NAFTA - Do Democrats really want to mess with that treaty? (Update) Posted by: McQ
on Friday, February 29, 2008
Good question. There sure is a lot of populist rhetoric about "opting out" between the two nominees of the Democratic party about doing so. But considering the real consequences, it seems it might be a rather dumb move. And, as Investors Business Daily notes, don't believe that either Canada or Mexico aren't paying attention:
On Thursday, Canadian trade minister David Emerson warned that America's easy access to Canadian oil could be history if NAFTA were suspended or scrapped, as the candidates proposed. "Knowledgeable observers would have to take note of the fact that we are the largest supplier of energy to the U.S.," he said.
How much oil? 900 million barrels. And what has NAFTA to do with it? Well, as it turns out, NAFTA gives us "first dibs" to the oil production of both Canada and Mexico (Mexico provides us with 600 million barrels a year).
Opt out of NAFTA and both Canada and Mexico are free to peddle their oil to anyone else they choose out there. So what is being jeopardized with all this populist talk is the access to a strategic commodity from two trade partners who happen to be right next door (making it about as secure a supply as one can imagine coming from "foreign" suppliers). And should the US opt out and Canada and Mexico sell elsewhere (I'm sure China would be more than pleased to buy every bit of what is available from each), we're stuck making up that difference with such countries as Hugo Chavez's Venezuela, Russia, Saudi Arabia, and the ever dependable Nigeria.
Or said another way, it would be foolishness of the first order to "opt out" of NAFTA for that reason alone.
But wait, there's more:
Canada is the biggest market for U.S. exports, and Mexico is No. 2. U.S. companies sell them $380 billion of Made-In-America products, which grew to that level because of NAFTA. Scrap the pact and the old pre-1994 tariffs would snap right back in.
Scrap NAFTA and instantly prove that your grasp of economics is as tenuous as your grasp of national security. If Democrats want to hand Republicans a perfect issue to demonstrate this, the populist anti-NAFTA nonsense is the way to go.
Rebuking the panderers, Mexico's ambassador to the U.S. said: "NAFTA has been a win-win-win for Mexico, the United States and Canada, proving that a rising tide can lift all boats."
And, if explained well, it may end up being a winning issue for Republicans as well.
A critical fact overlooked by politicians who blame lost jobs on NAFTA is that during those three years Ohio manufacturers actually sold more goods to Canada and Mexico — our NAFTA partners — than it took in. If Ohio exported more to these countries than it imported — shrinking the trade deficit — how can these politicians argue this agreement cost us jobs?
In fact, while one in five manufacturing jobs in Ohio depends on making products that are sold overseas, exports to NAFTA countries increased more than 31 percent in the past five years.
What some candidates are not admitting to Ohioans is that the decline in manufacturing jobs was largely the result of the state's early-decade recession, when the nation's entire economy slowed. An even greater factor is increased productivity: Manufacturers can simply make more products today with fewer people. We could just as easily blame faster microprocessors, automated production lines and other technological advances for the decline in manufacturing jobs. Yet no candidate is demanding a timeout from computer chips.
Enacting the anti-trade policies expressed in recent campaign rhetoric equals more than just a timeout; it means surrendering the playing field to our competitors, costing us jobs.
Note his point about productivity and automation.
UPDATE II: The Financial Times is even more direct and biting in their criticism of the NAFTA bashing going on between Clinton and Obama:
Trade policy has no effect on net employment: you can as easily have full employment, or chronic unemployment, under autarky as under free trade. The purpose of liberal trade is not to “create jobs” – the term is a badge of economic illiteracy – but to change the pattern of work and raise living standards overall. As with new technology, there are winners and losers. The right policy is not to turn back integration, any more than it would be to ban the fork-lift truck. It is to ensure that the overall gains are widely shared and the victims get help.
The saddest thing is that the Democrats who understand this reasoning believe that the party’s supporters are too dull to grasp it, and must be fed some protectionist red meat. The challenge, they believe, is to pander to ignorance while doing the least harm. Good policy rarely happens that way. And is the logic of trade really so hard to grasp – or to sell?
No. But then, you can't use the fear of job loss as a motivator to vote for a candidate. It is just another version of the "politics of fear" the Democrats decry, this time in the economic realm.
After the Ohio primaries, we will never hear about NAFTA again.
It’s political theatre.
It’s a sad commentary on our electoral process, and you all know this, but it is ignored when there is perceived red-meat on the campaign trail.
NAFTA was widely publicized as bad policy in rust belt states like Ohio, so even though NAFTA is not remotely responsible for their economic woes, a lot of the workers of Ohio perceive NAFTA as responsible (as opposed to the US auto-makers failure to build cars that people want to buy).
So the Democratic candidates, who need the votes of workers in Ohio, have a choice... tell the people of Ohio that the world is round while they think it’s flat, or tell them we’re going to put up a fence so Ohio residents stop falling over the edge. The danger of course is that after you make comments like this, you have recover from them, but here’s the rub, if you don’t pander, you won’t have that pesky recovery problem, because you won’t be in the race.
Pandering is the oldest political trick, and apparently a requirement to win.
I was talking to Republicans about McCain, and they were under impression that McCain voted against the Bush tax cuts because they did not include spending cuts, a good Republican reason for opposing tax cuts, only it’s just not true. McCain argues that he initially opposed tax cuts because "I said, look, we’ve got to have spending restraint." McCain talked about controlling spending during his first presidential campaign, but that was not his point at the time the tax cuts were being debated. In full frontal pander, McCain revised his position, because the base doesn’t want to hear why he said he really opposed the Bush tax cuts....
