Ron Paul Liberty Report - Weekly Update --- NAFTA 2.0: Free Trade or Central Planning?
Aired: 2018-10-08
Duration: 04:27


=== USMCA's Expansion of Government Control (04:05) ===

[00:00:00]  Hello everybody and thank you for tuning in to the weekly report, NAFTA 2.0, Free Trade or Central Planning.
[00:00:08]  Last week, the United States, Mexico, and Canada agreed to replace the North American Free Trade Agreement, NAFTA, with a new United States-Mexico-Canada Agreement, USMCA.
[00:00:21]  Sadly, instead of replacing NAFTA's managed trade with true free trade, the new USMCA expands government's control over trade.
[00:00:31]  For example, under the USMCA's rules of origin, at least 75% of a car's parts must be from the U.S., Canada, or Mexico in order to avoid tariffs.
[00:00:43]  This is protectionism designed to raise prices of cars using materials from outside North America.
[00:00:50]  The USMCA also requires that 40 to 45 percent of an automobile's content be made by workers earning at least $16 per hour.
[00:01:00]  Like all government set wages, this requirement will increase prices and decrease employment.
[00:01:06]  The USMCA also requires Mexico to pass legislation recognizing the right of collective bargaining.
[00:01:14]  In other words, this so-called free trade agreement forces Mexico to import U.S.-style compulsory unionism.
[00:01:22]  If the Mexican legislature does not comply, the U.S. and Canada will impose tariffs on Mexican goods.
[00:01:31]  The USMCA also requires the three countries to abide by the International Labor Organization, ILO, standards for workers' rights.
[00:01:42]  So, if, for example, the bureaucrats at the ILO declared that right-to-work laws violate international labor standards because they weaken collective bargaining and give right-to-work states an unfair advantage over compulsory unionism and countries, the federal government may have to nullify all state right-to-work laws.
[00:02:05]  The USMCA also obligates the three countries to work together to improve air quality.
[00:02:12]  This sounds harmless, but could be used as a backdoor way to impose costly new regulations and taxes such as a cap and trade scheme on America.
[00:02:24]  This agreement also forbids the use of currency devaluation as a means of attempting to gain a competitive advantage in international trade.
[00:02:34]  Enforcement of this provision will be difficult, if not impossible, as no central bank will ever admit it is devaluing currencies to obtain a competitive advantage in international trade.
[00:02:46]  Of course, given that the very act of creating money lowers its value, the only way to stop central bank from devaluing currency is to put them out of business.
[00:02:56]  Sadly, I don't think the drafters of the UMCA seek to restore free market money.
[00:03:02]  The currency provision will likely be used to justify coordination of monetary policy between the Federal Reserve and the Mexican and Canadian central banks.
[00:03:12]  This will lead to region-wide inflation and a global currency war as the U.S. pressures Mexico and Canada to help the Fed counter other countries' alleged currency manipulation and challenges to the dollar's reserve currency status.
[00:03:30]  A true free trade deal would simply reduce or eliminate tariffs and other trade barriers.
[00:03:36]  It would not dictate wages and labor standards or require intergovernmental cooperation on environmental standards and monetary policy.
[00:03:46]  A true free trade deal also would not, as the USMCA does, list acceptable names for types of cheeses.
[00:03:54]  Those of us who support real free trade must not let supporters of the USMCA get away with claiming the USMCA has anything to do with free trade.

=== Fighting Protectionism Threats (00:21) ===

[00:04:05]  We must also fight the forces of protectionism that are threatening to start a destructive trade war.
[00:04:11]  Also, we must work to stop the government from trying to control our economic activities through regulations, taxes, and most importantly, control of the currency through central banking and legal tender laws.