Belfast Telegraph

Thursday 28 August 2014

US Notebook: North American Free Trade Agreement still as controversial 20 years on

The North American Free Trade Agreement passed Congress in 1994 after Bill Clinton pushed it
The North American Free Trade Agreement passed Congress in 1994 after Bill Clinton pushed it

This week marks 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), the New Year 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 and began energetically pushing  it, 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 $27 billion annually 20 years ago to $82 billion in 2011. US agricultural exports to Mexico also tripled during its first 12 years. And, they say, it created a surge in US employment 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, jobs in related supplier firms, and jobs nixed due to lost spending by laid off workers.  Many who’ve held onto their jobs have accepted lower wage and less benefits in the hopes of staving off further factory relocations.  

Critics also point to the fact that 2 million Mexican farmers who couldn’t compete with cheap imported American food and were forced to abandon their farms over the last 20 years. Many, along with their families, ended up entering the US illegally, exacerbating America’s undocumented immigrant crisis.     

For decades, Democrats’ electoral success has depended on the financial and organizational muscle of organized labor, which detests NAFTA. 

So fearful of incurring labor’s wrath over NAFTA were both Barack Obama and Hillary Clinton during the epic 2008 presidential primary season slugfest, that each vowed to  rewrite the pact in a more labor-friendly way if elected.

Once in office, and faced with the 2008 economic meltdown, Obama changed his tune. The time was not right to address NAFTA, he said in 2009.

Five years on, not only has Obama  not tried to rewrite the pact, but now 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, British Prime Minister David Cameron said that the proposed TTIP  between the EU and the US “could be the biggest bilateral trade deal in history” and benefit the EU, America, and the border world to the tune of hundred of billions of dollars. 

The TPP might top that alleged return. It will include 12 countries, from Chile to Japan to Malaysia (but not, notably, China),  whose 800 million people live in countries whose economies 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 labor activists have vowed to stop the TPP, which they see as another sop to multinational corporations at the expense of  workers all around the Pacific rim.

But they’ve a tough row to hoe. 

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 any time soon.

And that means, for good or for ill, 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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