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November 24, 2013

Free trade deals should benefit all

Our region well understands mutually beneficial trade. The North Country has been trading with Quebec since it was called Lower Canada two and three centuries ago.

This trade was based on mutual advantage, the notion that voluntary trading partners participate only if both sides benefit, and comparative advantage, which allows us to focus on what we do well as they do likewise.

Even the North American Free Trade Act worked well for both sides of this border. Similar wealth, values, opportunities and legal principles meant both nations could freely share their endowments of resources and entrepreneurship. Granted, Canada probably benefited more as a share of their economy, but only because the mutual and balanced flow of trade between our two nations constituted a much larger share of their much smaller economy.

The United States’ free-trade experience with Mexico was a bit different. There was, and remains, a wide income gap, which translates into different sensibilities with regard to protection of the environment, of human capital and of intellectual property. Free trade is helping to level the income imbalances and is ameliorating this differences, slowly and over time. I am confident that these two nations are converging on a balance that respects each other’s values.

However, such a balancing of values takes generations, even between two countries with the historical ties and migrations of Mexico and the United States. In the meantime, international tribunals must iron out differences that often result in the adoption of lowest common denominators between competing economic or societal systems.

For instance, if domestic U.S. law conflicts with a NAFTA provision, an international tribunal must find a solution that does not frustrate the NAFTA goals. This at times either subverts U.S. law or requires the U.S. to compensate our partners for losses they might incur by having to abide by U.S. legal principles. Either solution tears at our domestic fabric by reducing our domestic sovereignty or by subjugating our values to an international economic court.

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