Thursday, February 21, 2008
"NAFTA bad" has become Democratic shorthand to explain the misery spreading through America's industrial heartland.
Barack Obama threw this punch at Hillary Clinton: "She says, well, speeches don't put food on the table. Well, you know what? NAFTA didn't put food on the table in Youngstown, either." He was trying to tie her to Bill Clinton's role in pushing the North American Free Trade Agreement
Hillary Clinton, meanwhile, has called NAFTA "a mistake" and demanded a "time out" on new trade agreements.
May I suggest a "time out" on bashing free trade with our Canadian and Mexican neighbors? Life would be awfully easy if NAFTA were the problem. All you'd have to do is pull out.
The evidence points to NAFTA being mostly good for the countries involved. And if American factory workers want to see where their jobs have gone, they'd do better to look east than south. Labor may be cheaper in Mexico, but it's cheaper still in Asia. Chinese workers make about a quarter of what their Mexican counterparts earn.
In 2007, the U.S. trade deficit with China hit $256 billion. The deficit with Mexico, despite reaching an all-time high of $74 billion, was less than a third as big, and a lot of it was from buying Mexican oil. The U.S. trade deficit with Canada, which also has a lot of oil, was not far behind at $64 billion.
When China joined the World Trade Organization in 2001, Mexico lost much of any advantage that NAFTA gave it. Hundreds of Mexican factories have since closed and also moved to China.
But somehow the populist anger against trade tends to get trained on Latin America. We saw all the outrage heaped on the Central American Free Trade Agreement (CAFTA) in 2005. The combined economies of those five poor countries, plus the Dominican Republic, roughly equaled that of New Haven, Conn.
More recently, the free-trade agreement with Peru has been denounced as "a NAFTA-style trade deal." Peru's gross domestic economy is the size of Utah's. Clinton and Obama, despite their campaign rhetoric, voted for the accord, and were right to do so.
NAFTA knockers who fear sounding anti-Mexican often argue that free trade has been bad for Mexico, as well. They offer vivid examples, such as the peasant farmers protesting the end of tariffs on U.S. corn. Corn production is easily mechanized and relies on abundant water. That gives U.S. farmers a competitive advantage.
But NAFTA has opened the enormous U.S. market to Mexican avocado growers -- who now call their fruit "green gold." For avocados and other produce that requires picking by hand and therefore much farm labor, Mexicans have an advantage. In fact, Mexican farm exports to the United States and Canada have tripled since 1994.
Mexico's gross domestic product has doubled in the last 10 years, poverty is down, and the march to social liberalization continues. Mexico is no longer a very poor country -- it just seems so next to us.
Revisiting NAFTA won't fix what hurts the Ohio River Valley. A better approach would be universal health coverage that protects laid-off workers from total economic meltdown. A more vigorous program for job retraining would also help. And yes, Democrats are right to denounce tax breaks for companies that ship jobs overseas.
The sight of closed American factories -- those broken windows and weed-covered parking lots -- sickens the soul. The inescapable reality, though, is that the jobs that were going were going, if not to the Caribbean and Latin America, then to Asia. Wouldn't it be in America's interests to help our neighbors get the work?
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