Delicate touch needed in negotiations about NAFTA

WE have written about the need for the Trump administration to tread carefully as it pursues changes to the North American Free Trade Agreement, a pact that has greatly benefited Oklahoma’s business and agriculture sectors. Other voices are similarly concerned about where this may end.

Economists surveyed this month by The Wall Street Journal placed the likelihood of withdrawal from NAFTA at about 25 percent — and said doing so would create a considerable drag on the U.S. economy.

Four out of five of those surveyed said that if the United States withdraws, gross domestic product would grow more slowly over the next two years than it would otherwise. An additional 7 percent of those surveyed said withdrawal would produce a recession. None of the economists predicted NAFTA withdrawal would improve economic growth.

“Breaking global supply chains diminishes productivity and potential growth,” said Carl Tannenbaum, chief economist at Northern Trust and one of 59 people surveyed.

Critics of NAFTA, including President Trump, often cite the loss of U.S. jobs and the country’s trade deficit — he did so again Wednesday in remarks from the White House — as a reason to renegotiate the deal that’s been on the books since 1994. That isn’t a strong argument.

Sen. James Lankford, R-Oklahoma City, joined two Senate colleagues in a letter this week to U.S. Trade Representative Robert Lighthizer, urging the administration to focus more on job creation and less on the trade deficit. The letter noted that in the past decade, “the year in which the U.S. unemployment rate was at its highest is the same year that the U.S. trade deficit was at its lowest.”

“At the very least, there is a negligible correlation between the number of jobs in the U.S. economy and our nation’s trade deficit,” they wrote.

Kevin D. Williamson, a correspondent for National Review, argues that trade deficits should be the least of this country’s concerns regarding NAFTA. A trade deficit, Williamson writes in the Nov. 13 edition , isn’t a deficit “in the same sense as a federal budget deficit, and there is no cumulative effect analogous to the national debt.”

The United States “can continue to run trade deficits forever, with no negative economic consequences — and, indeed, with some positive consequences,” he says, citing the United Kingdom, and its 128-year trade deficit in goods, as an example.

Williamson notes that the U.K. is wealthy and has an innovative, trade-oriented economy. “Britons buy a great deal of what the United Kingdom makes, and they also buy a great deal of the best of what the rest of the world has to offer. And, like the United States, the United Kingdom is a magnet for global investment capital.”

This country shouldn’t do something that would adversely impact its global standing. Pulling out of NAFTA would do that.

No doubt there are revisions to the agreement that are worth pursuing, but the administration shouldn’t allow adherence to populist rhetoric to get in the way of responsible policymaking. To do so in this case would hurt Oklahoma and the country.