Monday, 23 June 2008

Why free trade agreements don't work

A constant refrain of euro-sceptics is that the Europe we signed up for was just basically a glorified free trade area. Well, that is just historically inaccurate but what underlies it, and is also an under-current in Conservative thinking about Europe is that a free trade agreement would be preferable to the EU that we have. Without the encumbrance of political union, free trade would benefit all the nations of Europe without them having to cede any political 'sovereignty.'

Such a Europe could never work and here's why. Senators Joe Biden (for Obama) and Lindsey Graham (for McCain) debated NAFTA in the context of the US Presidential election on Meet the Press yesterday. Biden's point was that NAFTA should be re-negotiated with the threat of a US pull-out if Canada and Mexico refused. The failing of NAFTA for Biden and Obama is that it permits free trade with no requirement for Canada and Mexico to raise their environmental and labour standards to US levels. Not only that but the new standards would require some form of enforcement. The transcript and video are available below.

Transcript.




So its interesting after only a decade or so of NAFTA, US liberals are now calling for a fair market with enforcement. Well, they are behind the times. The founders of the European Economic Community understood the politics of international trade acutely and that is why they built a free trade area with a political and legal dimension.

The experience of the US with NAFTA is exactly why the European Commission and the European Court of Justice exist and have legal authority. If anyone argues that these things are just petty bureaucratic interfering or even worse, a challenge to our national interest and sovereignty then it is worth just pointing them in the direction of NAFTA and they will see their necessity.

Much like the founding fathers of the US republic, the founders of the EEC got it pretty much right. They left the EU with a democratic deficit that it has been struggling with ever since and is still struggling with. On building a Europe that had a chance of effectiveness and political survival, however, they were spot on. Europe goes beyond environmental and labour standards into consumer protection, competition regulation, employment equality, and work-life balance. It is a free and fair trade area.

If it's to have a long term chance of success NAFTA will have to head in the same direction. Instead of NAFTA being held up as an exemplar for Europe. It is the EU that should be held up as an exemplar for NAFTA.

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