K
Kickin' Ass and Takin' Names
Guest
1 NAFTA has transformed the U.S. economy.
Hardly. Critics rightly point out that NAFTA's economic benefits were
oversold, but they're wrong to heap the blame for all America's woes
on it. NAFTA, which expanded the existing Canadian-U.S. free-trade
area to Mexico, has had only a marginal effect on the U.S. economy.
Yes, exports to Mexico have more than tripled since 1993 -- but at
$161 billion last year, they still account for only 1.1 percent of the
economy. Considering that total U.S. exports have more than doubled
over the same period, to more than $1.6 trillion a year, the boost
from NAFTA is just a trifle.
Though imports from Mexico have risen nearly five-fold since 1993 --
potentially threatening some U.S. businesses -- they only amounted to
$230 billion in 2007, or less than 1.7 percent of the $14 trillion
U.S. economy. That's peanuts. And for all the fears of factories being
shipped south on the back of an 18-wheeler, the total U.S. investment
in Mexican factories and offices adds up to a mere $75 billion. Mexico
received just $19 billion in foreign direct investment in 2006, while
the United States attracted $175 billion. Thus, the "giant sucking
sound" that Texas businessman and independent presidential candidate
H. Ross Perot heard back in the 1990s doesn't sound so giant after
all. But the benefits of NAFTA don't seem so remarkable, either.
2 NAFTA has put countless Americans out of work.
Not really. Obama claims that NAFTA has destroyed a million American
jobs. Suppose he's right. Total employment still rose by 27 million
jobs between 1993 and 2007, to 137.6 million, and the unemployment
rate has fallen. At worst, then, NAFTA has cost only a tiny minority
of American workers their jobs. And even that is a one-sided view. As
Mexico opened its economy to U.S. trade and investment, NAFTA created
new American jobs, too.
NAFTA critics also decry the trade deficit with Mexico, but at $70
billion a year, it accounts for only 0.5 percent of the U.S. economy.
These figures should quiet NAFTA foes, who point to lost jobs and
stagnant manufacturing wages, as well as boosters, who trumpet claims
of rising output and record-high exports. The fact is, NAFTA has had
only a fractional impact on these trends. Mexico's biggest impact on
the U.S. labor market is not through trade, but through immigration.
And the money that Mexican migrants send home contributes more to the
Mexican economy than foreign direct investment does.
3 "Fixing" NAFTA would be easy and cost-free.
Not so. Any changes would require a lengthy and complex renegotiation
with Canada and Mexico. As Canada's prime minister, Stephen Harper,
has pointed out, "Of course, if any American government ever chose to
make the mistake of opening [NAFTA], we would have some things we
would want to talk about as well." Just the threat of pulling out of
NAFTA would do some damage, too. Far from boosting America's
international reputation -- something all presidential candidates
agree is important -- it would fan fears that the United States is an
unreliable ally and discourage foreign governments from committing to
future agreements with Washington. The slim chance of concluding the
World Trade Organization's Doha round of global trade talks would
vanish. And if the next president wants, for instance, Mexico's help
in dealing with immigration reform and Canada's hand in combating
terrorism, then blaming America's friendly neighbors for its perceived
woes is hardly the way to start.
4 Making NAFTA's labor and environmental regulations stricter would
benefit U.S. workers.
Probably not. Clinton wants to make the treaty's labor and
environmental provisions "far tougher and absolutely binding" and to
require that all future trade agreements include similar language. The
stated purpose is to raise labor and environmental standards around
the world and to make it harder for companies to ship jobs to
countries where workers have fewer protections than in the United
States. But America's trading partners would probably see the move as
covert protectionism -- since when have the Teamsters cared about
Mexican wildlife? -- and may retaliate. Meanwhile, consumers would
probably resent the increased cost of their imports.
In any case, tough social clauses could backfire on the United States.
Canada's labor and environmental standards are generally higher than
the United States', and Canadians could claim that lax American
standards amount to unfair competition. Given that Canada and Mexico
have joined global efforts to curb climate change, they might wish to
restrict American imports if the United States continues to hold back.
And Mexican workers arguably have stronger labor rights than
Americans: Unlike the United States, Mexico has ratified most of the
International Labor Organization's conventions on core labor
standards, including those on freedom of association, collective
bargaining and employment discrimination. If the United States bashes
Mexican labor practices, what's to stop Mexico from objecting to
American imports produced in non-unionized factories?
5 Renegotiating NAFTA should be a priority for the new president.
Absolutely not. With the housing market plunging, the financial system
seizing up and the economy apparently shrinking, tinkering with a
treaty that governs trade with two of Washington's trading partners is
a costly distraction -- whatever your view of NAFTA. The next
president will have much bigger things to worry about, such as
stopping the economy from going into a tailspin; cushioning the blow
for vulnerable Americans who lose their homes, their jobs and their
health care in the downturn; and helping frame new regulations that
protect the economy against future financial excesses without stifling
the market. Compared to all that, changing NAFTA looks like small
change.
http://www.washingtonpost.com/wp-dyn/content/article/2008/04/04/AR2008040401572_pf.html
Hardly. Critics rightly point out that NAFTA's economic benefits were
oversold, but they're wrong to heap the blame for all America's woes
on it. NAFTA, which expanded the existing Canadian-U.S. free-trade
area to Mexico, has had only a marginal effect on the U.S. economy.
