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The Dartmouth
March 4, 2024 | Latest Issue
The Dartmouth

Montalbano: Free Trade Brings More Than Just Economic Wealth

Luke Montalbano ’27 argues that free trade should be considered not just as an economic tool but as a diplomatic tool as well.

Free trade has defined the direction of Western economic diplomacy since the mid-1980s, integrating Western economies, strengthening the transition toward economic specialization and, seldom discussed, benefitting non-economic diplomatic relations between states. In this article, I am not hoping to change readers’ minds on free trade’s economic costs and benefits. Instead, I aim to expand the scope of the discussion to the impacts free trade has on other areas.

Under former President Donald Trump’s administration, the debate over free trade once more came to the fore, and, as a result, the North American Free Trade Agreement — or NAFTA — was replaced by a new agreement termed the “U.S.-Mexico-Canada Agreement,” or USMCA. Being a trade deal, discussion naturally focused on the economic costs and benefits of NAFTA and USMCA, but a realm often forgotten, yet arguably equally important, is the impact on non-economic diplomacy that a free trade agreement brings. 

Of course, willingness to enter into a free trade agreement brings inherent benefits to diplomatic relationships with other states. It immediately establishes channels for bilateral relations, easing future collaboration on issues aside from trade. However, trade agreements are no guarantee of amicable relations over time, particularly if the trade agreement ends up damaging a sector of the economy that is crucial for a participant’s population. For example, NAFTA had an exceptionally negative impact on Mexican corn farmers, resulting in a collapse of this specialization in the agricultural sector and putting pressure on the Mexican government to renege on its ratification of the agreement. However, if one secures reciprocally beneficial economic terms, negotiators can then embed provisions within these agreements that extend beyond simple trade guarantees. These provisions can include environmental protections, intellectual property rights, free movement, a shared currency or any other medium of integration beyond just trade. Such agreements are termed “deep trade agreements” by the World Bank.

Although NAFTA was viewed predominantly as an economic agreement, it is important to note that a large number of provisions were included in the document that protected intellectual property and the environment. Ultimately, Canada and the United States — those who arguably benefited most from NAFTA — grew far closer than before and expanded upon previous non-economic agreements, such as the U.S.-Canada Air Quality Agreement of 1991. If the United States and other major Western powers embark upon an enterprise of developing further deep trade agreements, it could bring about a stronger form of integration with peripheral allies, particularly in East and Southeast Asia, such as Japan, Taiwan and Vietnam. This would, in practice, mean a revival of the Trans-Pacific Partnership, a trade agreement with East Asian and South East Asian states and some Pacific states, such as Canada and Australia.

This latter point is crucial. The Trans-Pacific Partnership was established between the United States and key Pacific allies to contain the economic and political expansion of the People’s Republic of China. The goal was not only to hasten economic integration between these states but to deepen security bonds as well. However, the United States withdrew in 2017, effectively killing the agreement. As a result, a key avenue for security cooperation in East Asia was dissolved for protectionist reasons. Although it has not eliminated the possibility for future economic security cooperation, it has limited the extent to which the United States can prevent economic dependence of states in East and Southeast Asia on the People’s Republic of China. In Europe, similar economic integration in the form of the European Union has given rise to greater security integration from the irredentist threat of the Russian Federation. With the Russian invasion of Ukraine, the extent to which trade agreements can truly provide security benefits will be tested in the coming years.

We now come back to the question: Why would a country wish to engage in such agreements, particularly with the ongoing popular upheaval against free trade? Regardless of the economic costs and benefits of free trade, from an international relations point of view, it will be crucial for Western states to be all on the same page as the People’s Republic of China continues its expansion — economically or otherwise — and Russia re-engages in irredentism in Eastern Europe. Strengthening NATO and the European Union are certainly important tasks, but more can be done to ensure security and diplomatic amicability. Deep trade agreements are another cog in the machine for a solidified and prosperous bloc of states, and I would contend that Canada, the United States, Japan and other allied countries should engage in vigorous expansion of such trade missions. They have worked in the past, and they certainly will be of great importance in the future in the realms of security, environment and integration.

Opinion articles represent the views of their author(s), which are not necessarily those of The Dartmouth.