North American Free Trade Agreement

mfggdp.jpgWe take for granted all the benefits of international trade and what they continue to bring to the American economy. Right now, the exports of thousands of U.S. manufacturers–large and small–are helping to offset the economic bad news stemming from the housing and credit sectors. That’s right. U.S. exports have risen so much in the past few years that they are boosting the economy, just when we need it most. Those exports go all over the world, but especially to our largest trading partners, which include Canada and Mexico.

So it’s more than a little unsettling to see Senators Clinton and Obama jumping on NAFTA–the North American Free Trade Agreement–as if it were a truly bad thing for the U.S. economy and calling for it to be reopened and renegotiated. I guess they don’t recognize a good trade agreement for America when they see it. There’s been lots of misinformation spewed about NAFTA for a long time and it’s surprising to see these well-informed legislators buying into the bashing at this time. One of Vice Presidennt Al Gore’s greatest moments was his debate long ago with Ross Perot where Mr. Gore forcefully and effectively demolished the untruths about NAFTA being circulated by Mr. Perot and his allies.

Why are these two Democratic candidates for president so off track? I’m not the only one to ask that question. In Sunday’s Washington Post, Sebastian Mallaby really laid out the case for how dangerous this anti-trade juggernaut has become. Mr. Mallaby’s article really zoned in on the facts in his last paragraph:

The pity is that the Democrats didn’t have to go this way. It’s not that difficult to explain that U.S. manufacturing output has gone up, not down. It simply isn’t true that production has been shifted en masse to Mexico or even China. Manufacturing employment has fallen not because of trade but because of technological progress….

The steady rise in manufacturing output that Mr. Mallaby refers to is presented in the accompanying graph. To see the chart in a larger format, please click here.

Long before NAFTA surfaced as a campaign issue, The Manufacturing Institute launched a survey of manufacturers in the United States, Canada and Mexico to gauge their views on how competitive our big market is compared to those in Europe and Asia. This report is nearing completion and will be made public later this spring. It appears that our survey of manufacturers will give all the presidential candidats something to think about and for those finding fault with NAFTA, there will need to be some serious back-peddling.

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