Yes, exports to Mexico have more than tripled since 1993 -- but at
$161 billion last year, they still account for only 1.1 percent of the
economy. Considering that total U.S. exports have more than doubled
over the same period, to more than $1.6 trillion a year, the boost
from NAFTA is just a trifle.
Though imports from Mexico have risen nearly five-fold since 1993 --
potentially threatening some U.S. businesses -- they only amounted to
$230 billion in 2007, or less than 1.7 percent of the $14 trillion
U.S. economy. That's peanuts. And for all the fears of factories being
shipped south on the back of an 18-wheeler, the total U.S. investment
in Mexican factories and offices adds up to a mere $75 billion. Mexico
received just $19 billion in foreign direct investment in 2006, while
the United States attracted $175 billion. Thus, the "giant sucking
sound" that Texas businessman and independent presidential candidate
H. Ross Perot heard back in the 1990s doesn't sound so giant after
all. But the benefits of NAFTA don't seem so remarkable, either.
2 NAFTA has put countless Americans out of work.
Not really. Obama claims that NAFTA has destroyed a million American
jobs. Suppose he's right. Total employment still rose by 27 million
jobs between 1993 and 2007, to 137.6 million, and the unemployment
rate has fallen. At worst, then, NAFTA has cost only a tiny minority
of American workers their jobs. And even that is a one-sided view. As
Mexico opened its economy to U.S. trade and investment, NAFTA created
new American jobs, too.
NAFTA critics also decry the trade deficit with Mexico, but at $70
billion a year, it accounts for only 0.5 percent of the U.S. economy.
These figures should quiet NAFTA foes, who point to lost jobs and
stagnant manufacturing wages, as well as boosters, who trumpet claims
of rising output and record-high exports. The fact is, NAFTA has had
only a fractional impact on these trends. Mexico's biggest impact on
the U.S. labor market is not through trade, but through immigration.
And the money that Mexican migrants send home contributes more to the
Mexican economy than foreign direct investment does.
3 "Fixing" NAFTA would be easy and cost-free.
Not so. Any changes would require a lengthy and complex renegotiation
with Canada and Mexico. As Canada's prime minister, Stephen Harper,
has pointed out, "Of course, if any American government ever chose to
make the mistake of opening [NAFTA], we would have some things we
would want to talk about as well." Just the threat of pulling out of
NAFTA would do some damage, too. Far from boosting America's
international reputation -- something all presidential candidates
agree is important -- it would fan fears that the United States is an
unreliable ally and discourage foreign governments from committing to
future agreements with Washington. The slim chance of concluding the
World Trade Organization's Doha round of global trade talks would
vanish. And if the next president wants, for instance, Mexico's help
in dealing with immigration reform and Canada's hand in combating
terrorism, then blaming America's friendly neighbors for its perceived
woes is hardly the way to start.
4 Making NAFTA's labor and environmental regulations stricter would
benefit U.S. workers.
Probably not. Clinton wants to make the treaty's labor and
environmental provisions "far tougher and absolutely binding" and to
require that all future trade agreements include similar language. The
stated purpose is to raise labor and environmental standards around
the world and to make it harder for companies to ship jobs to
countries where workers have fewer protections than in the United
States. But America's trading partners would probably see the move as
covert protectionism -- since when have the Teamsters cared about
Mexican wildlife? -- and may retaliate. Meanwhile, consumers would
probably resent the increased cost of their imports.
In any case, tough social clauses could backfire on the United States.
Canada's labor and environmental standards are generally higher than
the United States', and Canadians could claim that lax American
standards amount to unfair competition. Given that Canada and Mexico
have joined global efforts to curb climate change, they might wish to
restrict American imports if the United States continues to hold back.
And Mexican workers arguably have stronger labor rights than
Americans: Unlike the United States, Mexico has ratified most of the
International Labor Organization's conventions on core labor
standards, including those on freedom of association, collective
bargaining and employment discrimination. If the United States bashes
Mexican labor practices, what's to stop Mexico from objecting to
American imports produced in non-unionized factories?
5 Renegotiating NAFTA should be a priority for the new president.
Absolutely not. With the housing market plunging, the financial system
seizing up and the economy apparently shrinking, tinkering with a
treaty that governs trade with two of Washington's trading partners is
a costly distraction -- whatever your view of NAFTA. The next
president will have much bigger things to worry about, such as
stopping the economy from going into a tailspin; cushioning the blow
for vulnerable Americans who lose their homes, their jobs and their
health care in the downturn; and helping frame new regulations that
protect the economy against future financial excesses without stifling
the market. Compared to all that, changing NAFTA looks like small
change.
http://www.washingtonpost.com/wp-dyn/content/article/2008/04/04/AR2008040401572_pf.html
