Life After Nafta
By Llewellyn H. Rockwell,
Politicians, mediacrats, environmentalists, social engineers, big
corporations, big banks, and global democrats the entire establishment won the Nafta fight. Yet they did so only over the objections
of Old Liberals and a resurgent Old Right, not to mention an increasingly
Despite the inclusion of "free trade" in the agreement's name,
Nafta had nothing to do with liberty. It was about malting North
America safe for Greenpeace, Archer-Daniels-Midland, Citibank, and
social democracy. As a result, the continent is now a more dangerous
place for taxpayers, small business, and American particularism.
With the end of the Cold War, everyone wanted to know how the world's
political alliances would reshape themselves. Nafta's passage has
answered that question. The Cold War model of warring cartels of
nation-states has been transferred to international trade. And while
this may make sense for special interests, it does not bode well
for the future of freedom and prosperity.
With Nafta, the world is being reorganized into four trading blocs:
Asia, dominated by the Japanese; Europe, dominated by the Germans;
North America, dominated by the U.S. establishment; and the former
Soviet Union and advanced third world countries, dominated by the
Russians. This was laid out by Jagdish Bhagwati, a trade expert
at Columbia University, who noted how far the new arrangements are
from the ideal of free trade.
For the classical liberals, that ideal began with freedom at home.
It was the obligation of government to protect person and property,
enforce contracts, defend the borders, and nothing else. That meant
no restrictions on imports or exports. Businessmen and consumers
could trade abroad as at home: without limits.
This is America's ideal as well. The Declaration of Independence
charged George III with "cutting off our trade with all parts of
the world." Thomas Jefferson believed in liberty at home and free
trade abroad, as did his followers. As the aristocratic libertarian
John Taylor of Caroline expressed it, "Give us a free and open competition
in our market, and we fear not to encounter like competition in
the general market of the world."
Compare this to Bill Clinton's "free trade": more taxes, more regulations,
more mandates, and more controls at home, and a trade bloc abroad
rammed through Congress using Tammany Hall vote-buying techniques.
Nafta was "free trade" that Ted Kennedy and the Institute for Policy
Studies could support and did.
"Free trade" used to be included in the lexicon of liberty. Clinton
having coopted the term, but not the reality, the idea of free trade
is now linked with mixed economies, environmentalism, heavy-handed
labor laws, and the increasingly nebulous idea of "democracy."
After Nafta, National Wildlife Federation president Jay Hair exulted
that "all future international trade agreements" would have to "address
environ- mental concerns."
This is the corruption, not the fulfillment, of the Old Liberal
ideal. Instead of the world of free individuals and sovereign countries
that many of us hoped would emerge after the Cold War, we have strutting
politicians throwing taxpayer's money at foreign governments that
do their bidding, and imposing sanctions on those that do not. We
have special interests who put politics before profits in determining
the rules of commerce. And we have social engineers demanding that
all trade be conditioned on erasing sexual and racial income disparities.
The "embryonic Nafta government," as the Washington Post
calls our new system, will help bring all this about. Its side deals,
which expanded on the core of the treaty itself, not only do not
fit with free trade, they may eventually devour it. Its rules of
origin create a New World Order trade bloc. Only the over-taxed
and over-regulated citizens of each country suffer.
The free-market arguments against Nafta were not lost on some in
Washington. Senator Ted Stevens (R.-Ak.) pleaded with the Senate
to separate the side accords from the agreement itself so that they
could be voted on separately. He feared that the accords entrenching
costly environmental and labor regulations would prevent Alaska
from attracting investment. But his amendment was defeated.
Senator Bob Smith (R.- N.H.) spoke about the red tape faced by
small businesses in New Hampshire. "When I think of free trade,"
he told the Senate, "I do not think of the 1,200 pages of complex
rules, regulations, and specifications on who can trade what, when,
how, and how much"- as embodied in Nafta. All this and the "invasion
of the sovereignty of the United States make this Nafta a bureaucratic
nightmare. This Nafta and especially its side agreements"-- "impede
Not a week goes by, said Senator Smith, when he doesn't get a call
from an entrepreneur being wrecked by environmental regulation,
or going out of business thanks to the artificially increased cost
of labor. "Now we have a trade agreement that says in essence things will only get worse. Efforts to roll back ... government
regulation will be met head on by side agreements designed by advocates
of big government."
Nafta "represents an attack on our national sovereignty that must
be repelled. I cannot in good conscience lend my support to an agreement
that violates the spirit of the Constitution" and "the United States'
right to maintain our own standards."
Congressmen Terry Everett (R.-Ala.), John Doolittle (R.- Cal.)
and others on the House side joined Senators Stevens and Smith in
voting no, despite the hysterical opposition of every establishment
mouthpiece in the country. But the free-market opponents of Nafta
saw exactly where this new world of warring trade blocs is taking
us, and it's not closer to peace and prosperity.
The present task of a true free trader, and an Old Liberal, is
somehow to rescue the ideal of liberalized trade from its perverters.
We need to reassert the freedom of people to trade regardless of
residence, while opposing agreements like Nafta that restrict that
freedom through rules of origin, red tape, and bureaucracy. Moreover,
we need to regain an appreciation of trade apart from loan guarantees,
subsidies, and the entire panoply of interventionism.
In the 1950s, free-trade economist Wilhelm Roepke did just that.
A Misesian, he was the intellectual godfather of the German economic
miracle. The European elite academics, government officials,
and large corporations had embarked on the Common Market, Nafta's
intellectual godfather. Roepke thought it would lead first to a
trade bloc and then to supranational government, as indeed it has
(see Tucker, p. 7). Roepke was a member of the Mt. Pelerin Society,
a club of classical liberals, but he resigned in protest when the
Society endorsed the Common Market.
Like the European Community, Nafta is good for international politicians,
since it puts them more in charge. It is good for international
development banks, always looking for new territories to conquer.
And it is good for the big companies that will be privileged through
Nafta, and for the big banks that will be bailed out of their Mexican
debts. But Nafta is not good for small business and consumers, the
very groups for whom free trade was once such a benefit. As the
bad effects of Nafta become obvious in the years ahead, we must
not forget those who opposed it, and those who supported it.