The House Ways and Means Trade Subcommittee invited submissions in connection with its hearing on modernizing NAFTA. This is the Executive Summary of American Phoenix’s comments. The full comments can be found here.
In the past year, the backlash against globalization has expressed itself through Brexit, the withdrawal of the U.S. from the Trans-Pacific Partnership, and the launch of NAFTA renegotiations. It is clear from the discussions that significant segments of the population do not feel that globalization is working for them.
Both economic theory and empirical evidence support the argument that trade overall is beneficial. But theory and practice also support the argument that trade exacerbates inequality.
Modernizing trade agreements is not just about recognizing that we now live in a digital age. It is also about rethinking the terms of these agreements, and making our trade policy more inclusive.
The following principles are designed to modernize policy to achieve that goal:
1. Less is sometimes more.
2. Labor and environment rules not only need to be included but strengthened.
3. Rules of origin need to be tightened – intelligently.
4. Digital trade is vital, but we must be thoughtful about it.
5. Investor-State Dispute Settlement in trade agreements is an anachronism.
6. We need a competitiveness policy.
7. Visionary businesses must lead the charge for a new, more inclusive trade policy.