WASHINGTON (AP) — A 21-year-old ghost haunts President Barack Obama and his allies as he presses Congress for enhanced powers to make trade deals with Japan and other nations.
Obama says new trade deals will avoid the shortcomings of NAFTA, the 1994 North America Free Trade Agreement with Mexico and Canada, which many Americans blame for big job losses, especially in manufacturing.
Pro-trade groups say globalism, technology and other factors caused many of the losses. Still, they are scrambling to show that post-NAFTA deals have been better for U.S. workers, and they say more agreements are needed.
Near the heart of every trade argument lurks NAFTA, a breakthrough deal passed mainly by Republicans in Congress and signed by a Democratic president, Bill Clinton. Liberals, labor unions and others denounce NAFTA almost daily. They say it’s the blueprint for new proposals being pushed by Obama and — once again — a mostly Republican constituency in Congress.
Not true, say Obama and others.
“Past trade deals haven’t always lived up to the hype,” Obama acknowledged in last month’s State of the Union speech. “I’m asking both parties to give me trade promotion authority to protect American workers, with strong new trade deals from Asia to Europe that aren’t just free but are also fair.”
In a White House meeting this week with black lawmakers, Obama said trade deals of the 1990s were flawed, and “any new trade agreement will not make the same mistake,” said Rep. Hank Johnson, D-Ga.
A pro-trade, pro-Democratic think tank, Third Way, issued a study on Thursday showing that post-NAFTA trade deals, on balance, have benefited the United States. The group examined the nations’ post-NAFTA trade deals, which involve 17 nations. Using federal government data, it studied only goods, not services, which are a U.S. strength.
The study found that in 13 of the 17 countries, the U.S. balance of trade improved after free-trade agreements took effect. Even when the other four nations are counted, the study said, the average annual U.S. trade balance improved by $30 billion among the 17 nations.
The study averaged the annual U.S. trade deficit or surplus with each nation for the decade before its trade deal took effect. It then made the same calculations for each year after the deal was in place. It converted all findings to 2014 dollars, to account for inflation.
The brightest spot was Singapore, where the average U.S. trade balance rose by nearly $12 billion a year since their trade deal began in 2004. The worst was South Korea. The average U.S. trade deficit expanded by $4.8 billion after the Korea Free Trade Agreement began in March 2012.
“Many policymakers and interest groups reflexively oppose new trade deals because of the hangover from NAFTA,” the Third Way study said. “But post-NAFTA, trade deals were negotiated with higher standards.”
The study’s co-author, Jim Kessler, said the higher standards mostly involved environmental and labor safeguards, which were omitted from NAFTA’s main document. He acknowledged that many labor and environmental groups criticize Obama’s trade plans.
“But at some point you have to make a deal,” Kessler said, and U.S. failure to enact new trade pacts will cede control to countries such as China.
Obama and Republican congressional leaders are pushing two proposals at once. The Trans-Pacific Partnership, or TPP, is a pending trade agreement with Japan, Australia and nine other Pacific Rim nations. China is not included.
Lawmakers say TPP won’t pass unless Congress first gives Obama trade promotion authority, known as TPA or “fast track” power. A TPA bill sets guidelines but lets the White House send Congress a trade proposal to adopt or reject, but not amend. Every president since Franklin Roosevelt has had some form of enhanced trade-dealing powers, but Obama still lacks it.
Lori Wallach of Public Citizen’s Global Trade Watch strongly opposes TPA and TPP. She said studies such as Third Way’s make a big deal out of modest trade improvements with countries like Panama, and gloss over huge trade deficits with major trading partners such as South Korea, Mexico and Canada.
Census data show the 2014 U.S. trade deficit with those three countries was $25 billion, $54 billion and $34 billion, respectively.
Wallach said there’s no reason to think the TPP language will differ much from NAFTA or the Korea agreement. “It’s a straight line from NAFTA to Korea to TPP,” she said.
While China is excluded from the TPP, it’s central to many trade debates. The Obama administration says China is unfairly subsidizing seven industries and wants the World Trade Organization to take action.
