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Much Ado about NAFTA

Author: Toni Johnson
February 28, 2008

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In state after state, the economy trumps national security in the concerns of both Republicans and Democrats voting in presidential nominating contests. Residents of few states, though, can compare to Ohio in their mistrust of trade agreements as the cause of economic problems. The Midwestern state, which will vote in party primaries on March 4, has lost more than a quarter of a million manufacturing jobs in the last eight years. Median income has dropped more than 10 percent in that time. In this climate, notes the Columbus Dispatch, “nothing resonates better with blue-collar Democrats in Ohio than the idea that wealthy manufacturers have taken advantage of trade agreements to move their production facilities abroad.”

So it’s little surprise that Democratic candidates Senators Barack Obama and Hillary Clinton have ratcheted up their “fair trade” rhetoric (WashPost) ahead of the Ohio vote. But their vehemence in attacking the North American Free Trade Agreement (NAFTA) has raised eyebrows among some economists and trade experts. Clinton has aggressively defended herself against Obama’s assertions that she was a NAFTA booster. “You know, I have been a critic of NAFTA from the very beginning,” Clinton said in their February 26 debate. Obama disputed this while stressing he thinks NAFTA has not been good for the country. He referred to “entire cities that have been devastated as a consequence of trade agreements that were not adequately structured to make sure that U.S. workers had a fair deal.” Both agreed in the debate that they would “opt out” of NAFTA unless proper labor and environmental standards were renegotiated into the deal.

Many economic analysts believe the focus on NAFTA is misplaced. To New York Times columnist David Leonhardt, the candidates’ calls for tougher labor and environment standards are silly. “They call the country’s trade policy a disaster, and yet their plan to fix it starts with, um, cracking down on Mexican pollution,” he writes. Ned Hill of Cleveland State University tells NPR that Ohio’s economic woes are not the fault of NAFTA but “because of the failed strategy of three companies”—Ford, Chrysler, and General Motors. The latter has been supplanted as the state’s main employer by Wal-Mart. Syndicated columnist Froma Harrop asserts U.S. voters should not be blaming NAFTA for manufacturing job losses (RealClearPolitics) but China’s entrance into the World Trade Organization. She notes that the U.S. trade deficit with China is three times as large as it is with Mexico.

NAFTA has amassed a mixed record since it came into force in 1994, a Congressional Budget Office report found after its first decade. A CFR Task Force in 2005 said NAFTA has “ transformed Mexico, but it has also deepened and made much more visible the divisions that exist in the country.” Some economists note that illegal immigration from Mexico to the United States has increased since NAFTA took effect (NYT).

What’s important now, say trade watchdogs like Lori Wallach, head of the U.S.-based Public Citizen’s Global Trade Watch, is for the Democratic candidates to better articulate how they would “restore the economic security” of the U.S. middle class. In this regard, says the New York Times’ Leonhardt, Obama and Clinton have come up with good ideas about investing in infrastructure, science, and alternative energy. And they are joined by the front-running Republican presidential candidate, Sen. John McCain, in supporting beefed-up Trade Adjustment Assistance, seen as crucial in helping U.S. workers displaced by trade. McCain, however, voted for NAFTA in 1994.

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