In a bid to woo blue-collar voters in Ohio before Tuesday’s
presidential primaries, Barack Obama and Hillary Clinton are locked
in a rhetorical race to the bottom to trash free trade and
NAFTA.
During their February 26 debate in Cleveland, Sen. Clinton
denounced the North American Free Trade Agreement as “flawed” and
blamed it for closing factories in Ohio and upstate New York. Not
to be outdone, Sen. Obama claimed that “if you travel through
Youngstown and you travel through communities in my home state of
Illinois, you will see entire cities that have been devastated as a
consequence of trade agreements” such as NAFTA.
Both pledged to withdraw the United States from the agreement if
Canada and Mexico refuse to add “enforceable” labor and
environmental standards.
Obama and Clinton are peddling the false hope that tinkering
with a 14-year-old trade agreement will somehow bring an industrial
renaissance to Youngstown and other Rust Belt cites.
Why? Because the relative decline of those regions dates back to
the 1960s and 1970s, decades before NAFTA, when the American
economy began to undergo a structural change away from heavy
industry toward a more sustainable, information-based service
economy.
The real record of NAFTA is overwhelmingly positive. Since it
took effect on January 1, 1994, the agreement has delivered its
central promise of more trade and deeper economic integration
between the United States and our two next-door neighbors.
IN THE DECADE and a half of the “NAFTA era,” the U.S. economy has
added a net 26 million new jobs. The average real hourly
compensation (wages and benefits) earned by American workers has
climbed 23 percent, while real household income is up 13
percent.
Home values have more than doubled and stock prices have
tripled, boosting real median household net worth by a third.
Poverty, crime, and divorce rates are all down significantly since
NAFTA.
Even U.S. manufacturing has prospered in the NAFTA era.
According to the Federal Reserve Board, real manufacturing output
in 2007 was 66 percent higher than before NAFTA. In recent years,
U.S. manufacturers have enjoyed record output, revenue, exports,
and profits.
Since NAFTA, U.S. manufacturing investment in Mexico has
averaged a modest $2 billion a year — a tiny fraction of the $150
billion or more those same companies invest annually in domestic
manufacturing capacity. American factories actually added a net
half a million new manufacturing jobs in the five years after
NAFTA.
The loss of manufacturing jobs in Ohio and elsewhere since 2000
has not been because of NAFTA, but because of increased automation
and our own domestic slowdown. U.S. factories are producing more
and better stuff with fewer workers because their workers have
become so much more productive.
Behind the trend has been a shift of production down South to
non-union, right-to-work states, and up the value chain to more
technology-intensive products.
Ohio workers would pay a heavy price for pulling out of NAFTA.
Canada and Mexico are the top two markets for exports from Ohio,
accounting for more than half of the state’s exports in 2006.
According to the Ohio Department of Development, 283,500 workers
in the state earn their living in the export sector, with
machinery, car parts, aircraft engines, and optical/medical
equipment among the leading exports. A trade showdown with our
NAFTA partners would put those good-paying jobs at risk.
THE IRONY OF THIS Democratic cat fight over NAFTA is that the
agreement was one of the most important policy triumphs of the
previous Democratic administration. President Bill Clinton and Vice
President Al Gore fought successfully for the agreement, which
passed Congress in November 1993 with the support of 102 Democrats
in the House.
Hillary Clinton boasts about the robust U.S. economy of the
1990s as evidence of sound economic stewardship, yet she and Obama
now reject the free-trade policies that were an integral part of
that record.
In contrast to Democratic backpeddling, Republican front runner
John McCain has grasped the free-trade banner. Sen. McCain, like
all recent Democratic and Republican presidents, understands that
embracing global markets is key to America’s future prosperity.
McCain has compiled one of the strongest free-trade voting records
in the Senate, while Obama and Clinton have usually voted against
trade liberalization.
Democratic opposition to NAFTA and free trade is not driven by
any real facts on the ground, but by special interest politics. Led
by the Teamsters and the AFL-CIO, organized labor blames trade for
declining membership, even though the share of American workers
belonging to unions has been eroding steadily since the 1950s.
Backtracking on NAFTA and other trade agreements will not
restore a previous era of glory to organized labor or Youngstown,
Ohio. It will only slow America’s own economic progress while
unnecessarily alienating our closest neighbors.
