"NAFTA has become this piniata that everybody has put their
frustrations into. [But] NAFTA is not the issue. That debate is
finished. What the candidates should be debating now is the future of
North America. That requires them to look forward, not backwards to
NAFTA."
-- Robert A. Pastor, director, Center for North American Studies,
American University
'Many economists blame the march of technology and the increasingly
dominant manufacturing role of China, not NAFTA, for that shift."
-- The Washington Post
"The forces that are driving job dislocations are not primarily trade-
related. They are technological improvements, increases in the
productive capacity of developing nations and technology that enables
greater global integration."
-- Lawrence H. Summers, Harvard University professor, Treasury
secretary under President Clinton
Both Hillary Clinton and Barack Obama, among other topics, are
campaigning on JOBS issues, including the
impact they say NAFTA has had on U.S. job losses and low wages. But
most economic experts say they'd probably do better by their targeted
voters by providing accurate assessments of the controversial
agreement.
Of course most ill-informed and economically ignorant U.S. Rust-
Belters
would continue to bash NAFTA, regardless of what anyone tells them.
Kind of like their red-state brethren, who can't or won't bring
themselves to admit their "president" is both a fool and a war
criminal.
-----------------------------
"Don't Blame NAFTA for Downturn, Many Economists Say"
By Michael A. Fletcher
Washington Post Staff Writer
Wednesday, April 9, 2008; D01
The North American Free Trade Agreement is once again a prime
scapegoat for the nation's growing economic troubles, drawing blame
for sending jobs overseas and flattening wages for U.S. workers. That
sentiment has intensified as the economy has deteriorated, a fall
punctuated last week by the steepest job decline in five years.
Sens. Hillary Rodham Clinton (N.Y.) and Barack Obama (Ill.) have fed
the anti-free-trade view in campaigning ahead of the Pennsylvania
Democratic primary April 22. Facing voters in a state that has lost
more than 200,000 manufacturing jobs since 2001, Obama has promised to
stand against trade deals that cost U.S. jobs, while saying Clinton
supported NAFTA in the past. Clinton counters that she has always
opposed the deal, even as her husband signed it as president, and she
has promised to call a "timeout" on future trade deals if elected
president. "I don't think NAFTA has been good for America," she said.
But is that judgment fair?
Many economists do not think so. It is true that the United States has
lost about 4 million manufacturing jobs since 1994, the year NAFTA
went into effect and eliminated most hurdles to trade and investment
between the United States, Mexico and Canada. Not only are items such
as clothing, toys and televisions increasingly made abroad, but so are
more complex goods including sophisticated magnets that help steer
military smart bombs and radio frequency identification chips embedded
in new U.S. passports.
But many economists blame the march of technology and the increasingly
dominant manufacturing role of China, not NAFTA, for that shift.
Overall, they said, NAFTA has been a net plus, if a modest one, for
the U.S. economy. Even as the number of factory jobs dropped,
manufacturing output in the United States was up 58 percent between
1993 and 2006, as U.S. plants produced more goods with fewer workers.
Exports are at a record high, and trade among the three NAFTA partners
has tripled since 1994. Meanwhile, overall employment in the United
States has grown 24 percent and average unemployment is down since
NAFTA went into effect. Some cities along the border with Mexico have
grown, and farm exports have gone up.
"On balance, researchers have found NAFTA a slight positive for the
U.S. as a whole," wrote Anil Kumar, a Federal Reserve Bank of Dallas
economist who studied the impact of the agreement.
A Campaign Fault Line
The escalating debate over the future of free-trade agreements
promises to be a stark fault line in the campaign. Sen. John McCain
(Ariz.), the presumptive Republican nominee for president, is an
unabashed supporter of free trade, and the Bush administration is
pushing for a free-trade agreement with Colombia.
Even with all their objections to these trade deals, Obama and Clinton
have been careful about where and when they have attacked NAFTA.
Campaigning in Pennsylvania and earlier in Ohio, both places where
trade is blamed by many for job losses, they have pledged to withdraw
from the treaty if it is not renegotiated to toughen labor and
environmental standards.
But the candidates were mostly silent on the deal in Texas, where
economists said it has increased exports not only to Mexico, but also
to Canada, Europe, Latin American and Asia.
