free trade

[Harlan Huckleby]

I'm a little concerned that Obama's financial supporters have a strong protectionist bent. I don't know what Obama himself thinks about free trade, I guess he is personally a realist. But he is relying on money from the anti-free trade left.

All the Democrats in recent years have been free trade advocates: Bill & Hillary, Al Gore, John Kerry, Lieberman, even John Edwards understands we have to trade.

We are in a hot competition with the Chinese to establish trade relations in Latin America. Recently the House of Representatives scuttled a trade deal with Columbia, a country we have good relations with. Terrible.

I am very pro-Union. But a lot of well-meaning people in the Union movement have stuck with an unrealistic anti-trade stance. I trust the Democrats to negotiate better deals in regard to labor standards and the environment, and they have to keep pushing it.

[Harlan Huckleby]

Unilateral Democrats
February 28, 2008; RearClearPolitics

Democrats claim the world hates America because President Bush has behaved like a global bully. But we don't recall him ever ordering an ally to rewrite an existing agreement on American terms -- or else.

Yet that's exactly what both Hillary Clinton and Barack Obama are now promising to do to our closest neighbors, Mexico and Canada. At their Ohio debate on Tuesday, first Mrs. Clinton, followed ever so quickly by Mr. Obama, pledged to pull America out of the North American Free Trade Agreement if the two countries don't agree to rewrite it on Yankee terms. How's that for global "unilateralism"?

Democrats sure have come a long way from the 1990s, when Bill Clinton pushed Nafta through a Democratic Congress. And the truth is that both Mrs. Clinton and Mr. Obama have spoken favorably about Nafta in the past. Yet now they are sounding the loudest protectionist notes by a potential President in decades. More dangerous, neither is telling the truth about the role of trade in the U.S. economy. If either one makes it to the White House, he or she will carry the weight of this campaign protectionism while trying to lead the global economy.

* * *
While it is politically incorrect to say so, Nafta has been good for all of North America. By opening the continent to investment and trade, capital has found more efficient uses, with benefits to producers and consumers alike. In Nafta's first decade after 1993, trade between the U.S. and Mexico multiplied to $232 billion from $81 billion. Trade with Canada has also blossomed, with Canadian exports to the U.S. by surface transport rising 79% in a decade and U.S. exports to Canada increasing 38%.

The deal also increased U.S. productivity. U.S. firms found they could be more globally competitive by putting some manufacturing in Mexico or Canada while retaining high-end production in the U.S. This has resulted in what John Engler, president of the National Association of Manufacturers, has called "the highly integrated North American industrial base, particularly between Canada and the U.S." Such flexibility may have saved thousands of U.S. jobs from going abroad. In the first 10 years of the deal, the U.S. economy added 18 million jobs and the jobless rate sank to record lows.

Nafta has also been crucial to Mexico's continuing development. After the 1994 peso devaluation, the political left in Mexico had all the ammunition it needed to turn back liberalization. But Nafta made that difficult. In the two presidential elections since the 1994-1995 peso crisis, Mexicans have voted for a modern economy. Nafta has helped Mexico develop strong retail competition for the first time and allowed the economy to diversify beyond oil. Other gains include greater transparency in Mexico's fiscal accounts, an independent central bank and an inflation rate that is now lower than in the U.S.

None of this counts with Mr. Obama, who is whacking Mrs. Clinton for saying in 2004 that Nafta had been good for New York state and the country. He also points out that "in her own book Senator Clinton called Nafta 'one of Bill's successes.'" Instead of defending the economic record of the 1990s, Mrs. Clinton's response has been to call for a "time out" on trade deals, as if the world won't build new trade blocs without America.

But the Illinois Senator is less than honest about his own Nafta history. In his race for his Senate seat in 2004, he told Illinois farmers that the U.S. benefits from exports under the World Trade Organization and Nafta, and he recommended that the U.S. go after more deals like it. He also discouraged protectionism, warning that "as an exporting state, Illinois would be hurt by a trade war sparked by tariffs. This would be particularly devastating to our agricultural economy."

But that was when he was trying to appeal to farmers who rely on exports. Now that he's battling for union endorsements, Mr. Obama says he "would immediately call the president of Mexico, the president of Canada [we presume he meant the prime minister], to try to amend Nafta, because I think that we can get labor agreements in that agreement right now."

