USTR on NAFTA: "Take That, Barack O-Bummer!"

♠ Posted by Emmanuel in at 3/03/2008 08:30:00 PM
While visiting the US Trade Representative's website in the process of gathering material for the post below on the US and EU going on the trade warpath against China (again), I got a chuckle to find its take on the ever-so-contentious NAFTA. As you all probably know, the Clinton-era deal has become a rhetorical whipping boy for Senator Barack Obama (D-Illinois) in his quest for the Democratic Party's presidential nomination. Or, is he just pretending to be anti-trade? Beats me, pal. Playing to the same protectionist sentiment, Hillary Clinton has suggested a "time out" on trade. It appears that the USTR is now going on the offensive in defense of NAFTA. On the eve of the crucial Ohio and Texas primaries, no less. Somehow, I don't think it's coincidence.

The USTR largely misses the point, though, by stating US manufacturing output has increased while ignoring complaints about US manufacturing employment declining. On this point, see Ben Muse for far better counterpoints than what the USTR puts up. In classic Marxist fashion, yes, technology ought to provide more efficient means of production, but at the expense of labor. Class warfare is hardly dispelled, nor is the argument of many that, gee, maybe Marx was right all along...

Myth #1: After 14 years, we know NAFTA has not achieved its core goals of expanding trade and investment between the U.S., Canada, and Mexico.
Fact: From 1993 to 2007, trade among the NAFTA nations more than tripled, from $297 billion to $930 billion. Business investment in the United States has risen by 117 percent since 1993, compared to a 45 percent increase between 1979 and 19931.

Myth #2: NAFTA has cost the U.S. jobs.
Fact: U.S. employment rose from 110.8 million people in 1993 to 137.6 million in 2007, an increase of 24 percent. The average unemployment rate was 5.1 percent in the period 1994-2007, compared to 7.1 percent during the period 1980-1993. [But what of manufacturing jobs in particular?]

Myth #3: NAFTA has hurt America’s manufacturing base.
Fact: U.S. manufacturing output rose by 58 percent between 1993 and 2006, as compared to 42 percent between 1980 and 1993. Manufacturing exports in 2007 reached an all time high with a value of $982 billion.

Myth #4: NAFTA has suppressed U.S. wages.
Fact: U.S. business sector real hourly compensation rose by 1.3 percent each year between 1993 and 2007, for a total of 19.3 percent over the full period. During 1979-1993, the annual rate of real hourly compensation rose by 0.8 percent each year, or 11 percent over the full 14-year period NAFTA entered into force on January 1, 1994.

Myth #5: NAFTA has not delivered benefits to U.S. agriculture.
Fact: Canada and Mexico accounted for 37% of the total growth of U.S. agricultural exports since 1993. Moreover, the share of total U.S. agricultural exports destined for Canada or Mexico has grown from 22% in 1993 to 30% in 2007. NAFTA access is most crucial for agriculture, where Mexico has its highest MFN tariffs. Mexico is the top export destination for beef, rice, soybean meal, corn sweeteners, apples and dry edible bean exports. It is the second export market for U.S. corn, soybeans and oils, and third largest for pork, poultry, eggs, and cotton.

Myth #6: NAFTA has reduced wages in Mexico.
Fact: Mexican wages grew steadily after the 1994 peso crisis, reached pre-crisis levels in 1997; and have increased each year since. Several studies note that Mexican industries that export or that are in regions with a higher concentration of foreign investment and trade also have higher wages.

Myth #7: NAFTA has done nothing to improve the environment.
Fact: NAFTA created two binational institutions unique to the agreement which certify and finance environmental infrastructure projects to provide a clean and healthy environment for residents along the U.S.-Mexico border. To date, they have provided nearly $1 billion for 135 environmental infrastructure projects with a total estimated cost of $2.89 billion and allocated $33.5 million in assistance and $21.6 million in grants for over 450 other border environmental projects. The Mexican government has also made substantial new investments in environmental protection, increasing the federal budget for the environmental sector by 81% between 2003 and 2008.