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Neither labour nor environmental standards were included in the main text of NAFTA. They were instead the object of side agreements with much less punch. Adding stronger such standards inside a renegotiated NAFTA would undermine one of the main reasons for the benefits of tree trade.

Consider carefully what higher labour standards would do to NAFTA

Consider carefully what higher labour standards would do to NAFTA. By increasing the cost of labour in the poorest of the three partners — Mexico — they would remove part of what economists call its “comparative advantage.” Wages are lower in poorer countries because labour there is less productive, which is exactly the reason why these countries are poor. For certain goods, productivity will be even lower than the low wages, and, for those goods, the poor country has no comparative advantage. But in sectors where productivity is higher than low wages — for instance, in Mexico’s case, manufacturing semiconductors — the goods are produced at prices attractive to foreign buyers, and the poor country is said to have a comparative advantage. A poor country can compete internationally where it has a comparative advantage, and get progressively richer.

What international labour standards do is to slow down or stop this process, by raising the cost of low-wage labour until it overcomes productivity. These standards thus protect rich workers in rich countries (like the U.S. and Canada) from the competition of poor workers in poor countries (like Mexico). Where are the social justice warriors to attack this ignominy?