NAFTA Schmafta

A great post on the Economics blog of the Economist about the hoopla that all the presidential candidates are making about NAFTA – the North American Free Trade Agreement. They want to abolish it. The Economist‘s Economics blogger thinks otherwise:

The world is globalised, and an election in America does not make one’s neighbours disappear, much as one might wish them to. Mr Drezner is correct to note that re-establishing respect for America’s allies is a key plank of the Democratic electoral platform. It is awfully hard to square that with efforts to throw those allies’ economic concerns out the window. [link] (hyperlink added to excerpt)

However, not everything about a trade treaty is sunny. There are some downsides, too:

Efficient allocation of resources, and the wealth that results, is one of the primary benefits of world trade. Liberalising via many tiny agreements distorts this process, and pits trading nations and trading blocs against each other. It also distracts from important goals, like the strengthening of healthy institutions worldwide, or the tackling of global environmental problems. [link]

The post ends with a brilliant insight. Nothing new, but definitely worth repeating:

If the Democratic presidential candidates are seriously interested in an agenda of hope, they should focus on improving the lives of Americans through the cultivation of global prosperity. An excellent way to begin that process would be to throw American leadership behind efforts to liberalise trade and develop appropriate standards at a global level. [link]

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