Belfast Telegraph

Wednesday 22 October 2014

DebateNI home of Northern Ireland politics

For good or ill, US free trade deals are set to continue

US President Barack Obama
US President Barack Obama

Last week marked the 20th anniversary of one of the most controversial trade pacts in US history. And with Americans -- and Democrats in particular -- still divided over the merits of the North American Free Trade Agreement (Nafta), this month will see President Obama championing two far larger free-trade pacts that already have many of his liberal allies gnashing their teeth.

Nafta was conceived while Republican George H W Bush was president. But it was only when Bill Clinton took office in 1993, that Nafta finally passed Congress. It took effect on January 1, 1994. Clinton may have loved it, but Nafta has never sat well with the public. One recent poll had 53% of Americans viewing it negatively and only 39% seeing it in a positive light.

Nafta's defenders say its benefits have been manifold, including a tripling of trade between the US, Canada and Mexico -- from $27bn (£16.4bn) annually 20 years ago to $82bn (£49.9bn) in 2011.

US agricultural exports to Mexico tripled during its first 12 years. And, they say, it created a surge in US employment in states along the Mexican border, primarily in industries servicing Mexican haulage firms entering the US.

Critics say low-paying service sector jobs are no compensation for the tens of thousands of high-paying manufacturing jobs lost when US companies re-located to low-wage Mexico.

Some studies estimate that as many as 600,000 American jobs disappeared due to factory re-locations, and many who've held onto their jobs have accepted lower wages and fewer benefits in the hope of staving off further relocations.

Critics also point to the fact that two million Mexican farmers, who couldn't compete with cheap, imported American food, were forced to abandon their farms over the last 20 years. Many, along with their families, ended up entering the US illegally.

So fearful of incurring labour's wrath over Nafta were both Barack Obama and Hillary Clinton during the epic 2008 presidential primary season, that each vowed to rewrite the pact in a more labour-friendly way if elected. Once in office and faced with the 2008 economic meltdown, Obama changed his tune.

Five years on, not only has Obama not tried to rewrite the pact; he's readying to push for passage of two far larger free trade agreements -- the Transatlantic Trade and Investment Partnership (TTIP) and the Trans-Pacific Partnership (TPP).

Speaking at June's G8 summit in Fermanagh, Prime Minister David Cameron said that the proposed TTIP between the EU and the US "could be the biggest bilateral trade deal in history".

But the TPP might top it, and will include 12 countries, from Chile to Japan to Malaysia (but not, notably, China), whose 800m people live in countries which comprise nearly 40% of the world's gross domestic product.

While the EU-US TTIP isn't as high on their radar at the moment, American progressives and labour activists have vowed to stop the TPP, which they see as another sop to multinational corporations at the expense of workers.

Obama, the consummate centrist, has probably calculated, like Clinton before him, that unhappy Lefties, however disgruntled, aren't going to switch sides and vote Republican.

And that means, for good or ill, that the march to bigger and more powerful free trade agreements that Nafta helped pave the way for 20 year ago will likely continue for some years yet.

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