In a sign of Obama’s challenge in Congress, Johnson said he listened carefully to the president’s arguments when the Congressional Black Caucus visited the White House. But his Georgia constituents are deeply unhappy with major trade pacts such as NAFTA, Johnson said.
“I’m not with the president on trade,” he said.
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Liberals talk about “NAFTA” the way conservatives talk about “The Deficit.” That is, sloppily, without regard to objective reality and in a way that deflects attention from the real problem.
The manufacturing jobs didn’t all go running down to Mexico because of NAFTA, or at least they netted out to zero due to increased Mexican purchases of manufactured goods. Instead, the manufacturing jobs were all shipped off to China which, last time I check, is neither in North America nor a party to NAFTA. If you want to attack a trade treaty for the loss of manufacturing jobs, blame the GATT nations (us included) for allowing China in without any checks on all the nasty little things China does to keep apparent labor costs low, from thinly veiled subsidization to the absorption of massive externalities to outright oppression.
The nation that truly lost jobs because of NAFTA is Mexico. The loss of agricultural jobs due to competition from American factory farmed foods is a big part of why so many people from down there have come here to find work.
“NAFTA” isn’t a handy symbol. It’s an actual thing with its own actual real problems that have very little to do with the problems attributed to it. Because, again, turns out Mexico isn’t China.
Many fear the Asia and Europe trade deals Obama is negotiating, arguing that, just like NAFTA, they would undercut the interests of American workers and put them at a competitive disadvantage if trade barriers with low-wage nations — with little in the way of labor or environmental protections – were lowered, thereby encouraging American jobs to be exported to cheap labor areas with poor labor and environmental practices.
Others claim the deal under development would undermine national sovereignty in favor of the international corporations.
I can understand the concern, and the use of NAFTA as a cautionary tale, but since there is no draft available – it is still being crafted – I’m afraid too many will reflexively resort to hair-on-fire opposition in the belief that these deals represent a continued race to the bottom.
But what if this were not the case? At the European Summit several months ago, the head of the European Council expressed concerns that, given the US right-wing’s preference to anti-union “Right to Work” laws and an easing of environmental regulations in some Republican-led states, a trade pact with the US could lead to a loss of European jobs. The man reminded me of Ross Perot warning of that “giant sucking sound” re NAFTA, but Obama assured him he had no intention of easing environmental regulations or worker protections.
Do you think such a trade deal, even if it were conditioned on firm labor and environmental
protections to support American workers and jobs, would lead to WTO-style protests from the Left?
Also, as the President said the other day to Vox, the US is currently at a disadvantage with regard to trade in Asia, and this might be an opportunity to level the playing field, if safeguards were put in place that provide for environmental and labor protections.
Also, continued globalization is inevitable; the question is whether we will be in a position to position ourselves advantageously for it and regain some lost ground. If we do nothing, we will only be ceding ground to China, which seeks a hegemonic position in Asia.
Also, re the suspicion over the “fast track” authority the administration is seeking: who do you trust more to craft an international trade agreement, Obama or the current Congress? Or China?
"Liberals talk about “NAFTA” the way conservatives talk about “The Deficit.”
Good analogy. I was going to liken liberal concerns to NAFTA with the hair-on-fire opposition to Chained Whatever-it-was, (the offer of reducing Social Security cost of living allowances Obama made to deficit hawks in exchange for more revenue). But then that was before I could get the comment page to open, and after several attempts hitting a dead comment button, it slipped my mind.
Anyone else had trouble opening this comment page?
I did. No idea what causes that to happen when it happens, but it does.
NAFTA has been the biggest disaster for American working people in US history. But if this rotting piece of shit TPP is passed, we will see the few remaining jobs in the US removed immediately. We need to do everything to stop this piece of crap. Obama has been a disaster for working people. He increased the H-1Bs, and what happens? SC Edison fired hundreds and hires H-1B scum. Disney fires hundreds and hires H-1 scum. Obama lies about trade all the time.