On the eve of the third round of renegotiation talks for the North American Free Trade Agreement, Commerce Secretary Wilbur Ross upped his attacks on the deal. He still errs, but he does so in interesting ways. The data, and Ross’ arguments, highlight a core Trump administration confusion on trade: they are trying to comprehend a global trading landscape while blinkered by a focus on bilateralism.
U.S. Commerce Secretary Wilbur Ross offered a new critique of the North American Free Trade Agreement. (Photo by Win McNamee/Getty Images)
First, the interesting new data. Sec. Ross, in the Washington Post, claims that a new report from his department vindicates NAFTA skeptics’ critiques. To Ross’ credit, the new data does present a more sophisticated look at trade flows between NAFTA countries (Canada, Mexico, and the United States) and the rest of the world. Rather than looking at the gross value of trade flows, the new report works with “value added” figures.
Depending on what argument one is trying to make, this can be a substantial improvement. To see why, imagine that the United States sends $4k of auto parts to Mexico, which then uses those parts to build a $10k vehicle that is exported back to the United States. In gross terms, the United States has imported $10k in this transaction; in value-added terms, only $6k.
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