What he doesn't mention is that our trading partners might not want to reopen a pact that the U.S. hasn't yet even fully implemented, as in the failure to allow Mexican trucks onto U.S. highways. The Teamsters, who endorsed Mr. Obama last week, have blocked that one. Mexico and Canada may also want to protect more of their agricultural markets in return for "labor agreements," harming U.S. farmers or other efficient U.S. exporters.

As the Democratic contest continues, it is becoming a race to the bottom on protectionism. Perhaps the best trade demagogue will win, but someone should point out that the last President who tried to govern as a protectionist was Herbert Hoover. It didn't turn out so well.

[The Leaper]

I just don't understand the Obama hype. I really don't. Our nation has become a legion of lemmings.

I could understand the hype if Obama produced a credible plan for what he wanted to accomplish and had the experience to back that plan. To me, he is subpar in both areas right now...yet continues to have 20,000 screaming fans show up wherever he goes.

As far as our trade woes go...NAFTA is the least of our concerns.

[hoosier]

My intuition is that free trade vs anti-nafta is the best example going of how the primary season generates empty rhetoric.

That aside, the universal benefits of Nafta for Mexico are not nearly as obvious as the article suggests. Low inflation, more transparency are great. But have you been to Ciudad Juárez lately?

[The Leaper]

That aside, the universal benefits of Nafta for Mexico are not nearly as obvious as the article suggests. Low inflation, more transparency are great. But have you been to Ciudad Juárez lately?

True, but I think the point is that Mexico would be even worse off without NAFTA. Just because NAFTA did not suddenly turn Mexico into a huge economic success hardly shows that it has failed.

Mexico has plenty of problems of their own they need to address...in terms of corruption and crime...before any trade agreement provides long term success.

[hoosier]

That aside, the universal benefits of Nafta for Mexico are not nearly as obvious as the article suggests. Low inflation, more transparency are great. But have you been to Ciudad Juárez lately?

True, but I think the point is that Mexico would be even worse off without NAFTA. Just because NAFTA did not suddenly turn Mexico into a huge economic success hardly shows that it has failed.

Mexico has plenty of problems of their own they need to address...in terms of corruption and crime...before any trade agreement provides long term success.

I'm not talking about probelms Nafta has failed to address in Mexico, I'm talking about new problems that Nafta has helped generate or made worse. Maquiladoras and drug violence have made Juarez unlivable, and yet the border region is the only place in the north of Mexico where economic opportunities exist. So people have little choice but to cross the border illegally or stay in a place that couldn't be much better than hell. That wasn't the case before the mid-1990's.

[Harlan Huckleby]

I'm talking about new problems that Nafta has helped generate or made worse. Maquiladoras and drug violence have made Juarez unlivable, and yet the border region is the only place in the north of Mexico where economic opportunities exist.

It sounds like NAFTA created prosperity in the border-region. And as a secondary effect, drug trade moved there too. I don't know exactly what is going on here, but it is hard to see how NAFTA can be condemned for lack of drug enforcement.

When the anti-NAFTA left claim (I think ridiculously) that NAFTA has caused manufacturing job loss in the midwest, why don't we go into discount stores and see "Made in Mexico" tags everywhere? Seems like the factories went to asia.

And then the left claims that the flow of immigration to this country is caused by the economic devastation in Mexico caused by NAFTA. Huh? That implies we're selling our products so cheaply there that the Mexican businesses & agriculture are being wiped out. Mexico could cancel NAFTA too if it was ruining their economy.

It all sounds like so much bullshit to me. I do know that people in the midwest manufacturing states are hurting. I am for helping people get restarted in new businesses and careers.

[Harlan Huckleby]

Dem Myths Collide with NAFTA Reality
By Steve Chapman

Democrats often pillory Republicans for their economic errors. From the 1930s on, they reminded Americans of Herbert Hoover's Great Depression. In 1960, they blamed Dwight Eisenhower for slow growth. In the 1980s, they decried the "trickle-down" policies of Ronald Reagan. And today, they excoriate the damage caused by the North American Free Trade Agreement passed under ... Bill Clinton.

Even Hillary Clinton treats the accord with a warmth she normally reserves for Kenneth Starr. She never misses a chance to denounce what she calls "the shortcomings of NAFTA," or to insist she was always against it. But she has to deal with Barack Obama, who often gives the impression that his opponent's name is Hillary Nafta Clinton.

