Which Way to Go on Trade?

Conservatives who gave in to an uncharacteristic bout of unsecured optimism quickly were reacquainted with our customary disappointment when President Trump, despite whispers to the contrary, decided to stand firm on his anti-trade agenda.

The issue was a narrow and relatively straightforward one from an economic and policy point of view: The Jones Act, an antediluvian anti-trade measure signed into law by Woodrow Wilson, has many unintended and destructive consequences, one of which is that Americans in the northeast and in Puerto Rico are being forced to import natural gas from Russia and the Caribbean at a time when the United States is producing jaw-dropping quantities of the stuff — but cannot get it from the places where the gas is to the places where the people are. This piece of old-fashioned crony capitalism hurts everyone from utility customers to manufacturers to farmers.

The Jones Act is a product of the nativist “100 Percent Americanism” movement that grew out of the Great War, and it requires that ships moving goods or people between U.S. ports be owned by Americans, crewed by Americans, registered and flagged in the United States, etc. There are no tankers meeting Jones Act requirements available to transport liquified natural gas from the Gulf Coast to consumers in New England and Puerto Rico, and New England’s position has been made worse by the success that environmentalists have enjoyed in preventing the construction of new natural-gas transportation infrastructure in the northeast. President Trump had been considered a narrow waiver to enable natural-gas transport, but in the end backed down — or was backed down by the business interests that profit from the Jones Act.

But convincing President Trump to defend and entrench anti-trade measures does not seem to require a great deal of work. Last week, Senator Chuck Grassley (R., Iowa) gave the president a very public ultimatum in the pages of the Wall Street Journal: “Trump’s Tariffs End Or His Trade Deal Dies.” The president’s desultory trade war is wreaking havoc on lives and livelihoods in the communities most vulnerable to retaliatory measures, and farmers in states such as Iowa are among those hardest hit. Senator Grassley wants the federal boot off the neck of Iowa’s agricultural producers before he moves on the NAFTA revisions that the president is so proud of, the U.S.-Canada-Mexico Agreement (USCMA).

NAFTA, an agreement that was negotiated before there was anything like contemporary Internet commerce, needed updating, and USCMA makes some important improvements, particularly in relation to the protection of intellectual property, an area in which the new accord will largely replicate the arrangements put forward by the feared and loathed Trans-Pacific Partnership. USCMA also contains some destructive and ill-advised provisions, including restrictions on the export of automobiles and automobile parts to the United States by Canada and Mexico. On balance, USCMA might not be the best we could do, but we could have done worse, and passing it would ensure at least a measure of stability and predictability in North American trade relations, even considering the truly batty provisions that the accord be reconsidered every six years and that it dissolve entirely in 16 years.

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