The Need for NAFTA

By Stephen Moore

April 24, 2018 6 min read

Finally, some good news for the future of the North American Free Trade Agreement. CNBC is reporting that a framework for a renewed and improved NAFTA may be coming in the weeks ahead.

It may be now or never for modernizing and extending this trade treaty. Although NAFTA needs repair, this freer-trade agreement has been positive for all three of its nations: the U.S., Canada and Mexico. Trade across borders of our three countries is up almost 60 percent over the last two decades. More importantly, NAFTA is vital to ensuring that North America remains the economically supreme continent over Asia and Europe. North America, for example, can easily become the Middle East of oil and gas production in the first half of the 21st century.

The revised agreement must be finished by the end of May for two reasons. One is that the deal needs to be voted on before the end of the year because Republicans may lose the House or Senate in November, and we know that Democrats will (figuratively) burn the place down if they take Congress — meaning they will stymie any legislation President Trump wants.

Second, Mexico has elections this summer, which could elevate a leftist government that would impede a deal on NAFTA.

Trump may be willing to be flexible on some of his stands on helping U.S. automakers — which would break the ice at the negotiating table. But he should also be firm on other issues. The White House is right to insist on better U.S. access to the Canadian and Mexican markets for manufacturing goods.

He also must insist on securing intellectual property protections in NAFTA for American innovators. IP-intensive industries (music, entertainment, software and biotechnology among them) support 45 million jobs — nearly a third of U.S. employment — and produce more than $7 trillion of value-added output, according to the U.S. Chamber of Commerce.

We know that the U.S. loses about half a trillion dollars of income a year due to theft of our IP products abroad. Most of that is in China, but it's a problem with Mexico and Canada, too.

Technology is improving at near light speed, and governmental protections struggle mightily to keep pace. The reason we need to renegotiate NAFTA in the first place is because in just a few short decades, the pace of technology has eclipsed the standard of law.

Just look at the life sciences industry, where the pace of innovation is incredibly exciting for combating life-threatening diseases.

The future of personalized medicine rests largely on biologics: personally tailored drugs that work with an individual's unique biology to treat, cure and prevent disease. The work in this field is spectacularly promising and could revolutionize modern medicine with respect to cancer, multiple sclerosis, Alzheimer's, heart disease and Parkinson's, just to name a few.

Our patents need to be honored and secured not only for economic reasons but also to encourage and accelerate the very innovation that makes this disease-free future possible. Medical innovation benefits everyone on the planet.

Many of our biological patents and data collection are protected for 12 years under U.S. law.

Today, Canada provides eight years of protection for biologics; Mexico in some cases provides none without costly judicial intervention. This is unfair, harmful to American companies and bad for medical progress.

This is where White House Trade Representative Bob Lighthizer should be insistent in the final rounds of negotiations. Every year of protection that we cede in NAFTA sacrifices billions of dollars — vital revenues that could be invested in research and development for new medicines and jobs in America. It is in America's economic interests to hold our NAFTA partners to the same high standard that is law in the U.S.

Steve Forbes, my colleague at the Committee to Unleash Prosperity, states it well: "The U.S. should now make fair pricing of American drugs overseas a top trade priority." Amen to that.

Trump once called NAFTA the "worst trade deal ever," but if he succeeds in getting a better deal for American producers and workers, he should take it.

In this and other trade deals, such as the Trans-Pacific Partnership, we need safeguards against theft and price controls of American technology and intellectual property — which is now a multitrillion-dollar industry. Trump should use the model that worked well in the promising revamped trade deal with South Korea, which adds new and solid IP protections.

What a wonderful irony it will be if Donald Trump winds up as the president who continues to promote trade deals with South Korea, China and our North American neighbors that secure freer and fairer trade to the benefit of American workers and the global economy.

Stephen Moore is a senior fellow at the Heritage Foundation and an economic consultant with Freedom Works. He is the co-author of "Fueling Freedom: Exposing the Mad War on Energy." To find out more about Stephen Moore and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate webpage at www.creators.com.

Photo credit: at Pixabay

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