So Tuesday's debate in Cleveland devoted a lot of time to the question: Are you now or have you ever been a supporter of NAFTA? Both candidates denied any complicity, past or present, and both vowed to scrap the treaty if the Mexican government doesn't agree to changes.

Obama makes a special theme of blaming this and other trade agreements for setting off a race to the bottom that destroys American jobs. "In Youngstown, Ohio," he said in a Texas debate, "I've talked to workers who have seen their plants shipped overseas as a consequence of bad trade deals like NAFTA, literally seeing equipment unbolted from the floors of factories and shipped to China." Why NAFTA would induce a company to move production to China is a puzzle, but you get the idea.

His campaign claims a million jobs have vanished because of the deal. That sounds devastating, but over the last 14 years, the American economy has added a net total of 25 million jobs -- some of them, incidentally, attributable to expanded trade with Mexico. When NAFTA took effect in 1994, the unemployment rate was 6.7 percent. Today it's 4.9 percent.

But maybe all the jobs we lost were good ones and all the new ones are minimum-wage positions sweeping out abandoned factories? Actually, no. According to data compiled by Harvard economist Robert Z. Lawrence, the average blue-collar worker's wages and benefits, adjusted for inflation, have risen by 11 percent under NAFTA. Instead of driving pay scales down, it appears to have pulled them up.

Manufacturing employment has declined, but not because we're producing less: Manufacturing output has not only expanded, but has expanded far faster than it did in the decade before NAFTA. The problem is that as productivity rises, we can make more stuff with fewer people. That's not a bad thing. In fact, it's essentially the definition of economic progress.

We're not the only country facing that phenomenon. China makes everything these days, right? But between 1995 and 2002, it lost 15 million manufacturing jobs.

Even if the candidates don't want to acknowledge the gains of the last 14 years, it's hard to see how they can blame NAFTA for economic troubles in Ohio or elsewhere. The whole idea was to eliminate import duties in both the United States and Mexico (as well as Canada). What everyone forgets is that we got the best of that bargain, since our tariffs were very low to begin with.

"Mexico had very good access to the U.S. market" already, says Charlene Barshefsky, who was U.S. Trade Representative in the Clinton administration. "What NAFTA did was level the playing field."

Critics complain that while exports to Mexico have risen, imports from Mexico have risen even faster. But that's not because we embraced free trade. It's because our economy has been more robust than theirs. Prosperous consumers buy more goods, from both home and abroad, than struggling consumers. Absent NAFTA, the trade imbalance with Mexico would not be smaller. It would be bigger.

None of this is a revelation to economists. The candidates' broadsides require them to ignore not just a wealth of evidence but the overwhelming consensus of experts. Gary Clyde Hufbauer, an economist at the Peterson Institute for International Economics in Washington, estimates that 90 percent of the people in his profession regard the accord as a good thing.

Jagdish Bhagwati, a Columbia University trade economist, supports Obama and thinks his positions on trade are generally better than Clinton's. "But on NAFTA," Bhagwati told me, "he is dead wrong."

Clinton is also in error, but on the question of which candidate has more consistently and vehemently denounced the accord, Obama has opened up a clear lead. Now there's a race to the bottom

[Joemailman]

I'm a little concerned that Obama's financial supporters have a strong protectionist bent. I don't know what Obama himself thinks about free trade, I guess he is personally a realist. But he is relying on money from the anti-free trade left.

All the Democrats in recent years have been free trade advocates: Bill & Hillary, Al Gore, John Kerry, Lieberman, even John Edwards understands we have to trade.

We are in a hot competition with the Chinese to establish trade relations in Latin America. Recently the House of Representatives scuttled a trade deal with Columbia, a country we have good relations with. Terrible.

I am very pro-Union. But a lot of well-meaning people in the Union movement have stuck with an unrealistic anti-trade stance. I trust the Democrats to negotiate better deals in regard to labor standards and the environment, and they have to keep pushing it.

I think you're too worried about this issue Harlan. I think the last sentence of your post is really where Obama and Clinton are at.

[Harlan Huckleby]

I looked on Obama's website. It says he is against CAFTA. HE's for the good parts of NAFTA, against the bad parts of NAFTA.

