industry" rationale.

All modern trade deals -- including NAFTA -- have provisions to prevent "predatory trading" practices (e.g. pricing exports below cost of production, in order to destroy competitors in importing nations); and to allow for exemptions designed to promote regional economic development.

The general principle remains -- trade creates economic wealth, and protectionism leads to economic stagnation.

The U.S. has such a large economy that it is, in effect, one of the world's largest free-trade zones, all by itself. For that reason, the U.S. could become quite isolatonist, and continue to function for some time. Similarly, the European Union could become a closed shop, and continue to function -- for a time. The economy would be smaller than it would have been with free trade; and it would grow at a much slower rate; but you could continue to function -- until the inevitable depression.

[org.whodat]

You could expect these prices to rise to "market" levels instantly upon ripping up NAFTA.

That is one of the silliest things I have ever heard. What are the Canadians going to do with their electricity, put it in a bottle and sell it on the world market. LOL

[USFRIENDINVICTORIA]

I never intended to get into a big spat about this on Free Republic. I was just trying to interject a few important facts and considerations.

So long as California, for instance, refuses to do anything to meet its own energy needs, there will be a market. Hydro electricity in Canada is generated by Crown Corporations — and, therefore, our domestic prices for electricity are far lower than market prices. Electricity prices have barely risen, while the world price of oil has more than quintupled. Under NAFTA, electricity is sold into the U.S. market at the Canadian domestic price. Based on the cost of alternative sources of power, the actual market price would be far more. By “market” price, I mean the price at which a willing buyer is willing to buy from a willing seller.

Here's another consideration — NAFTA started life as the Canada-US FTA, during Reagan's term. Bush Sr. started the expansion to NAFTA, and did most of the heavy lifting. W. J. Clinton sealed the deal on NAFTA — despite the same objections from within the Democrat Party as you're seeing today.

During the CAFTA, and then the NAFTA negotiations, Canadian trade opponents (AKA: socialists, “nationalists”, “environmentalists”, and anti-American moonbats) warned us of dealing with “sharp Yankee traders”. They warned that there was no way that Canadians could win anything from such Yankee traders as Reagan and Bush.

Do you really think that Reagan and Bush were pushovers? Or that their negotiators weren't some of the sharpest “Yankee traders” walking the planet? Do you think that they missed something you would have noticed?

IMHO, I think that NAFTA was a reasonable agreement at the time. Chapter 6, the Energy chapter, seemed to be a fair price to pay. That was then — the difference now is that we have more than ten times the known oil reserves, and over three times the exports that we did when NAFTA was signed. If anything, Chapter 6 has become far more valuable to the U.S. That's fine by me — because I think that freer trade benefits everyone, and because I don't mind seeing Americans benefit too. I also think that a deal’s a deal.

When you add in the current geopolitical situation; you can only conclude that Reagan was a farsighted genius to negotiate such an energy-security deal for the U.S. — when the future benefits were no where as clear as they are now.

[org.whodat]

Whatever you have pointed out is bunk, first it was oil, well oil is a free world market and because of no transportation cost Canada is getting a honey of a deal. As to electrical supply, if Canada dose not want to sell it to the united states at market they are free to ship it to mars.(as a hint to you, there is no one else they can sell their electricity to) And to say that Canada will raise the price is nothing but blackmail.