McCain 2001 "I cannot in good conscience support a tax cut in which so many of the benefits go to the most fortunate among us at the expense of middle-class Americans who most need tax relief." Or McCain 2003, who called further tax cuts "irresponsible," adding, "At a time of war, at a time of economic stagnation, at a time of rising national debt … one might expect our national leaders to pursue policies calling for shared sacrifice to achieve shared benefits. Regrettably, that is not the case." Or McCain 2004, who said, "I voted against the tax cuts because of the disproportionate amount that went to the wealthiest Americans. I would clearly support not extending those tax cuts in order to help address the deficit."
I look forward to meeting these candidates for the first time when the base pandering is over and they start trying to pander to the population at large.
McCain had a funny gaffe on the trail today, "I am a proud conservative, liberal, Republican." I suspect both are true, depending on which part of the election season we are in.
And watch Barack Obama start to look a lot more conservative in the general.
In one sense, I agree with you, Cap. It is pandering to the Nth degree and pandering is a disease that afflicts any election process. A chicken in every pot may be a political staple but the degree to which the chickens have multiplied in this election cycle seem greater than any in my own memory. The Edwards campaign lived and breathed the populist (another name for pandering) line and received far greater support than I would ever have imagined for an empty suit such as Edwards. And, in order to gain former Edwards supporters, both the Obama and Clinton campaigns have taken it to new heights.
But with the importance of Ohio in the General Election, I tend to agree with McQ - it will come up again and if McCain were smart, the issue will hit Obama not only in Ohio but in areas of the country that have greatly benefitted from NAFTA.
What nobody is saying is that worldwide manufacturing employment is declining. These dirty, boring, dangerous jobs are increasingly being done by machines.
In fact, that’s precisely what Engler points out:
An even greater factor is increased productivity: Manufacturers can simply make more products today with fewer people. We could just as easily blame faster microprocessors, automated production lines and other technological advances for the decline in manufacturing jobs. Yet no candidate is demanding a timeout from computer chips.
As critical as Ohio will be in the GE, I can promise you we’ll hear it again.
Ohio will be critical, but in the primaries you can pander directly to Ohio and other rust belt states for a few weeks and then forget about, but in the general, it’s much more difficult to say one thing to one state and the complete opposite to another (I know it’s done, but there’s a cost).
These guys know they want to win Ohio, but it doesn’t help to win Ohio if you lose everything else.
Let’s just say that this rhetoric will be tempered severely for the general election. Obama doesn’t need to be more radical on NAFTA vs McCain, he’ll be able to be far less inflammatory and still be on the right side of NAFTA for his constituency in Ohio.
What nobody is saying is that worldwide manufacturing employment is declining. These dirty, boring, dangerous jobs are increasingly being done by machines. They aren’t coming back.
It still might not be nearly as bad, and Ohio might be in good economic shape if the Big 3 were not so God-awful at competing with companies that now pay HIGHER wages than are paid to US workers. Does anything think the Big 3 automakers have done even a passable job of management?
(if you blame the unions, you are as wrong as people who blame NAFTA)
It still might not be nearly as bad, and Ohio might be in good economic shape if the Big 3 were not so God-awful at competing with companies that now pay HIGHER wages than are paid to US workers.
Or the functionaries running the Great State Of Ohio could actually do something to, you know, attract the attention of those very other companies. Putting all the eggs in the Big Three’s basket was a very, very bad idea and remains such while Honda, Toyota, BMW, etc. continue to eat their lunch.
After the Ohio primaries, we will never hear about NAFTA again.
If McCain has half a clue, we sure will. One of the Democrat’s planks is restoring our putatively scarred relations with the world; what better way to undercut that than bring up the number of times the Dem presidential candidates have managed to annoy our allies before they were even nominated?
Both Obama and Clinton take a count for this NAFTA thing, and Obama’s already got a count against him for upsetting Pakistan by saying that he would make George Bush look positively multilateral for seeking out UN support and gathering allies for the Iraq war, by simply attacking whomever we please in Pakistan. So it’s 2 for Obama and 1 for Clinton, which are really both quite impressive for primary contestants.
To the best of my knowledge, McCain is holding at zero during the campaign. Corrections welcome.
As far as US auto makers, there’s enough blame on both sides (labor and management) to pass around.
Yes, pandering is as old as politics. So is denial.
The press educating the general public that they are being pandered to is appropriate, whomever is doing it. What is sad, is that’s it was the Canadian press who had to do it.
The press also ought to be showing what the good, bad and ugly facts of NAFTA, free trade, and globalization are. Instead, they allow candidates free reign to say just about anything, under the guise of, we’re only reporting what they said, even if that has nothing to do with the facts.
NAFTA should come up in the future for the reason that Jeremy mentions (and I do as well in a previous thread - shameless self promotion): we have the two Democratic frontrunners for President that are spitting in the face of two strong allies and partners. Some serious Republican hay should be made out of two very unserious (foreign policy) candidates.
And, Cap, While I don’t have any use for unions - they’ve outlived their usefulness now by about 60 years now - unions are not the Big Three’s real problem. They need to design and build cars that I’d actually want to drive and own.Ugliest.cars.ever. Good grief, why in the heck are their best looking vehicles sold only in Europe?
Keith, Of the Big Three, Chrysler/Dodge has the best design team. But to me, they’re very...niche-y, meaning they only appeal to a narrow band of folks that like really muscled up looking cars. And it’s the whole line. My wife won’t consider them, because they look like "boys cars". It wasn’t said as a compliment.
I say this as one that likes the look, and like you, lusts after the new Challenger...
I think I may have to grant Obama a bonus count for doubling-down on the Canada story and, at least so far, losing.
Before that, I still considered it politics as usual, which is problematic for a man running like Obama, but there’s still lots of time. But the newest twist takes it out of "politics as usual" and puts it squarely in the "incompetent politics as usual" category.