Reality Versus Rhetoric on Trade

By February 27, 2008Economy, Trade

Floated last night in the Democratic presidential campaign debate in Cleveland, the idea of “opting out” of the North America Free Trade Agreement if our trade partners, Canada and Mexico, refuse to renegotiate the agreement as we demand.

Not a serious idea.

Theoretically, yes, it’s possible, but who not running for high office could possibly think that it’s a good idea? You’d have 14 years of U.S. business contracts, arrangements, supply chains, personal relationships, on and on and on, simply tossed out the window. Picture the effect on U.S. companies who have factored Canada materials and Mexican parts assembly into their product, companies perhaps just squeaking by. It’s cutting off the nose of your face to toss into the Pyrrhic victory.

The implausability of such an “opting out” also explains why the campaign vows to reopen NAFTA “or else” are just politics. The governments of Mexico or Canada would simply reject such negotiations as an economic disaster.

This kind of anti-trade pandering detracts the real issues — including manufacturing employment — involved with trade and the global economy. Moderator Tim Russert asked exactly the right question last night, positing a multitude of factors for the decline of manufacturing jobs in Ohio. As Russert characterized the study:

“MR. RUSSERT: Senator, two journalists here in Ohio wrote a piece called “Business as Usual,” which is very well known, suggesting it wasn’t trade or manufacturing jobs that were being lost because of it, but rather business as usual: lack of patents, lack of innovation, lack of investment, 70 percent of the Ph.D.s in biology, chemistry, engineering leaving the state.

The fact is, exports now have the highest share of our national income ever. Ohio ranks fourth in terms of exports to Canada and Mexico. Are you sure this has not been better for Ohio than you’re suggesting?”

The Toledo Blade Series, published in 2006, is available here: “‘Business as Usual.”

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