Everybody is for fair trade agreements, against unfair ones. I wish Obama would say he is going to aggressively PROMOTE trade. I implicitly trust he will work for fair deals. But will he stand-up to the forces of idiocy that have simply killed deals (like with Columbia)?

See, I trust Clinton (meaning I think I can tell when she is lying), I just don't have a clue what Obama really thinks because he is so new. His financial base includes many protectionists, that worries me.

[Freak Out]

Canada's ferocious NAFTA growl

Don't worry your head about whether Obama lied about the free trade agreement. The real story is a threat by that petro-state up north to turn off the oil spigot.

Andrew Leonard

Feb. 28, 2008 | One of Thursday's spiciest Democratic campaign controversies has been the report out of Canada, citing unnamed sources, that an Obama campaign official told the Canadian government not to worry about the senator from Illinois' anti-NAFTA "rhetoric." It wasn't "serious," he reputedly said.

The Obama campaign and the Canadian government are both vigorously denying that any such conversation took place. How the World Works is inclined to believe them if only because it defies comprehension that a campaign as well run as Obama's would do anything so stupid. (Dirty trick, anyone?) Understandably, the Clinton campaign was delighted to hear the news, even though there is a paucity of evidence that Hillary Clinton's commitment to renegotiating NAFTA is any more sincere than Obama's. But that didn't stop machinist union president and Clinton surrogate Tom Buffenbarger instantly proclaiming that "working families cannot trust a candidate who telegraphs his real position to a foreign government and then dissembles in a nationally televised debate."

Buffenbarger, avid campaign followers will recall, is the fellow who called Obama "Janus, the two-faced Roman god of ancient times" and dismissed his supporters as "latte-drinking, Prius-driving, Birkenstock-wearing, trust fund babies."

But all this focus on whether the Obama campaign actually fumbled the NAFTA ball in such a spectacular fashion misses the real point, which is the opportunity for a refresher course in U.S.-Canadian trade relations.

Question: Who is the largest supplier of energy resources to the United States?

Answer: Canada.

Canada exports more crude oil to the United States than any other nation, including Saudi Arabia. All of that oil, along with a gusher of natural gas, comes free of any kind of export controls or tariffs, courtesy of NAFTA. In fact, the United States consumes almost 100 percent of Canada's energy exports.

Which undoubtedly puts Canada in the driver's seat should a new president of the United States decide he or she wanted to "renegotiate" NAFTA.

David Emerson, Canada's trade minister, took some pains to remind Hillary Clinton and Barack Obama of U.S. dependence on foreign (Canadian) oil on Thursday, according to a Globe and Mail story a reader kindly forwarded to me.

Americans' privileged access to Canada's massive oil and gas reserves could be disrupted if Washington cancels the NAFTA accord as Democratic presidential candidates threaten, Canadian Trade Minister David Emerson warned yesterday.

"There's no doubt if NAFTA were to be reopened we would want to have our list of priorities," he said.

In other words, if you Yankees think you can wave a magic wand and "renegotiate NAFTA" so as to be more beneficial to Americans at the expense of Canada's interests, think again, because we'd be happy to close off the oil spigot and sell our crude, to, oh, I don't know, China.

Don't mess with Canada!

[Harlan Huckleby]

that an Obama campaign official told the Canadian government not to worry about the senator from Illinois' anti-NAFTA "rhetoric." It wasn't "serious," he reputedly said.

that's funny, and hopefully true.

I did get a Wikisplanation of why some on the left blame NAFTA for influx of Mexicans. Their farmers are hurt. I'm sure there is some truth to it:

Prominent among the critics of CAFTA is economist Joseph Stiglitz, who supports free trade, but argues that without fairer trade agreements, the benefits from trade will not be realized. He says that NAFTA and CAFTA will increase poverty because they prematurely open markets to US agricultural goods which are subsidized, making local farmers unable to compete with imports, and the nations in question do not have the ability to bear the costs of switching resources with their available capital, nor deal with the consequences of even short-term unemployment. He argues that these agreements have been more geo-political than economic, and that the essential problem with recent bilateral agreements, including CAFTA, is that they are not free-trade agreements. More generally, he argues that bilateral agreements fail to produce all the benefits expected, in part because of the inequality of the negotiating position of the parties involved.

[hoosier]

It sounds like NAFTA created prosperity in the border-region. And as a secondary effect, drug trade moved there too. I don't know exactly what is going on here, but it is hard to see how NAFTA can be condemned for lack of drug enforcement.