Some top congressional Democrats have said that rather than
renegotiate NAFTA -- which analysts call a difficult proposition
likely to produce strong demands from the Canadians and Mexicans, who
have their own problems with the treaty -- the candidates should focus
on easing the transition of workers into the new economy.
"NAFTA is not the main reason workers today are hurting," House
Democratic Caucus Chairman Rahm Emanuel (Ill.) wrote in the Wall
Street Journal. Emanuel, who served as the point man for the passage
of NAFTA under President Bill Clinton, called for a "new social
contract" of improved health care, job training and economic
development to gird workers for global competition.
Analysts point out that it is all but impossible to separate the
impact of NAFTA from other economic changes that unfolded before and
since it was implemented -- including other free-trade deals,
increased competition from manufacturers from Eastern Europe to India
and, most significantly, China's rise.
Lawrence H. Summers, a Harvard University professor who served as
Treasury secretary under President Clinton, said he remains proud to
have supported NAFTA. Overall, he said, NAFTA has bolstered the
economy and improved national security while easing U.S. problems with
illegal immigration.
"The forces that are driving job dislocations are not primarily trade-
related," Summers said. "They are technological improvements,
increases in the productive capacity of developing nations and
technology that enables greater global integration."
Not a Win or a Washout
NAFTA went into effect with lofty promises that it would be an
economic boon to North America. By eliminating tariffs among the
United States, Mexico and Canada and liberalizing foreign investment
in Mexico, proponents said, the continent would end up with lower
prices and higher wages. As living standards rose, the economic
incentives fueling illegal immigration would evaporate, boosters said,
and exports fostered by the world's largest free-trade zone would add
200,000 U.S. jobs. Proponents predicted that the pact would help
convert small trade deficits with Mexico and Canada into surpluses.
Fourteen years later, those promises have not panned out. Illegal
immigration across the southern border skyrocketed in NAFTA's wake.
Meanwhile, average wages stagnated in the United States and Mexico,
and the U.S. trade deficits with Canada and Mexico have ballooned.
But if NAFTA has not lived up to the most optimistic hopes, neither
has it been the disaster predicated by its most vocal detractors,
economists said.
Articulating the fears shared by many union leaders and other NAFTA
opponents, H. Ross Perot predicted a "giant sucking sound" of U.S.
jobs being pulled south of the border by NAFTA.
Instead, the treaty's impact has been less dramatic. Hundreds of U.S.
textile mills closed as Mexican-made apparel was allowed into the
country duty-free. Many of those operations have since come under
strong pressure from competition in China. Also hurt were workers at
manufacturing concerns in the industrial Midwest and elsewhere. Many
saw well-paying jobs move out and wages squeezed by the looming threat
that their jobs would be exported.
"NAFTA has weakened the leverage of workers and strengthened the clout
and bargaining power of multinational corporations," said Thea M. Lee,
policy director of the AFL-CIO. "It is hard to separate how much of
any impact has been just NAFTA, but it is clear that NAFTA has
accelerated trends that were already in place. It has become
emblematic of a corporate-centered trade policy."
At the same time, NAFTA has produced winners. Agricultural exports to
Mexico have almost tripled, while U.S. firms such as Wal-Mart have
secured a profitable foothold in Mexico. And as the industrial Midwest
has suffered, other regions have boomed. Fifteen years ago, the border
town of Laredo, Tex., was largely impoverished and had a population
well under 100,000. Now, with 260,000 residents, the city is the
largest inland port in the South.
Overall, the Texas economy has profited from NAFTA, studies have
found, with manufacturers taking advantage of cuts in Mexican tariffs
to send more electronics, industrial machinery, chemicals and
instruments south, according to a 2006 Federal Reserve Bank of Dallas
study. The same report found that the export of Texas lumber and
furniture declined after NAFTA.
Lost in this discussion is the importance -- and inevitability -- of
integration across North America and how important it is to the
nation's long-term economic and national security interests, analysts
said.
"NAFTA has become this pi=C3=B1ata that everybody has put their
frustrations into," said Robert A. Pastor, director of the Center for
North American Studies at American University. "NAFTA is not the
issue. That debate is finished. What the candidates should be debating
now is the future of North America. That requires them to look
forward, not backwards to NAFTA."
http://www.washingtonpost.com/wp-dyn/content/article/2008/04/08/AR2008040803294.html
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