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NAFTA Nay Sayers Need a Timeout

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                   March 18, 2008

NAFTA Nay-Sayers Need a Timeout
By Donald Lambro

WASHINGTON -- The economy's emergence as the main issue 
in this year's presidential election means that the 
voters will be pounded by a lot of persistent myths about 
trade and jobs.

The worst myth asserts that trade agreements, particularly 
the North American Free Trade Agreement (signed, sealed 
and delivered by Bill Clinton), are to blame for the de-
cline in manufacturing jobs in America. I wrote about this 
recently, but the issue is worth revisiting because it is 
growing in political intensity and will be one of the key 
ideological battlegrounds in the Pennsylvania Democratic 
primary next month. Barack Obama and Hillary Clinton have 
said they want a "timeout" on trade and that they both 
plan to revisit NAFTA in an attempt to change or in some 
way undo the agreement with Canada and Mexico. 

President Bush addressed their threats to renegotiate 
NAFTA last week in an address before the U.S. Hispanic 
Chamber of Commerce, saying if such a rejiggering 
happened, it would result in "a timeout from growth, a 
timeout from jobs and a timeout from good results."

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I wish I could say the national news media is quick to 
correct mistruths, untruths and half-truths being spread 
about trade. But campaign reporters remain woefully 
uninformed about economic issues and show little interest 
in examining whether the Democratic candidates' negative 
statements regarding free trade hold up to serious scrutiny. 
This was notably true during the Ohio primary when Hillary 
and Obama waged slash-and-burn campaign attacks on NAFTA 
and trade.

What's difficult in debating this issue is that sometimes 
two seemingly contradictory results can, to one degree 
or another, be true at the same time. Ohio lost about 
200,000 manufacturing jobs between 2000 and 2003, and some 
of its companies have moved facilities elsewhere in the 
country or abroad. And we have had to compete with major 
foreign exporters such as China and the economic pressures 
that can result from such new players in the global arena. 
But at the same time Ohio has also benefited from NAFTA, 
and trade in general. 


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"A critical fact overlooked by politicians who blame lost 
jobs on NAFTA is that during those three years Ohio man-
ufacturers actually sold more goods to Canada and Mexico 
... than it took in," John Engler, president of the 
National Association of Manufacturers, wrote in a recent 
op-ed article. "If Ohio exported more to these countries 
than it imported ... how can these politicians argue this 
agreement cost us jobs," Engler argued. One out of every 
five manufacturing jobs in Ohio "depends on making pro-
ducts that are sold overseas," and its "exports to NAFTA 
countries increased more than 31 percent in the past 
five years."

The reasons Ohio has lost manufacturing jobs are more 
complicated than the simply blaming NAFTA. The state was 
hit hard early this decade when the economy was slowing 
down, state taxes were raised -- making Ohio less 
competitive -- and technology made manufacturing more 
productive, requiring fewer workers.

Politicians, being what they are, never talk about the 
natural churning of the U.S. workforce. In the last few 
years, almost a million Americans left or lost their 
jobs each week. However, a little more than that were 
hired each week, too. Employment has declined in the 
last two months as a result of the slowdown, but before 
that we had nearly five years of net job growth. 


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The fact is that, even during our current economic rough 
patch, trade remains one of the bright spots in a $14-
trillion-a-year economy. A typical example: Last week, 
Caterpillar boosted its sales forecast by 20 percent, 
largely because of growing foreign demand for its con-
struction and farm machinery.

Another example: Whirlpool, whose 9,000 workers manufacture 
top-of-the-line, energy-efficient appliances at four plants 
in Ohio. Over 20 percent of the Clyde factory's sales come 
from overseas -- business that will grow as we negotiate 
and sign trade agreements with other countries to drop 
their tariffs on American-made products.

Hillary and Obama are fond of roundly condemning job 
outsourcing, but they never mention the rise of 
"insourcing" from foreign companies that find it pays 
to build their manufacturing plants here. BMW, the 
German automotive giant, has announced that it will ex-
pand production at its South Carolina plant by more than 
50 percent, while it cuts jobs in Germany. Also taking 
advantage of the lower dollar, Toyota will be buying more 
of their parts locally and that, too, will help boost 
employment. Meanwhile, the United States remains the larg-
est exporter in the world, selling $1.6 trillion in goods 
and services abroad last year -- the fourth straight year 
of double-digit export growth, says Commerce Secretary 
Carlos Gutierrez.

NAFTA has been a driving force in that export growth. 
Closing the United States off from the global marketplace, 
or calling for a "timeout," is a job-killer. The jobs of 
the future are going to come more and more from selling 
our stuff to a growing world economy. 

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