Prosperity for corporations, most of which are US or transnational, few of which are Mexican. The maquilas do offer plenty of employment to locals, but at very low wages and with lots of accompanying problems (poor working conditions, abusive and hierarchical managerial-employee relations, disruption and displacement of older communities and creation of new cities like Juarez that are an urban planner's nightmare). Surely not all of this can be blamed on Nafta, and these problems aren't unique to northern Mexico. But to say that Nafta has been an economic godsend to Mexicans isn't quite accurate either.

[GBRulz]

Harlan, who's the guy in your avatar?

[Harlan Huckleby]

Harlan, who's the guy in your avatar?

That would be Tony Robbins. Handsome, no? He fills me with hope.

[Joemailman]

The self help guy! I wonder if Obama is a client. They seem to have something in common.

[The Leaper]

That wasn't the case before the mid-1990's.

If you think Mexico was some kind of safe utopia prior to 1990, you are kidding yourself.

I'll admit that NAFTA probably has opened the doors to more crime...but that is hardly NAFTA's fault. Why don't you hold Mexico accountable for cleaning up corruption? The Mexican government is far more to blame in this regard than NAFTA is...corruption to some degree has been prevalent in Mexico for generations.

[The Leaper]

http://blogs.usatoday.com/oped/2008/02/our-view-on-fre.html

Our view on free trade: Bashing NAFTA misses real reason for factory job losses

by Adrienne Lewis, USA Today

Clinton, Obama hit wrong target. It’s productivity gains, not Mexico.
As they go at each other in Ohio, presidential candidates Hillary Clinton and Barack Obama seem to be suggesting that the North American Free Trade Agreement has been a disaster. Both Democrats have vowed to renegotiate the agreement with Mexico and Canada or pull out of it altogether.

NAFTA opponents point to the 2.4 million U.S. manufacturing jobs that have disappeared since NAFTA took effect in 1994, a drop of about 14%. In Ohio, site of Tuesday's hotly contested primary, manufacturing jobs are down by nearly 200,000, or 20%, during the same time.

NAFTA supporters — this page among them — usually respond by pointing out that 39 million jobs outside of manufacturing have been created in that time in the USA. Even Ohio has seen a net gain of 900,000 jobs, including 60,000 in finance, 80,000 in professional services and almost 190,000 in health care.

The reality is that NAFTA has relatively little to do with either the overall job losses or job gains. China is a far larger factor. But the number that best displays the nonsensical nature of the debate is 66% — the increase in the manufacturing output of American industry since 1993.

It's impossible to look at an economy that has increased its manufacturing output so dramatically while simultaneously cutting its manufacturing workforce and not see a much larger force at work than NAFTA.

That force has been the unprecedented and sweeping gains in worker productivity that have allowed U.S. companies to churn out more goods with fewer people. Some of this has come from outsourcing the most labor-intensive parts of manufacturing, particularly to Asia. But much of it is from the use of more automated systems for assembly lines and high-tech inventory management.

Put another way, the main job killer of the past 14 years has not been the "giant sucking sound" of jobs going to Mexico, as enunciated by Ross Perot. Rather it has been that giant humming sound of machines replacing humans.

Overall, this increased productivity has led to rising living standards and made the American economy more competitive. It has also left some people behind at a cost of considerable personal pain.

But to make NAFTA a centerpiece of the debate over the manufacturing economy is cheap pandering. Modifying or scrapping NAFTA wouldn't create jobs or more skilled workers. The idea raises false hope and seeks to scapegoat Mexico and Canada.

The only real answer to the problem of declining employment in manufacturing lies in educating younger workers and retraining older ones. This is, to be sure, a big challenge and a tough sell politically. American schools continue to underperform, particularly in technical knowledge. And most federal retraining programs have failed.

Any other answer, however, is simply not responsive to the problem — a workforce with too many people lacking the skills to prosper in a global economy and climb into the middle class. Fixing this is both essential for the economy and vital to U.S. democracy.

For these reasons, it would be nice to hear more from senators Clinton and Obama about creating a more educated workforce — and less about why they hate NAFTA. In 2004, before they were trying to win the Ohio primary, Clinton said "on balance NAFTA has been good" and Obama said the USA "benefits enormously from exports" under NAFTA. They had it right the first time.