Obama to Calderon: NAFTA Will Be Renegotiated

♠ Posted by Emmanuel in ,, at 1/13/2009 07:42:00 AM
The meeting of US President-elect Barack Obama and Mexican President Felipe Calderon is not particularly newsworthy except for this tidbit from the Huffington Post. Obama says he will fulfill campaign promises to renegotiate NAFTA to include labor and environmental provisions. Again, I am of the opinion that this is little more than backdoor protectionism.

Do LDCs have anywhere near the institutional capacity to raise labor and environmental standards to industrialized country standards? If they had these or were able to do so, then they wouldn't be developing countries to start with.

The answer, of course, is that this is blatant protectionism. By using America's economic clout to arm twist LDCs into lopsided deals in which the US can slap down LDCs with purported labor and environmental violations should it become necessary to pander to rent seekers, this amounts to little more than beggar-thy-neighbor revisited. The Huffington Post article is quite frankly incomprehensible in arguing that burdening Mexico with all sorts of costs would somehow improve Mexican competitiveness. Calderon is justifiably appalled. Unlike retrograde flicks on trade, this is one bad movie which may come to life even if the "reasoning" is similarly MIA.

UPDATE: Reuters quotes Calderon saying that renegotiating NAFTA would be "a very bad idea" as it would increase and not decrease pressure for illegal immigration.