NAFTA getting a bad rap from candidates, but it’s not deserved
Let’s put the politics away for a minute and show a little respect for the North American Free Trade Agreement, a deal that’s made the continent one of the most important manufacturing regions in the world.
Presidential candidates Donald Trump and Hillary Clinton like to bash NAFTA, trying to appeal to a sliver of the electorate that feels victimized by global trade. Cowardly politicians would rather blame foreigners for the failure of some workers and communities to adapt to new trade realities rather than admit the problem is in Washington.
NAFTA has actually benefited the U.S., Canada and Mexico by creating millions of new jobs, lowering the costs of consumer goods and boosting the economies of all three countries for a net benefit to all.
Let’s start with the myth that NAFTA has cost America jobs. While some people did see their jobs shift overseas, and some cities suffered economic losses, that is only a small part of a much bigger picture.
If we accept the most inflated estimate of jobs lost due to NAFTA from the left-leaning Economic Policy Institute, then 852,000 Americans lost their jobs due to increased competition. But that’s balanced by the 2 million Americans whose jobs depend on NAFTA, according to the right-wing U.S. Chamber of Commerce.
The new jobs, by the way, are higher-paying than the basic manufacturing jobs that were lost.
If you prefer less politically charged analyses, the Congressional Research Service, the Organization of Economic Cooperation and Development, and Yale University all say U.S. employment is slightly better off with NAFTA than without. And that doesn’t count increased income from lower-cost trade.
Mexico or Canada rank as the largest or second-largest export markets for 30 out of 50 states, with more than
140,000 small- and medium-size businesses sending goods to NAFTA countries, according to the Office of the United States Trade Representative. Since NAFTA was signed, the U.S. has consistently exported more manufactured goods to Mexico and Canada than it has imported, consisting mostly of electronics, furniture, paper and fabricated metals.
If Mexico’s and Canada’s fossil fuel exports to the United States are excluded, the U.S. trade deficit with Mexico and Canada disappears.
More than 60 percent of Mexican and Canadian goods imported to the U.S. are used to assemble products that will receive the “Made in USA” label. NAFTA countries exported nearly $2.3 trillion in goods to other countries in 2015, and 65 percent of that total came from the United States.
Most of the NAFTA criticism has focused on Mexico, which reveals a tinge of race-baiting since rarely do people complain about jobs moving to Canada.
But Mexico deserves our respect, since $1 million in trade takes place every minute, and Mexicans make 70 million legal border crossings a year and spend their hard-earned pesos here. Americans in turn cross the border 25 million times a year.
“Most Mexican immigration to the United States is legal, it’s middleclass Mexicans coming to live in the United States. ... More Mexicans left the country last year than entered the country, legally and illegally,” said Alan Bersin, assistant secretary for international affairs at the Department of Homeland Security.
Thanks to NAFTA, 85 percent of people arrested crossing the border illegally are not Mexican citizens, he added. Trade agreements have helped 47 percent of Mexicans reach the middle class, so they don’t need to come to the U.S. for jobs.
The big political problem with NAFTA is the U.S. job losses that did occur. Manufacturing workers, who were laid off when factories moved overseas or became automated, rarely found new jobs that paid as well, and that has made people angry.
The Department of Labor’s Trade Adjustment Assistance Program was supposed to help, but it is an underfunded failure, according to outside audits.
This is largely due to conservatives blocking retraining assistance to the poor and unemployed, and Democrats cheerfully slashing the program to protect other priorities.
When our government negotiates trade deals that open foreign markets for our financial services companies, for example, in return for allowing more imported goods, we owe the people who lose their jobs an avenue to create a better life. That’s what we’ve failed to do as a nation, and that’s what the politicians don’t want you to think about as you enjoy the inexpensive foreign goods that NAFTA made available.
No trade deal will ever be perfect, and NAFTA certainly needs updating. The TransPacific Partnership, which includes Canada and Mexico, would address many of the labor and environmental problems with NAFTA, but because of anti-trade sentiment and the presidential election, we’re on track to scuttle a deal that would actually make trade fairer for us.
The real culprits here are workers unwilling to adapt to a changing world, and politicians refusing to help them.
And while everyone remembers something that they wish had never changed, you can’t turn back time, no matter what the politicians promise.
We must build the best future we can by expanding peaceful commerce, not restricting it.
The challenge is not global trade. It’s coping with the tyranny of change.