The United States renegotiated its accord with Mexico and Canada, redubbed the United States–Mexico–Canada Agreement (USMCA) in December 2019. Dissatisfied with the trade adjustment resulting from competition in tradeable sectors worldwide, the United States Trade Representative demanded new protections for regional automotive and other industrial manufacturers, including stricter rules of origin and labor protection rules. The ultimate goal was to rebuild the United States’ manufacturing sector and protect its vulnerable people from the repeated ravages of trade liberalization. The agreement offers similar protections to small and medium enterprises, as well as the agricultural industry. The message is clear: the United States is interested in protecting its manufacturing sector, and is taking steps to make it so that treaties play a role in protecting and supporting those sectors.

Interest in these kinds of economic-restructuring policies is rising all over the world and is not new. As evidenced by the rhetoric surrounding US trade relations, and the demand in the United Kingdom to exit from the European Union, even developed countries are seeking ways to restructure their economies and meet the needs of those sectors that have lost out to global competition under neoliberalism. Although industrial policies, as they are commonly called, are usually associated with countries in earlier stages of development, overt attempts by highly industrialized nations offer yet more evidence that most countries are only interested in free trade inasmuch as it serves the interests of their voting constituents.

Trade and industrial policy together are broadly defined as those measures that countries put in place to adjust the balance of trade (imports and exports) and/or the industrial structure of their economies. They vary widely, including measures that fund and support public education, subsidies supporting specific types of economic activity and taxes discouraging other types. They also include investment incentives offered in specific sectors, tariffs and export taxes, and even varying levels of protection for intellectual property rights. Ideally, the countries put in place these measures to increase welfare among their constituents. In most cases, countries are seeking the elusive idea of development.

Development is the long-run process of transforming an economy from concentrated assets based on primary products to a diverse set of assets based on knowledge.