Donald Trump doesn’t liked to be reined in, which is why he has such a problem with trade deals like NAFTA. (The Associated Press)

New NAFTA or no NAFTA? How Trump’s ire could affect Canadian agri-food

The main objective of international trade agreements like NAFTA is to put limits on the ability of politicians to intervene in trade matters — for example, mutually agreeing to remove tariffs on certain goods and never raising them in the future.

This ensures that society benefits from trade by increasing the predictability and reducing the risks for companies wishing to engage in international commerce.

In the past, when politicians were unconstrained — when there were no rules of trade — the result was economically damaging, beggar-thy-neighbour trade wars.

A system of rules for trade has been in place since 1947, with the successful negotiation of the multilateral General Agreement on Tariffs and Trade (GATT). NAFTA fits within that rules-based system.

Over the 70-year span since the GATT rules were established, politicians have generally accepted the constraints on their actions that have been agreed upon — often by the elected officials who preceded them.

U.S. President Donald Trump, of course, is not cut from that cloth. He does not accept that there should be constraints on his freedom to act as he sees fit.

The Conversation

William A. Kerr is a Distinguished Professor with the Department of Agricultural and Resource Economics at the University of Saskatchewan.
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